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

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

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

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

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

----

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

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

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

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

|   | · | 1986      – Contran acquires control of NL, which at the time owns 100% of Kronos      and a 50% interest in Titanium 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; |
|--------|--------|------------------------------------------------------------------------------------------------------------------|

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

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

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

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

|   | · | Customer      inventory levels (such as the extent to which Kronos’ customers may, from      time to time, accelerate purchases of TiO2 in      advance of anticipated price increases or defer purchases of TiO2in      advance of anticipated 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 prices, including increased competition from low-cost      manufacturing sources (such asChina); |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|

|   | · | 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      ability of our subsidiaries to pay us dividends (such as Kronos’      suspension of its dividend in2009); |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------|

|   | · | 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, amend, refinance or establish credit      facilities; |
|--------|--------|----------------------------------------------------------------------------------|

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

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

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

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

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

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

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

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

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

----

| Chemicals  Kronos      Worldwide, Inc.                       | Our      chemicals segment is operated through our majority control of      Kronos.  Kronos is a leading global producer and marketer of      value-added 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 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Component      Products  CompX      International Inc.  | We      operate in the component products industry through our majority control of      CompX.  CompX is a leading manufacturer of engineered components      utilized in a variety of applications and industries.  Through its      Security Products division CompX manufactures mechanical and electrical      cabinet locks and other locking mechanisms used in postal, office and      institutional furniture, transportation, vending, tool storage and other      general cabinetry applications.  CompX’s Furniture Components      division manufactures precision ball bearing slides and ergonomic computer      support systems used in office and institutional furniture, home      appliances, tool storage and a variety of other applications.  CompX      also manufactures stainless steel exhaust systems, gauges and throttle      controls for the performance boat industry through its Marine Components      division. |
|                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| 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 in 2009 WCS received a      low-level radioactive waste disposal license.  In 2009 WCS      completed construction of a byproduct disposal facility, which began      operations in the fourth quarter of 2009. Construction of the low-level      radioactive waste facility is currently expected to begin in mid-2010,      following the completion of some pre-construction licensing and      administrative matters, and is expected to be operational in early      2011.                                                                                                                                                                                       |
|                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

----

|                                                                                       |   | 2007   |   |   | 2008   |   |   | 2009   |   |
|--------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                       |   |   |   |   |   |   |   |   |   |
|              Europe       |   |   | 19     | %      |   |   | 19     | %      |   |   | 19 | % |
|             North      America |   |   | 15     | %      |   |   | 16     | %      |   |   | 16 | % |

| ·   | Chloride production      process.  Approximately      three-fourths of our current production capacity is based on the chloride      process.  The chloride process is a continuous process in which      chlorine is used to extract rutile TiO2.  The      chloride process typically has lower manufacturing costs than the sulfate      process due to newer technology, higher yield, less waste, lower energy      requirements and lower labor costs.  The chloride process      produces less waste than the sulfate process because much of the chlorine      is recycled and feedstock bearing a higher titanium content is      used. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Sulfate production      process.  The sulfate process is a batch chemical process      that uses sulfuric acid to extract both rutile and anatase TiO2. In      addition to the factors indicated above, the higher production costs      associated with the sulfate process result in part from the need to      process the spent sulfuric acid remaining at the end of the production      process. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We      own and operate an ilmenite mine in Norway pursuant to a governmental      concession with an unlimited term. We commenced production from our second      mine in 2009..  Ilmenite is a raw material used directly as a      feedstock by some sulfate-process TiO2      plants, 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 which 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 specialty products from the production of TiO2.  Titanium      oxychloride is used in specialty applications in the formulation of      pearlescent pigments, production of electroceramic capacitors for cell      phones and other electronic devices.  Titanyl sulfate products      are used in pearlescent pigments, natural gas pipe and other specialty      applications. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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      mines                                                                                   |

|   | (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) | In      2009 we completed the excavation of a second mine located near our first      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                         |   | 351                                                                                                  |
|                                                                          |   |                                                                                                 |
| Sulfate process plants:                                                       |   |                                                                                                 |
|   Raw ilmenite ore      mined and used    internally |   |  226                                                                                            |
|   Purchased      slag                                               |   | 13                                                                                                   |

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

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

|   | · | pin      tumbler locking mechanisms, which are more costly to produce and are used      in applications requiring higher levels of security, including our KeSet 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 or networked security and      audit trail capability for drug storage and other valuables through the      use of a proximity card, magnetic stripe or keypad      credentials. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | · | our      patented adjustable Ball      Lock, which reduces the risk of heavily-filled drawers, such as      auto mechanic 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                               |   |                                       |

|                                |   |   |     |
|-------------------------------------|--------|--------|----------|
| United      States                  |   |   | 528      |   |
| Canada(1)                           |   |   | 211      |   |
| Taiwan                              |   |   |  76 |   |
|      Total |   |   | 815      |   |
|                                |   |   |     |   |

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

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

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

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

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

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

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

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

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

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

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

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

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

----

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

|                                             |   |   High |   |   |   Low |   |   | Cashdividends paid |   |
|--------------------------------------------------|--------|------------------|--------|--------|-----------------|--------|--------|-------------------------|--------|
|                                             |   |             |   |   |            |   |   |                    |   |
| 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 |   |
|                                             |   |             |   |   |            |   |   |                    |   |   |   |   |
| Year ended December 31, 2009 |   |             |   |   |            |   |   |                    |   |   |   |   |
|                                             |   |             |   |   |            |   |   |                    |   |   |   |   |
|   First Quarter                   |   | $                | 15.48  |   |            | $      | 7.83   |                    |   | $ | .10 |   |
|   Second Quarter                  |   |             | 11.71  |   |            |   | 7.07   |                    |   |   | .10 |   |
|   Third Quarter                   |   |             | 14.53  |   |            |   | 6.14   |                    |   |   | .10 |   |
|   Fourth Quarter                  |   |             | 14.99  |   |            |   | 9.01   |                    |   |   | .10 |   |
|                                             |   |             |   |   |            |   |   |                    |   |   |   |   |
| First      Quarter 2010 through February 26      |   | $                | 18.78  |   |            | $      | 14.42  |                    |   | $ | .10 |   |

----

|                                            |   | December      31, |   |
|-------------------------------------------------|--------|-------------------|--------|
|                                            |   | 2004              |   |   | 2005 |   |   | 2006 |   |   | 2007 |   |   | 2008 |   |   | 2009 |   |
|                                            |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Valhi      common stock                         |   | $                 | 100    |   |   | $ | 117 |   |   | $ | 168 |   |   | $ | 236 |   |   | $ | 162 |   |   | $ | 220 |   |
| S&P      500 Composite Stock Price Index    |   |              | 100    |   |   |   | 105 |   |   |   | 121 |   |   |   | 128 |   |   |   | 81 |   |   |   | 102 |   |
| S&P      500 Industrial Conglomerates Index |   |              | 100    |   |   |   | 96 |   |   |   | 104 |   |   |   | 109 |   |   |   | 53 |   |   |   | 58 |   |

----

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

|                                                                                                              |   | Years ended December 31,                  |        |
|-------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|-------------|
|                                                                                                              |   | 2005                                      |        |   | 2006 |   |   | 2007 |   |   | 2008 |   |   | 2009 |   |
|                                                                                                              |   | (In      millions, except per share data) |        |
|                                                                                                              |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |
| STATEMENTS      OF OPERATIONS DATA:                                                                               |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |
|   Net sales:                                                                                       |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |
|     Chemicals                                                                                 |   | $                                         | 1,196.7     |   |   | $ | 1,279.5 |   |   | $ | 1,310.3 |   |   | $ | 1,316.9 |   |   | $ | 1,142.0 |   |
|     Component products                                                                   |   |                                      | 186.3       |   |   |   | 190.1 |   |   |   | 177.7 |   |   |   | 165.5 |   |   |   | 116.1 |   |
|     Waste management                                                                     |   |                                      | 9.8         |   |   |   | 11.8 |   |   |   | 4.2 |   |   |   | 2.9 |   |   |   | 14.0 |   |
|                                                                                                              |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Total      net sales                                                          |   | $                                         | 1,392.8     |   |   | $ | 1,481.4 |   |   | $ | 1,492.2 |   |   | $ | 1,485.3 |   |   | $ | 1,272.1 |   |
|                                                                                                              |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Operating income      (loss):                                                                    |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Chemicals                                                                            |   | $                                         | 165.6       |   |   | $ | 138.1 |   |   | $ | 88.6 |   |   | $ | 52.0 |   |   | $ | (10.6 | ) |
|     Component products                                                                   |   |                                      | 19.3        |   |   |   | 20.6 |   |   |   | 16.0 |   |   |   | 5.5 |   |   |   | (4.0 | ) |
|     Waste management                                                                     |   |                                      | (12.1       | ) |   |   | (9.5 | ) |   |   | (14.1 | ) |   |   | (21.5 | ) |   |   | (27.0 | ) |
|                                                                                                              |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Total      operating income (loss)                                            |   | $                                         | 172.8       |   |   | $ | 149.2 |   |   | $ |  90.5 |   |   | $ |  36.0 |   |   | $ | (41.6 | ) |
|                                                                                                              |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                              |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Equity in earnings of TIMET                                                       |   | $                                         | 64.9        |   |   | $ | 101.1 |   |   | $ |  26.9 |   |   | $ |  - |   |   | $ |  - |   |
|                                                                                                              |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Net      income (loss)                                                                    |   | $                                         | 93.5        |   |   | $ | 153.7 |   |   | $ | (49.2 | ) |   | $ | 4.9 |   |   | $ | (38.1 | ) |
|                                                                                                              |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Net income(loss)attributable     to      Valhi stockholders |   | $                                         | 81.9        |   |   | $ | 141.7 |   |   | $ | (45.7 | ) |   | $ | (.8 | ) |   | $ | (34.2 | ) |
|                                                                                                              |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| DILUTED EARNINGS PER SHARE DATA:                                                              |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Net income (loss)attributable      to    Valhi      stockholders        |   | $                                         | .69         |   |   | $ | 1.20 |   |   | $ | (.40 | ) |   | $ | (.01 | ) |   | $ | (.30 | ) |
|                                                                                                              |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Cash dividends                                                                                   |   | $                                         | .40         |   |   | $ | .40 |   |   | $ | .40 |   |   | $ | .40 |   |   | $ | .40 |   |
|                                                                                                              |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Weighted average common shares   outstanding                            |   |                                      |  118.5 |   |   |   |  116.5 |   |   |   |  114.7 |   |   |   |  114.4 |   |   |   |  114.3 |   |
|                                                                                                              |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| STATEMENTS OF CASH FLOW DATA:                                                                 |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Cash provided by      (used in):                                                            |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Operating activities                                                                 |   | $                                         | 104.3       |   |   | $ | 86.3 |   |   | $ | 63.5 |   |   | $ | (24.0 | ) |   | $ |  76.0 |   |
|     Investing activities                                                                 |   |                                      | 20.4        |   |   |   | (89.5 | ) |   |   | (65.4 | ) |   |   | (60.0 | ) |   |   | (44.5 | ) |
|     Financing activities                                                                 |   |                                      | (115.8      | ) |   |   | (87.6 | ) |   |   | (56.1 | ) |   |   | (12.9 | ) |   |   |  (4.7 | ) |
|                                                                                                              |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE SHEET DATA (at year end):                                                        |   |                                      |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Total assets      (1)                                                                            |   | $                                         | 2,578.4     |   |   | $ | 2,804.7 |   |   | $ | 2,603.0 |   |   | $ | 2,389.4 |   |   | $ | 2,410.3 |   |
|   Long-term debt                                                                                   |   |                                      | 715.8       |   |   |   | 785.3 |   |   |   | 889.8 |   |   |   | 911.0 |   |   |   | 988.4 |   |
|   Valhi      stockholders’ equity (1)(2)                                                     |   |                                      | 797.3       |   |   |   | 866.8 |   |   |   | 618.4 |   |   |   | 468.8 |   |   |   | 428.7 |   |
|   Total equity      (1)(2)                                                                         |   |                                      | 922.7       |   |   |   | 990.5 |   |   |   | 708.9 |   |   |   | 542.1 |   |   |   | 498.4 |   |

|  (1) | We      adopted the asset and liability recognition provisions of Accounting      Standard Codification (“ASC”) Topic 715 as of December 31, 2006 and the      measurement date provisions of the Topic as of December 31,      2007.  See Notes 11 and 18 to our Consolidated Financial      Statements. |
|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) |           We adopted the uncertain tax position provisions of ASC Topic 740 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 control of      Kronos.  Kronos is a leading global producer and marketer of      value-added titanium dioxide pigment products (“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 control of      CompX.  CompX is a leading manufacturer of engineered components      utilized in a variety of applications and industries.  Through its      Security Products division CompX manufactures mechanical and electrical      cabinet locks and other locking mechanisms used in postal, office and      institutional furniture, transportation, vending, tool storage and other      general cabinetry applications.  CompX’s Furniture Components      division manufactures precision ball bearing slides and ergonomic computer      support systems used in office and institutional furniture, home      appliances, tool storage and a variety of other applications.  CompX      also manufactures stainless steel exhaust systems, gauges and throttle      controls for the performance boat industry through its Marine Components      division. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 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 began disposal      operations in October 2009.  In January 2009 WCS received a      low-level radioactive waste disposal license, and construction of the      low-level radioactive waste facility is currently expected to begin in      mid-2010, following the completion of some pre-construction licensing and      administrative matters, and is expected to be operational in early      2011. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | operating      losses at our Chemicals, Component Products and a larger operating loss at      our Waste Management Segments in2009; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------|

|   | · | lower      gains from a litigation settlements in2009; |
|--------|--------|--------------------------------------------------------|

|   | · | a      gain from a sale of a business in2009; |
|--------|--------|-----------------------------------------------|

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

|   | · | an      income tax benefit recognized in 2009 due to a net decrease in our reserve      for uncertain tax positions which exceeded a similar change recognized in      2008; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

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

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

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

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

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

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

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

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

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

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

----

|   | · | 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 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 a goodwill impairment      recognized on the Marine Components reporting unit of our Component      Products Segment; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

|   | · | expected      operating income from our Chemicals Segment due to increased sales volumes      and lower anticipated productioncosts; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------|

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

|   | · | a      non-cash income tax benefit of approximately $24.4 million ($.21 per      diluted share), net of noncontrolling interest, in the first quarter of      2010 as a result of a European Court ruling that resulted in a favorable      resolution of certain income tax issues in  Germany; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | recording      a lower gain on litigation settlements in 2010;  and |
|--------|--------|---------------------------------------------------------------------|

|   | · | higher      operating losses at WCS as we expect more expenses associated with the      limited operations of our byproduct disposal facility which commenced      operations in the fourth quarter of2009. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Marketable securities -      We own investments in certain companies that we account for as      marketable securities carried at fair value or that we account for under      the equity method.  For these investments, we evaluate the fair      value at each balance sheet date.  We use quoted market prices,      Level 1 inputs as defined in Accounting Standards Codification (“ASC”)      820-10-35, Fair Value      Measurements and Disclosures, to determine fair value for certain      of our marketable debt securities and publicly traded      investees.  For other of our marketable debt securities, the      fair value is generally determined using Level 2 inputs as defined in the      ASC because although these securities are traded in many cases the market      is not active and the year-end valuation is based on the last trade of the      year which may be several days prior to December 31.  We use      Level 3 inputs to determine fair value of our investment in Amalgamated      Sugar Company LLC. See Note 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 $396.9 million at December 31, 2009 resulting primarily from our      various step acquisitions of Kronos and NL (which occurred before the      implementation of the new accounting standards related to noncontrolling      interest, see Note 8 to our Consolidated Financial Statements) and to a      lesser extent CompX’s purchase of various businesses.  In      accordance with the applicable accounting standards for goodwill, we do      not amortize goodwill. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Long-lived assets – We      account for our long-lived assets, including our investment in WCS, in      accordance with applicable GAAP. We assess property,      equipment and capitalized permit costs for impairment only when      circumstances as specified in ASC 360-10-35, Property, Plant, and      Equipment, indicate an impairment may exist.  During      2009, as a result of continued operating losses, certain long-lived assets      of our Waste Management Segment were evaluated for impairment as of      December 31, 2009.  WCS has had limited operations as it seeks      regulatory approval for several licenses it needs for full scale      operations.  WCS obtained a byproduct disposal license in 2008      and began disposal operations in October 2009.  In January 2009      WCS received a low-level radioactive waste disposal permit, and      construction of the low-level radioactive waste facility is currently      expected to begin in mid-2010, following the completion of some      pre-construction licensing and administrative matters, and is expected to      be operational in late 2010 or early 2011. We estimate it will cost      approximately $75 million to construct this facility which will be      incurred over the construction period from mid-2010 until      late-2011.  Our impairment analysis is based on estimated future      undiscounted cash flows of WCS’ operations, and this analysis indicated no      impairment was present at December 31, 2009 and that the carrying value of      WCS is recoverable as the aggregate future undiscounted cash flow estimate      exceeded the carrying value of WCS’ net assets by at least two      times.  Considerable management judgment is necessary to      evaluate the impact of operating changes and to estimate future cash      flows.  Assumptions used in our impairment evaluations, such as      when we will receive final regulatory licenses, the cost and timing of      construction, forecasted growth rates and our cost of capital, are      consistent with our internal projections and operating plans. However, if      our future cash flows from operations less capital expenditures were to      drop significantly below our current expectations (approximately 90%), it      is reasonably likely we would conclude an impairment was      present.  At December 31, 2009 the asset carrying value of WCS      was $129.7 million. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | · | Income taxes – We      recognize deferred taxes for future tax effects of temporary differences      between financial and income tax reporting.  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 (loss) 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 $941 million for German corporate purposes and $288 million      for German trade tax purposes at December 31, 2009).  At December 31,      2009, we have concluded that no deferred income tax asset valuation      allowance is required to be recognized with respect to such carryforwards,      principally because (i) such carryforwards have an indefinite carryforward      period, (ii) we have utilized a portion of such carryforwards during the      most recent three-year period and (iii) we      currently expect to utilize the remainder of such carryforwards over the      long term.  However, prior to the complete utilization of these      carryforwards, particularly if the economic recovery were to be      short-lived or we were to generate 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 applicable GAAP for      accounting for contingencies, we record accruals      for these liabilities when estimated future expenditures associated with      such contingencies become probable, and we can reasonably estimate the      amounts of such future expenditures.  However, new information      may become available to us, or circumstances (such as applicable laws and      regulations) may change, thereby resulting in an increase or decrease in      the amount we are required to accrue for such matters (and therefore a      decrease or increase in our reported net income in the period of such      change). At December 31, 2009 we have recorded total accrued environmental      liabilities of $48.9 million. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Chemicals      – allowance for doubtful accounts, reserves for obsolete or unmarketable      inventories, impairment of equity method investments, 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      sales and production volumes; |
|--------|--------|-----------------------------------------|

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

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

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

----

|                                                                                          |   | Years ended December 31,   |    |   | % Change |   |
|-----------------------------------------------------------------------------------------------|--------|----------------------------|---------|--------|----------|--------|
|                                                                                          |   | 2007                       |    |   | 2008     |   |   | 2009 |   |   |   | 2007-08 |   |   |   | 2008-09 |   |
|                                                                                          |   | (Dollars      in millions) |    |   |     |   |   |   |   |   |   |
|                                                                                          |   |                       |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Net sales                                                                                |   | $                          | 1,310.3 |   |     | $      | 1,316.9 |   |   | $ | 1,142.0 |   |   |   | 1 | % |   |   | (13 | )% |
| Cost of sales                                                                       |   |                       | 1,062.2 |   |     |   | 1,098.7 |   |   |   | 1,014.0 |   |   |   | 3 | % |   |   | (8 | )% |
|                                                                                          |   |                       |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross margin                                                                             |   | $                          | 248.1   |   |     | $      | 218.2 |   |   | $ | 128.0 |   |   |   | (12 | )% |   |   | (41 | )% |
|                                                                                          |   |                       |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating income      (loss)                                                             |   | $                          | 88.6    |   |     | $      | 52.0 |   |   | $ | (10.6 | ) |   |   | (41 | )% |   |   |   |   |
|                                                                                          |   |                       |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Percent of net sales:                                                          |   |                       |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Cost of       sales                                                     |   |                       | 81      | %      |     |   | 83 | % |   |   | 89 | % |   |   |   |   |   |   |   |   |
|   Gross margin                                                                 |   |                       | 19      | %      |     |   | 17 | % |   |   | 11 | % |   |   |   |   |   |   |   |   |
|   Operating income      (loss)                                                 |   |                       | 7       | %      |     |   | 4 | % |   |   | (1 | )% |   |   |   |   |   |   |   |   |
|                                                                                          |   |                       |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TiO2 operating statistics:                                                          |   |                       |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Sales volumes*                                                               |   |                       | 519     |   |     |   | 478 |   |   |   | 445 |   |   |   | (8 | )% |   |   | (7 | )% |
|   Production volumes*                                                          |   |                       | 512     |   |     |   | 514 |   |   |   | 402 |   |   |   | - | % |   |   | (22 | )% |
|   Production rate as    percent of capacity |   |                       | 98      | %      |     |   | 97 | % |   |   | 76 | % |   |   |   |   |   |   |   |   |
|                                                                                          |   |                       |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Percent change in TiO2 net sales:                                    |   |                       |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   TiO2 product pricing                                                    |   |                       |    |   |     |   |   |   |   |   |   |   |   |   | 2 | % |   |   | (1 | )% |
|   TiO2 sales volumes                                                      |   |                       |    |   |     |   |   |   |   |   |   |   |   |   | (8 | ) |   |   | (7 | ) |
|   TiO2 product mix                                                        |   |                       |    |   |     |   |   |   |   |   |   |   |   |   | 2 |   |   |   | (2 | ) |
| Changes      in currency exchange rates                                                       |   |                       |    |   |     |   |   |   |   |   |   |  5 |   |   |   | (3 | ) |
|                                                                                          |   |                       |    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                                                         |   |                       |    |   |     |   |   |   |   |   |   |  1 | % |   |   | (13 | )% |

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

|                              |   | Impact of changes in foreign currency – 2007 vs.      2008 (in millions) |   |
|-----------------------------------|--------|--------------------------------------------------------------------------------|--------|
|                              |   |  Transaction gains/(losses)      recognized                               |   |   | Translationgain/loss-impact      of rate |   |   | Total      currencyImpact |   |
|                              |   | 2007                                                                           |   |   | 2008 |   |   | Change |   |   | changes |   |   | 2008 vs 2009 |   |
|                              |   |                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                              |   |                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Impact      on:                   |   |                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      sales                    |   | $                                                                              | -      |   |   | $ | - |   |   | $ | - |   |   | $ | 61 |   |   | $ | 61 |   |
| Operating income      (loss) |   |                                                                           | -      |   |   |   | 1 |   |   |   | 1 |   |   |   | (5 | ) |   |   | (4 | ) |

|                                     |   | Years ended December 31,   |   |   | % Change |   |
|------------------------------------------|--------|----------------------------|--------|--------|----------|--------|
|                                     |   | 2007                       |   |   | 2008     |   |   | 2009 |   |   |   | 2007-08 |   |   |   | 2008-09 |   |
|                                     |   | (Dollars      in millions) |   |   |     |   |   |   |   |   |   |
|                                     |   |                       |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      sales                           |   | $                          | 177.7  |   |     | $      | 165.5 |   |   | $ | 116.1 |   |   |   | (7 | )% |   |   | (30 | )% |
| Cost      of sales                       |   |                       | 132.4  |   |     |   | 125.7 |   |   |   |  92.3 |   |   |   | (5 | )% |   |   | (27 | )% |
|                                     |   |                       |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross      margin                        |   | $                          | 45.3   |   |     | $      | 39.8 |   |   | $ | 23.8 |   |   |   | (12 | )% |   |   | (40 | )% |
|                                     |   |                       |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income (loss)             |   | $                          | 16.0   |   |     | $      | 5.5 |   |   | $ | (4.0 | ) |   |   | (66 | )% |   |   |   |   |
|                                     |   |                       |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Percent      of net sales:               |   |                       |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Cost      of sales           |   |                       | 75     | %      |     |   | 76 | % |   |   | 80 | % |   |   |   |   |   |   |   |   |
|   Gross      margin            |   |                       | 25     | %      |     |   | 24 | % |   |   | 20 | % |   |   |   |   |   |   |   |   |
|   Operating      income (loss) |   |                       | 9      | %      |     |   | 3 | % |   |   | (3 | )% |   |   |   |   |   |   |   |   |

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

| ·   | approximately      $4.6 million of patent litigation expenses relating to Furniture      Component; and |
|--------------------|---------------------------------------------------------------------------------------------------------|

| ·   | a      write-down on assets held for sale of approximately    $717,000. |
|--------------------|-------------------------------------------------------------------------|

| ·   | a      $3.8 million reduction in fixed manufacturing expenses in response to the      lower sales volume; |
|--------------------|-----------------------------------------------------------------------------------------------------------|

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

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

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

----

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

|                  |   | Impact of changes in foreign currency – 2007 vs.      2008 (in millions) |   |
|-----------------------|--------|--------------------------------------------------------------------------------|--------|
|                  |   | Transaction gains/(losses)      recognized                                     |   |   | Translation      gain/loss-impact      of rate |   |   | Totalcurrencyimpact |   |
|                  |   | 2007                                                                           |   |   | 2008 |   |   | Change |   |   | changes |   |   | 2007 vs 2008 |   |
|                  |   |                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Impact      on:       |   |                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      sales        |   | $                                                                              | -      |   |   | $ | - |   |   | $ | - |   |   | $ | .4 |   |   | $ | .4 |   |
| Operating      income |   |                                                                           | (1.1   | ) |   |   | .7 |   |   |   | 1.8 |   |   |   | (.5 | ) |   |   | 1.3 |   |
|                  |   |                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                |   | Years ended December 31, |   |
|---------------------|--------|--------------------------|--------|
|                |   | 2007                     |   |   | 2008 |   |   | 2009 |   |
|                |   | (In      millions)       |   |
|                |   |                     |   |   |   |   |   |   |   |
| Net      sales      |   | $                        | 4.2    |   |   | $ | 2.9 |   |   | $ | 14.0 |   |
| Cost      of sales  |   |                     | 11.7   |   |   |   | 14.7 |   |   |   | 29.4 |   |
|                |   |                     |   |   |   |   |   |   |   |   |   |   |
| Gross      margin   |   | $                        | (7.5   | ) |   | $ | (11.8 | ) |   | $ | (15.4 | ) |
|                |   |                     |   |   |   |   |   |   |   |   |   |   |
| Operating      loss |   | $                        | (14.1  | ) |   | $ | (21.5 | ) |   | $ | (27.0 | ) |

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

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

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

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

| ·   | The      component of our defined benefit pension cost related to the expected      return on plan assets was higher for 2008 as compared to 2007 due to the      fair value of plan assets being higher at the beginning of 2008 as      compared to the beginning of 2007;and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      component of our defined benefit pension cost related to the amortization      of unrecognized net actuarial losses was lower for 2008 as compared to      2007 primarily due to the aggregate $75.1 million actuarial gain we      recognized during 2007 related to the aggregate projected benefit      obligation of all of our defined benefit pension plans, which actuarial      gain was primarily due to the significant increase in the weighted average      discount rate used in the determination of the projected benefit      obligation from 4.8% at December 31, 2006 to 5.6% at December 31, 2007 and      which actuarial gain began to be amortized into our periodic pension      expense in 2008. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

----

|                      | Discount      rates used for:                                 |
|---------------------------|---------------------------------------------------------------|
|                      | Obligations      atDecember      31, 2007 and expense in 2008 |   | Obligations      atDecember      31, 2008 and expense in 2009 |   | Obligations      atDecember      31, 2009 and expense in 2010 |
|                      |                                                          |   |   |   |   |
| Kronos      and NL plans: |                                                          |   |   |   |
|   Germany       | 5.5%                                                          |   | 5.8% |   | 5.5% |
|   Canada        | 5.3                                                      |   | 6.5 |   | 6.0 |
|   Norway        | 5.5                                                      |   | 5.8 |   | 5.3 |
|   U.S.          | 6.1                                                      |   | 6.1 |   | 5.7 |

|   | · | During      2009, substantially all of the Kronos and NL plan assets in the U.S. were      invested in The Combined Master Retirement Trust (“CMRT”), a collective      investment trust sponsored by Contran to permit the collective investment      by certain master trusts that fund certain employee benefits plans      sponsored by Contran and certain of its affiliates.  Harold C.      Simmons is the sole trustee of the CMRT and is a member of the CMRT      investment committee.  The CMRT’s long-term investment objective      is to provide a rate of return exceeding a composite of broad market      equity and fixed income indices (including the S&P 500 and certain      Russell indices), while utilizing both third-party investment managers as      well as investments directed by Mr. Simmons.  The CMRT holds      TIMET common stock in its investment portfolio; however through December      31, 2009 both Kronos and NL invest in a portion of the CMRT which does not      include the TIMET holdings.  During the 21-year history of the      CMRT through December 31, 2009, 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 55% to equity      securities and 45% 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, 72% to fixed income securities, and the remainder primarily to      cash and liquid investments.  The expected long-term rate of      return for such investments is approximately 9.0%, 5.0%, and 3.0%,      respectively. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                 |   | 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 | % |

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

|                      |   | 2007   |   |   | 2008   |   |   | 2009   |   |
|---------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                      |   |   |   |   |   |   |   |   |   |
| Kronos      and NL plans: |   |   |   |   |   |   |   |   |   |
|   Germany       |   |   | 5.8    | %      |   |   | 5.3    | %      |   |   | 5.3 | % |
|   Canada        |   |   | 6.8    |   |   |   | 6.3    |   |   |   | 6.0 |   |
|   Norway        |   |   | 5.5    |   |   |   | 6.1    |   |   |   | 5.8 |   |
|   U.S.          |   |   | 10.0   |   |   |   | 10.0   |   |   |   | 10.0 |   |
| Medite      plan          |   |   | 10.0   |   |   |   | 10.0   |   |   |   | 10.0 |   |

----

|   | · | lower      consolidated operating income in 2009 of $77.6 million, due to the      operating losses at all of our segments in2009; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

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

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

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

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

| ·   | Kronos’      average days sales outstanding (“DSO”) decreased at December 31, 2009      compared to December 31, 2008, due to the timing of collection of accounts      receivables balances at the end of2009; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Kronos’      average number of days in inventory (“DII”) decreased at December 31, 2009      from December 31, 2008 as our TiO2      sales volumes in 2009 exceeded our production  volumes; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | CompX’s      average DSO decreased at December 31, 2009 from December 31, 2008 the      reduction in our average days sales outstanding was the result of efforts      to increase accounts receivable collection efforts in order to reduce      exposure to bad debts in light of the challenging economic environment;      and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | CompX’s      average DII decreased at December 31, 2009 from December 31, 2008      primarily due to inventory management controls in order to ensure      inventory balances are aligned with the current business needs in light of      the reduction in customer demand. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                     | December      31,                              |   | December      31,                              |   | December      31,                              |
|------------------------------------------|------------------------------------------------|--------|------------------------------------------------|--------|------------------------------------------------|
|                                     |     2007    |   |     2008    |   |     2009    |
|                                     |                                           |   |                                           |   |                                           |
| Kronos:                                  |                                           |   |                                           |   |                                           |
|   Days      sales outstanding  | 63      days                                   |   |  64      days                             |   | 56      days                                   |
|   Days      sales in inventory | 59      days                                   |   | 113      days                                  |   | 58      days                                   |
|                                     |                                           |   |                                           |   |                                           |
| CompX:                                   |                                           |   |                                           |   |                                           |
|   Days      sales outstanding  | 44      days                                   |   | 41      days                                   |   | 37      days                                   |
|   Days      sales in inventory | 63      days                                   |   | 70      days                                   |   | 64      days                                   |

|                                                  |   | Years ended December 31, |   |
|-------------------------------------------------------|--------|--------------------------|--------|
|                                                  |   | 2007                     |   |   | 2008 |   |   | 2009 |   |
|                                                  |   | (In      millions)       |   |
|                                                  |   |                     |   |   |   |   |   |   |   |
| Cash      provided by (used in) operating activities: |   |                     |   |   |   |   |   |   |   |
|   Kronos                                    |   | $                        | 89.9   |   |   | $ | 2.7 |   |   | $ | 86.3 |   |
|   NL      Parent                            |   |                     | (11.2  | ) |   |   | (11.5 | ) |   |   | (10.4 | ) |
|   CompX                                     |   |                     | 11.9   |   |   |   | 15.7 |   |   |   | 15.3 |   |
|   Waste      Control Specialists            |   |                     | (11.2  | ) |   |   | (9.9 | ) |   |   | (11.7 | ) |
|   Tremont                                   |   |                     | (3.1   | ) |   |   | (.7 | ) |   |   | 7.6 |   |
|   Valhi      exclusive of subsidiaries      |   |                     | 59.9   |   |   |   | 54.6 |   |   |   | 24.8 |   |
|   Other                                     |   |                     | (.7    | ) |   |   | (1.6 | ) |   |   | .6 |   |
|   Eliminations                              |   |                     | (72.0  | ) |   |   | (73.8 | ) |   |   | (36.5 | ) |
|                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |
|       Total             |   | $                        | 63.5   |   |   | $ | (24.5 | ) |   | $ | 76.0 |   |
|                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |

----

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

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

|   | · | CompX      purchased common stock through its 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 for $23.3million; |
|--------|--------|----------------------------------------------------|

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

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

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

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

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

|   | · | in      April and July 2009, we borrowed an aggregate of $30 million principal      amount through unsecured demand promissory notes payable to Contran    ; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

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

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

|   | · | KII’s      euro 400 million aggregate principal amount of its 6.5% Senior Secured      Notes ($574.6 million) due in 2013; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------|

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

|   | · | KII's      European revolving credit facility ($13.0 million outstanding) due in      2011; |
|--------|--------|---------------------------------------------------------------------------------------------|

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

|   | · | Kronos’      U.S. revolving credit facility ($16.7 million outstanding) due in      2011; |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | Valhi’s      revolving credit facility with Contran ($54.9 million outstanding) due in      2011; |
|--------|--------|---------------------------------------------------------------------------------------------------------|

|   | · | A      wholly-owned subsidiary of Valhi's promissory demand notes payable to      Contran ($30 million outstanding) due in 2011;  and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------|

|   | · | approximately      $9.5 million of other indebtedness. |
|--------|--------|--------------------------------------------------------|

|   | · | $90.6(1)      million under Kronos’ various U.S. and non-U.S. credit facilities;      and |
|--------|--------|-------------------------------------------------------------------------------------------------|

|   | · | $15.1      million under Valhi’s Contran creditfacility. |
|--------|--------|----------------------------------------------------------------|

| (1) | Based      on euro 51 million ($73.5 million at December 31, 2009) maximum borrowing      availability which, under the Amendment, we are currently limited to until      we are in compliance with certain specified financial covenants and, in      any event, no earlier then March 31,2010. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                        |   |               |      |
|-------------------------------------------------------------|--------|--------------------|-----------|
|                                                        |   | Amount             |      |
|                                                        |   | (In      millions) |      |
|                                                        |   |               |      |
|   Valhi      exclusive of its subsidiaries        |   | $                  | 12.1      |   |
|   Kronos                                          |   |               | 32.8      |   |
|   NL      Parent                                  |   |               | 34.3      |   |
|   CompX                                           |   |               | 20.8      |   |
|   Tremont                                         |   |               | 8.9       |   |
|   Waste      Control Specialists                  |   |               |  4.6 |   |
|                                                        |   |               |      |   |
| Total      cash, cash equivalents and marketable securities |   | $                  | 113.5     |   |

|   | · | $43      million in our Chemicals Segment, including approximately $12 million in      the area of environmental protection and  compliance.; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | · | $42      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                                                                                      |   | 2010               |               |   |   | 2011/2012 |   |   |   | 2013/2014 |   |   | 2015      and after |   |   | Total |   |
|                                                                                                              |   | (In      millions) |               |
|                                                                                                              |   |               |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Indebtedness(1):                                                                                                  |   |               |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Principal                                                                                             |   | $                  | 2.5                |   |   | $ | 121.2 |   |   | $ | 616.5 |   |   | $ | 250.7 |   |   | $ | 990.9 |   |
|   Interest                                                                                              |   |               | 65.9               |   |   |   | 125.2 |   |   |   | 60.5 |   |   |   | 282.0 |   |   |   | 533.6 |   |
|                                                                                                              |   |               |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      leases(2)                                                                                          |   |               | 5.8                |   |   |   | 6.7 |   |   |   | 3.2 |   |   |   | 20.0 |   |   |   | 35.7 |   |
|                                                                                                              |   |               |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Kronos’      long-term supply contracts      for the purchase of      TiO2      feedstock(3) |   |               |    227.0 |   |   |   |    208.0 |   |   |   |    114.0 |   |   |   |    - |   |   |   |    549.0 |   |
|                                                                                                              |   |               |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Kronos’      long-term service and      other supply contracts(4)                                      |   |               |  87.7         |   |   |   |  51.4 |   |   |   |  30.1 |   |   |   |  7.2 |   |   |   |  176.4 |   |
|                                                                                                              |   |               |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CompX      raw material and other      purchase commitments(5)                                               |   |               |  11.4         |   |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   |  11.4 |   |
|                                                                                                              |   |               |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed      asset acquisitions(2)                                                                                  |   |               | 19.1               |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 19.1 |   |
|                                                                                                              |   |               |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Estimated      tax obligations(6)                                                                                 |   |               |  3.9          |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3.9 |   |
|                                                                                                              |   |               |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                                                                             |   | $                  | 423.3              |   |   | $ | 512.5 |   |   | $ | 824.3 |   |   | $ | 559.9 |   |   | $ | 2,320.0 |   |

| (1) | The      amount shown for indebtedness involving revolving credit facilities is      based upon the actual amount outstanding at December 31, 2009, and the      amount shown for interest for any outstanding variable-rate indebtedness      is based upon the December 31, 2009 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 ($574.6 million at      December 31, 2009), 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 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, 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, 2009 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 at December 31, 2009, which is assumed to be paid      during 2010. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (1) | Our      obligations under the Louisiana Pigment Company, L.P. joint venture, as      the timing and amount of such purchases are unknown and dependent on,      among other things, the amount of TiO2      produced by the joint venture in the future, and the joint      venture’s future cost of producing such TiO2.  However,      the table of contractual commitments does include amounts related to our      share of the joint venture’s ore requirements necessary for it to produce      TiO2      for us.  See Notes 7 and 17 to our Consolidated Financial      Statements and “Business      – Chemicals – Kronos Worldwide,Inc.” |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (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 $26.9 million to our defined benefit pension      and OPEB plans during 2010. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (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 |   | $                   | 574.6  |   |            | $      | 466.2  |               |   |   | 6.5 | % |   |   | 2013 |   |
|   Valhi loans from Snake River                                          |   |                | 250.0  |   |            |   | 250.0  |               |   |   | 9.4 |   |   |   | 2027 |   |
|     Fixed-rate                                                                    |   |                | 824.6  |   |            |   | 716.2  |               |   |   | 7.4 | % |   |   |   |   |
|                                                                                                  |   |                |   |   |            |   |   |               |   |   |   |   |   |   |   |   |
| Variable-rate indebtedness -                                                                |   |                |   |   |            |   |   |               |   |   |   |   |   |   |   |   |
|   CompX      promissory note to TIMET                                                       |   |                | 42.2   |   |            |   | 42.2   |               |   |   | 1.3 | % |   |   | 2014 |   |
|   Kronos Euro      denominated revolver                                           |   |                | 13.0   |   |            |   | 13.0   |               |   |   | 3.5 |   |   |   | 2011 |   |
|   Kronos U.S. revolver                                                            |   |                | 16.7   |   |            |   | 16.7   |               |   |   | 3.3 |   |   |   | 2011 |   |
|   Valhi      Contran promissory notes                                                       |   |                | 30.0   |   |            |   | 30.0   |               |   |   | 1.8 |   |   |   | 2011 |   |
|   Valhi Contran      credit facility                                                   |   |                | 54.9   |   |            |   | 54.9   |               |   |   | 5.8 |   |   |   | 2011 |   |
|                                                                                                  |   |                |   |   |            |   |   |               |   |   |   |   |   |   |   |   |
|     Variable-rate                                                                 |   |                | 156.8  |   |            |   | 156.8  |               |   |   | 3.3 | % |   |   |   |   |
|                                                                                                  |   |                |   |   |            |   |   |               |   |   |   |   |   |   |   |   |
|     Total                                                                         |   | $                   | 981.4  |   |            | $      | 873.0  |               |   |   | 6.7 | % |   |   |   |   |

| ·   | an      aggregate of $48.0 million for an equivalent value of Canadian dollars at      an exchange rate of Cdn. $1.04 per U.S. dollar.  These contracts      with Wachovia Bank, National Association mature from January 2010 through      December 2010 and are subject to early redemption provisions at our      option; and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an      aggregate of $64 million for an equivalent value of Norwegian kroner at      exchange rates ranging from kroner 5.83 to kroner 6.06  per U.S.      dollar.  These contracts with DnB Nor Bank ASA mature from      February 2010 through January 2011 and are subject to early redemption      provisions at our option. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

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

----

----

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

----

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

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

|   | We      have omitted TIMET’s consolidated financial statements for the year ended      December 31, 2007, otherwise required to be filed pursuant to Rule 3-09 of      Regulation S-X, based on an exemption granted by the staff of the      SEC.  We are not required to provide any other consolidated      financial statements pursuant to Rule 3-09 of Regulation    S-X. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| Item No.  | Exhibit Index                                                                                                                                                                                                                                                                                                                                                                |
|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|      |                                                                                                                                                                                                                                                                                                                                                                         |
|  3.1 | Restated      Articles of Incorporation of Valhi, Inc. - incorporated by reference to      Exhibit 3.1 to our Current Report on Form 8-K/A (File No. 1-5467)      dated March 26, 2007 and filed by us on March 29, 2007.                                                                                                                                               |
|      |                                                                                                                                                                                                                                                                                                                                                                         |
|  3.2 | By-Laws      of Valhi, Inc. as amended - incorporated by reference to Exhibit 3.1 of      our Current Report on Form 8-K (File No. 1-5467) dated November 6,      2007.                                                                                                                                                                                                      |
|      |                                                                                                                                                                                                                                                                                                                                                                         |
|  4.1 | Indenture      dated April 11, 2006 between Kronos International, Inc. and The Bank of      New York, as Trustee, governing Kronos International's 6.5% Senior Secured      Notes due 2013 - incorporated by reference to Exhibit 4.1 to Kronos      International, Inc.’s Current Report on Form 8-K (File No. 333-100047)      filed with the SEC on April 11, 2006. |
|      |                                                                                                                                                                                                                                                                                                                                                                         |
| 10.1      | Intercorporate Services Agreement      between Valhi, Inc. and Contran Corporation effective as of January 1,      2004 – incorporated by reference to Exhibit 10.1 to our Quarterly Report      on Form 10-Q for the quarter ended March 31,  2004.                                                                                                                   |
|      |                                                                                                                                                                                                                                                                                                                                                                         |
| 10.2      | Intercorporate      Services Agreement between Contran Corporation and NL 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 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.                                                                                             |
|      |                                                                                                                                                                                                                                                                                                                                                                         |
| 10.6      | 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   10.7 | 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.                                                                                                                                                                                                             |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   10.8 | 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.                                                                                                                                                                                                           |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   10.9 | 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.                                                                                                                                         |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.10            | 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. |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.11*           | 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.                                                                                                                                                                                                                                                                                      |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.12*           | 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).                                                                                                                                                                                                                                                                                                          |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.13*           | 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.                                                                                                                                                                                                                                                    |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.14*           | 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).                                                                                                                                                                                                                                                                                                 |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.15            | 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.                                         |
|             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 10.16            | 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                                                                                                                                                                                                                                                                                                                                                                                                     |
|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.17    | 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.                                                                                                                          |
|     |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.18    | 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.                                                                   |
|     |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.19    | 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.                                                                                                                             |
|     |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.20    | 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.                                                                                                                                            |
|     |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.21    | 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.                                                                                                                                       |
|     |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.22    | 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.                                                                                                                             |
|     |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.23    | 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. |
|     |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.24    | 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.                                        |
|     |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.25    | 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.             |
|     |                                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.26    | 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                                                                                                                                                                                                                                                                                                                                                                              |
|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.27    | 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.                                                                                         |
|     |                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.28    | 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.                                                                               |
|     |                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.29    | 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.                                                                                      |
|     |                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.30    | 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.   |
|     |                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.31    | 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. |
|     |                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.32    | 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.                |
|     |                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.33    | 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.                                                         |
|     |                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.34    | 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.                                                                       |
|     |                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.35    | 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 |
|-------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|
|                                |                                                                                                                                                                                                                                                                                                                                                                 |          |
|           10.36 | 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.                                               |          |
|                                |                                                                                                                                                                                                                                                                                                                                                                 |          |
|           10.37 | 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.                                                                              |          |
|                                |                                                                                                                                                                                                                                                                                                                                                                 |          |
|           10.38 | 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.                                               |          |
|                                |                                                                                                                                                                                                                                                                                                                                                                 |          |
| 10.39                               | 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.                  |          |
|                                |                                                                                                                                                                                                                                                                                                                                                                 |          |
| 10.40                               | 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.                                                                                       |          |
|                                |                                                                                                                                                                                                                                                                                                                                                                 |          |
| 10.41                               | 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.                                                             |          |
|                                |                                                                                                                                                                                                                                                                                                                                                                 |          |
| 10.42                               | 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. |          |
|                                |                                                                                                                                                                                                                                                                                                                                                                 |          |
| 10.43                               | 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.      |          |
|                                |                                                                                                                                                                                                                                                                                                                                                                 |          |
| 10.44                               | 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.      |          |
|                                |                                                                                                                                                                                                                                                                                                                                                                 |          |
|           10.45 | 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 |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |          |
| 10.46  | 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.                                                                                                                                                                                                                                                   |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |          |
| 10.47  | 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.                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 10.48  | 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.                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |          |
| 10.49  | 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.                                                                                                                                                                      |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |          |
| 10.50  | 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.                                                                                                                                                                    |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |          |
| 10.51  | 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.                                                                                   |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |          |
| 10.52  | Reinstated      and Amended Settlement Agreement and Release, dated June 26, 2008, by and      among NL Industries, Inc., NL Environmental Management Services, Inc., the      Sayreville Economic and Redevelopment Agency, Sayreville Seaport      Associates, L.P., and the County of Middlesex - incorporated by      reference to Exhibit 10.35 to NL’s Annual Report on NL’s Form 10-K (File      No. 1-640) for the year ended December 31, 2009.                                                        |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |          |
| 10.53  | 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 |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |          |
| 10.54  | 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.                                                                                                                                                      |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |          |
| 10.55  | Leasehold      Mortgage, Assignment, Security Agreement and Fixture Filing, dated October      15, 2008, by Sayreville Seaport Associates, L.P. in favor of NL      Industries, Inc. and NL Environmental Management Services, Inc. -      incorporated by reference to Exhibit 10.38 to NL’s Annual Report on Form      10-K (File No. 1-640) for the year ended December 31,2009.                                                                                                                                       |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |          |
| 10.56  | Intercreditor,      Subordination and Standstill Agreement, dated October 15, 2008, by NL      Industries, Inc., NL Environmental Management Services, Inc., Bank of      America, N.A. on behalf of itself and the other financial institutions,      and acknowledged and consented to by Sayreville Seaport Associates, L.P.      and J. Brian O'Neill - incorporated by reference to Exhibit 10.39 to NL’s      Annual Report on Form 10-K (File No. 1-640) for the year ended December      31, 2009.                     |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |          |
| 10.57  | Multi      Party Agreement, dated October 15, 2008 by and among Sayreville Seaport      Associates, L.P., Sayreville Seaport Associates Acquisition Company, LLC,      OPG Participation, LLC, J. Brian O'Neill, NL Industries, Inc., NL      Environmental Management Services, Inc., The Prudential Insurance Company      of America, Sayreville PRISA II LLC.   - incorporated by      reference to Exhibit 10.40 to NL’s Annual Report on Form 10-K (File No.      1-640) for the year ended December 31, 2009. |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |          |
| 10.58  | Guaranty      Agreement, dated October 15, 2008, by J. Brian O’Neill in favor of NL      Industries, Inc. and NL Environmental Management Services, Inc. -      incorporated by reference to Exhibit 10.7 to NL’s Current Report on Form      8-K, File No. 1-640, that was filed with the U.S. Securities and Exchange      Commission on October 16, 2008.                                                                                                                                                             |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |          |
| 21.1** | Subsidiaries      of Valhi, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |          |
| 23.1** | Consent      of PricewaterhouseCoopers LLP with respect to Valhi’s Consolidated      Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                      |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |          |
| 31.1** | Certification                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |          |
| 31.2** | Certification                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |          |
| 32.1** | Certification                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |          |

----

|   | VALHI,      INC.(Registrant)                                                              |
|--------|-------------------------------------------------------------------------------------------|
|   |                                                                                      |
|   | By: /s/ Steven L.      Watson           |
|   | Steven      L. Watson, March 10, 2010(President      and Chief Executive Officer)         |

| /s/ Harold C.      Simmons                            |   | /s/ Steven L.      Watson                      |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------|
| Harold      C. Simmons, March 10, 2010(Chairman      of the Board)                                                                         |   | Steven      L. Watson, March 10, 2010(President,      Chief Executive Officer and      Director)                     |
|                                                                                                                                       |   |                                                                                                                      |
| /s/ Thomas E.      Barry                    |   | /s/ Glenn R.      Simmons                      |
| Thomas      E. Barry, March 10, 2010 (Director)                                                                                       |   | Glenn      R. Simmons, March 10, 2010(Vice      Chairman of the Board)                                                    |
|                                                                                                                                       |   |                                                                                                                      |
| /s/ Norman S.      Edelcup                            |   | /s/ Bobby D.      O’Brien                |
| Norman      S. Edelcup, March 10, 2010(Director)                                                                                           |   | Bobby      D. O’Brien, March 10, 2010(Vice      President and Chief Financial Officer, Principal FinancialOfficer)  |
|                                                                                                                                       |   |                                                                                                                      |
| /s/ W. Hayden      McIlroy                            |   | /s/ Gregory M.      Swalwell                                  |
| W.      Hayden McIlroy, March 10, 2010(Director)                                                                                           |   | Gregory      M. Swalwell, March 10, 2010(Vice      President and Controller, Principal      Accounting Officer)      |
|                                                                                                                                       |   |                                                                                                                      |
| /s/ J. Walter Tucker,      Jr.                                            |   |                                                                                                                      |
| J.      Walter Tucker, Jr. March 10, 2010 (Director)                                                                                  |   |                                                                                                                      |
|                                                                                                                                       |   |                                                                                                                      |

----

| Financial      Statements                                                                                                                                                                                  | Page      |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------|
|                                                                                                                                                                                                       |      |
| Report of Independent Registered      Public Accounting Firm                                                                                                                                               | F-2       |
|                                                                                                                                                                                                       |      |
| Consolidated Balance Sheets -      December 31, 2008 and 2009                                                                                                                                              | F-3       |
|                                                                                                                                                                                                       |      |
| Consolidated Statements of      Operations –Years ended December 31, 2007,      2008 and 2009                                                                                                        |  F-5 |
|                                                                                                                                                                                                       |      |
| Consolidated Statements of      Comprehensive Income (Loss) –Years ended December 31, 2007,      2008 and 2009                                                                                       |  F-6 |
|                                                                                                                                                                                                       |      |
| Consolidated Statements of Equity      –Years ended December 31, 2007,      2008 and 2009                                                                                                            |  F-7 |
|                                                                                                                                                                                                       |      |
| Consolidated Statements of Cash      Flows –Years ended December 31, 2007,      2008 and 2009                                                                                                        |  F-8 |
|                                                                                                                                                                                                       |      |
| Notes to Consolidated Financial      Statements                                                                                                                                                            | F-11      |
|                                                                                                                                                                                                       |      |
| Financial      Statement Schedule                                                                                                                                                                          |      |
|                                                                                                                                                                                                       |      |
| Schedule I – Condensed Financial      Information of Registrant                                                                                                                                      | S-1       |
|                                                                                                                                                                                                       |      |
| We omitted Schedules II, III and      IV because they are not applicable or the required amounts are either not      material or are presented in the Notes to the Consolidated Financial      Statements. |      |

----

----

| ASSETS                                                              |   | December 31, |    |
|---------------------------------------------------------------------|--------|--------------|---------|
|                                                                |   | 2008         |    |   | 2009 |   |
|                                                                |   |         |    |   |   |   |
| Current      assets:                                                |   |         |    |   |   |   |
|   Cash      and cash equivalents                          |   | $            | 37.0    |   |   | $ | 68.7 |   |
|   Restricted      cash equivalents                        |   |         | 9.4     |   |   |   | 8.9 |   |
|   Marketable      securities                              |   |         | 8.8     |   |   |   | 6.1 |   |
|   Accounts      and other receivables, net                |   |         | 203.5   |   |   |   | 204.1 |   |
|   Refundable      income taxes                            |   |         | 1.6     |   |   |   | 2.6 |   |
|   Receivable      from affiliates                         |   |         | .1      |   |   |   | 16.2 |   |
|   Inventories,      net                                   |   |         | 408.5   |   |   |   | 312.0 |   |
|   Prepaid      expenses and other                         |   |         | 15.4    |   |   |   | 17.7 |   |
|   Deferred      income taxes                              |   |         | 12.1    |   |   |   | 11.9 |   |
|                                                                |   |         |    |   |   |   |   |   |
|       Total      current assets       |   |         | 696.4   |   |   |   | 648.2 |   |
|                                                                |   |         |    |   |   |   |   |   |
| Other      assets:                                                  |   |         |    |   |   |   |   |   |
|   Marketable      securities                              |   |         | 272.0   |   |   |   | 279.5 |   |
|   Investment      in affiliates                           |   |         | 124.0   |   |   |   | 116.1 |   |
|   Goodwill                                                |   |         | 396.8   |   |   |   | 396.9 |   |
|   Other      intangible assets                            |   |         | 2.0     |   |   |   | 1.4 |   |
|   Deferred      income taxes                              |   |         | 166.4   |   |   |   | 185.5 |   |
|   Pension      asset                                      |   |         | -       |   |   |   | .3 |   |
|   Other      assets                                       |   |         | 90.8    |   |   |   | 101.8 |   |
|                                                                |   |         |    |   |   |   |   |   |
|       Total      other assets         |   |         | 1,052.0 |   |   |   | 1,081.5 |   |
|                                                                |   |         |    |   |   |   |   |   |
| Property      and equipment:                                        |   |         |    |   |   |   |   |   |
|   Land                                                    |   |         | 46.4    |   |   |   | 56.3 |   |
|   Buildings                                               |   |         | 268.5   |   |   |   | 293.8 |   |
|   Equipment                                               |   |         | 1,025.3 |   |   |   | 1,176.1 |   |
|   Mining      properties                                  |   |         | 30.3    |   |   |   | 68.4 |   |
|   Construction      in progress                           |   |         | 58.2    |   |   |   | 20.7 |   |
|                                                                |   |         | 1,428.7 |   |   |   | 1,615.3 |   |
|   Less      accumulated depreciation                      |   |         | 787.7   |   |   |   | 934.7 |   |
|                                                                |   |         |    |   |   |   |   |   |
|       Net      property and equipment |   |         | 641.0   |   |   |   | 680.6 |   |
|                                                                |   |         |    |   |   |   |   |   |
|       Total      assets               |   | $            | 2,389.4 |   |   | $ | 2,410.3 |   |
|                                                                |   |         |    |   |   |   |   |   |

----

|    LIABILITIES      AND STOCKHOLDERS' EQUITY                                                                                                                                      |   | December 31,  |             |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|------------------|
|                                                                                                                                                                                             |   | 2008               |             |   | 2009 |   |
|                                                                                                                                                                                             |   |               |             |   |   |   |
| Current      liabilities:                                                                                                                                                                        |   |               |             |   |   |   |
|   Current      maturities of long-term debt                                                                                                                                            |   | $                  | 9.4              |   |   | $ | 2.5 |   |
|   Accounts      payable                                                                                                                                                                |   |               | 121.0            |   |   |   | 124.5 |   |
|   Accrued      liabilities                                                                                                                                                             |   |               | 128.4            |   |   |   | 137.5 |   |
|   Payable      to affiliates                                                                                                                                                           |   |               | 25.8             |   |   |   | 26.1 |   |
|   Income      taxes                                                                                                                                                                    |   |               | 4.9              |   |   |   | 3.9 |   |
|   Deferred      income taxes                                                                                                                                                           |   |               | 4.7              |   |   |   | 4.7 |   |
|                                                                                                                                                                                             |   |               |             |   |   |   |   |   |
|       Total      current liabilities                                                                                                                               |   |               | 294.2            |   |   |   | 299.2 |   |
|                                                                                                                                                                                             |   |               |             |   |   |   |   |   |
| Noncurrent      liabilities:                                                                                                                                                                     |   |               |             |   |   |   |   |   |
|   Long-term      debt                                                                                                                                                                  |   |               | 911.0            |   |   |   | 988.4 |   |
|   Deferred      income taxes                                                                                                                                                           |   |               | 346.6            |   |   |   | 360.7 |   |
|   Accrued      pension costs                                                                                                                                                           |   |               | 146.1            |   |   |   | 130.5 |   |
|   Accrued      environmental costs                                                                                                                                                     |   |               | 41.3             |   |   |   | 37.9 |   |
|   Accrued      postretirement benefits costs                                                                                                                                           |   |               | 29.3             |   |   |   | 25.5 |   |
|   Payable      to affiliate                                                                                                                                                            |   |               | -                |   |   |   | .3 |   |
|   Other                                                                                                                                                                                |   |               | 78.8             |   |   |   | 69.4 |   |
|                                                                                                                                                                                             |   |               |             |   |   |   |   |   |
|       Total      noncurrent liabilities                                                                                                                            |   |               | 1,553.1          |   |   |   | 1,612.7 |   |
|                                                                                                                                                                                             |   |               |             |   |   |   |   |   |
| Equity:                                                                                                                                                                                          |   |               |             |   |   |   |   |   |
|   Valhi      stockholders’ equity:                                                                                                                                               |   |               |             |   |   |   |   |   |
|     Preferred      stock, $.01 par value; 5,000     shares authorized;      5,000 shares issued                                                |   |               |  667.3      |   |   |   |  667.3 |   |
|     Common      stock, $.01 par value; 150.0 million     shares authorized;      118.4 million     shares      issued |   |               |    1.2 |   |   |   |    1.2 |   |
|     Additional      paid-in capital                                                                                                                                          |   |               | -                |   |   |   | - |   |
|     Accumulated      deficit                                                                                                                                                 |   |               | (109.8           | ) |   |   | (197.7 | ) |
|     Accumulated      other comprehensive loss                                                                                                                                |   |               | (51.0            | ) |   |   | (3.2 | ) |
|     Treasury      stock, at cost – 4.1 million shares                                                                                                                  |   |               | (38.9            | ) |   |   | (38.9 | ) |
|                                                                                                                                                                                             |   |               |             |   |   |   |   |   |
|       Total      Valhi stockholders’ equity                                                                                                                  |   |               | 468.8            |   |   |   | 428.7 |   |
|                                                                                                                                                                                             |   |               |             |   |   |   |   |   |
|   Noncontrolling      interest in subsidiaries                                                                                                                                         |   |               | 73.3             |   |   |   | 69.7 |   |
|                                                                                                                                                                                             |   |               |             |   |   |   |   |   |
|       Total      equity                                                                                                                                            |   |               | 542.1            |   |   |   | 498.4 |   |
|                                                                                                                                                                                             |   |               |             |   |   |   |   |   |
|       Total      liabilities and equity                                                                                                                            |   | $                  | 2,389.4          |   |   | $ | 2,410.3 |   |
|                                                                                                                                                                                             |   |               |             |   |   |   |   |   |

----

|                                                                                         |   |                     |        |   |   |   |        |   |   |
|----------------------------------------------------------------------------------------------|--------|--------------------------|-------------|--------|--------|--------|-------------|--------|--------|
|                                                                                         |   | Years ended December 31, |        |
|                                                                                         |   | 2007                     |        |   | 2008   |   |        | 2009   |   |
|                                                                                         |   |                     |        |   |   |   |
|                                                                                         |   |                     |        |   |   |   |        |   |   |
| Revenues      and other income:                                                              |   |                     |        |   |   |   |        |   |   |
|   Net      sales                                                                   |   | $                        | 1,492.2     |   |   | $      | 1,485.3     |   |   | $ | 1,272.1 |   |
|   Other      income, net                                                           |   |                     | 42.3        |   |   |   | 93.7        |   |   |   | 70.8 |   |
|   Equity      in earnings of:                                                      |   |                     |        |   |   |   |        |   |   |   |   |   |
|     Titanium      Metals Corporation ("TIMET")                           |   |                     | 26.9        |   |   |   | -           |   |   |   | - |   |
|     Other                                                                |   |                     | 1.7         |   |   |   | (1.0        | )      |   |   | (1.1 | ) |
|                                                                                         |   |                     |        |   |   |   |        |   |   |   |   |   |
|     Total      revenues and other income                                 |   |                     | 1,563.1     |   |   |   | 1,578.0     |   |   |   | 1,341.8 |   |
|                                                                                         |   |                     |        |   |   |   |        |   |   |   |   |   |
| Costs      and expenses:                                                                     |   |                     |        |   |   |   |        |   |   |   |   |   |
|   Cost      of sales                                                               |   |                     | 1,206.3     |   |   |   | 1,239.1     |   |   |   | 1,135.7 |   |
|   Selling,      general and administrative                                         |   |                     | 238.4       |   |   |   | 238.5       |   |   |   | 227.6 |   |
|   Goodwill      impairment                                                         |   |                     | -           |   |   |   |  10.1  |   |   |   |  - |   |
|   Assets      held for sale write-down                                             |   |                     | -           |   |   |   | -           |   |   |   |  .7 |   |
|   Interest                                                                         |   |                     | 64.4        |   |   |   | 68.7        |   |   |   | 66.7 |   |
|                                                                                         |   |                     |        |   |   |   |        |   |   |   |   |   |
|     Total      costs and expenses                                        |   |                     | 1,509.1     |   |   |   | 1,556.4     |   |   |   | 1,430.7 |   |
|                                                                                         |   |                     |        |   |   |   |        |   |   |   |   |   |
|     Income      (loss) before income taxes                               |   |                     | 54.0        |   |   |   | 21.6        |   |   |   | (88.9 | ) |
|                                                                                         |   |                     |        |   |   |   |        |   |   |   |   |   |
| Provision      for income taxes (benefit)                                                    |   |                     | 103.2       |   |   |   | 16.7        |   |   |   | (50.8 | ) |
|                                                                                         |   |                     |        |   |   |   |        |   |   |   |   |   |
|     Net      income (loss)                                               |   |                     | (49.2       | )      |   |   | 4.9         |   |   |   | (38.1 | ) |
|                                                                                         |   |                     |        |   |   |   |        |   |   |   |   |   |
| Noncontrolling      interest in net income (loss) of subsidiaries                            |   |                     | (3.5        | )      |   |   |  5.7   |   |   |   | (3.9 | ) |
|                                                                                         |   |                     |        |   |   |   |        |   |   |   |   |   |
|     Net      income (loss) attributable to Valhi stockholders            |   | $                        | (45.7       | )      |   | $      | (.8         | )      |   | $ | (34.2 | ) |
|                                                                                         |   |                     |        |   |   |   |        |   |   |   |   |   |
| Amounts      attributable to Valhi stockholders:                                        |   |                     |        |   |   |   |        |   |   |   |   |   |
|                                                                                         |   |                     |        |   |   |   |        |   |   |   |   |   |
|   Basic      and diluted earnings per share                                        |   | $                        | (.40        | )      |   | $      | (.01        | )      |   | $ | (.30 | ) |
|                                                                                         |   |                     |        |   |   |   |        |   |   |   |   |   |
|   Cash      dividends per share                                                    |   |                     | .40         |   |   |   | .40         |   |   |   | .40 |   |
|                                                                                         |   |                     |        |   |   |   |        |   |   |   |   |   |
|   Basic      and diluted weighted average   shares      outstanding |   |                     |  114.7 |   |   |   |  114.4 |   |   |   |  114.3 |   |
|                                                                                         |   |                     |        |   |   |   |        |   |   |   |   |   |

----

|                                                                                                  |   | Years ended December 31, |   |
|-------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                                  |   | 2007                     |   |   | 2008 |   |   | 2009 |   |
|                                                                                                  |   |                     |   |   |   |   |   |   |   |
| Net      income (loss)                                                                                |   | $                        | (49.2  | ) |   | $ | 4.9 |   |   | $ | (38.1 | ) |
|                                                                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |
| Other      comprehensive income (loss), net of tax:                                                   |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Marketable      securities                                                                |   |                     | 25.9   |   |   |   | (28.3 | ) |   |   | 7.0 |   |
|                                                                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Currency      translation                                                                 |   |                     | 33.6   |   |   |   | (38.1 | ) |   |   | 22.0 |   |
|                                                                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Defined      benefit pension plans                                                        |   |                     | 36.7   |   |   |   | (51.7 | ) |   |   | 7.7 |   |
|                                                                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Other      postretirement benefit plans                                                   |   |                     | .8     |   |   |   | 1.3 |   |   |   | 3.6 |   |
|                                                                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total      other comprehensive income (loss), net                             |   |                     | 97.0   |   |   |   | (116.8 | ) |   |   | 40.3 |   |
|                                                                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      income (loss)                                                                      |   |                     | 47.8   |   |   |   | (111.9 | ) |   |   | 2.2 |   |
|                                                                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      income (loss) attributable  to      noncontrolling interest              |   |                     | 8.1    |   |   |   | (8.6 | ) |   |   | 1.5 |   |
|                                                                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Comprehensive      income (loss) attributable   to      Valhi stockholders |   | $                        | 39.7   |   |   | $ | (103.3 | ) |   | $ | .7 |   |
|                                                                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                       |   | Valhi      Stockholders’ Equity |    |   |                    |   |    |                           |   |
|--------------------------------------------------------------------------------------------|--------|---------------------------------------|---------|--------|-------------------------|--------|---------|--------------------------------|--------|
|                                                                                       |   |  Preferred stock            |    |   |  Common stock |   |    | Additionalpaid-in capital |   |   | Retainedearnings(deficit) |   |   | Accumulatedothercomprehensiveincome (loss) |   |   |  Treasury stock |   |   | Non-controlling interest |   |   |  Total equity |   |
|                                                                                       |   |                                  |    |   |                    |   |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2006                                                          |   | $                                     | -       |   |                    | $      | 1.2     |                           |   | $ | 107.4 |   |   | $ | 839.2 |   |   | $ | (43.1 | ) |   | $ | (37.9 | ) |   | $ | 123.7 |   |   | $ | 990.5 |   |
|                                                                                       |   |                                  |    |   |                    |   |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                                                              |   |                                  | -       |   |                    |   | -       |                           |   |   | - |   |   |   | (45.7 | ) |   |   | - |   |   |   | - |   |   |   | (3.5 | ) |   |   | (49.2 | ) |
| Cash      dividends                                                                        |   |                                  | -       |   |                    |   | -       |                           |   |   | (34.2 | ) |   |   | (11.4 | ) |   |   | - |   |   |   | - |   |   |   | (8.5 | ) |   |   | (54.1 | ) |
| Dividend      of TIMET common stock                                                        |   |                                  | -       |   |                    |   | -       |                           |   |   | (55.0 | ) |   |   | (850.4 | ) |   |   | 8.0 |   |   |   | - |   |   |   | - |   |   |   | (897.4 | ) |
| Change      in accounting:                                                                 |   |                                  |    |   |                    |   |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Uncertain      tax positions provisions of   ASC      Topic 740 |   |                                  |  - |   |                    |   |  - |                           |   |   |  - |   |   |   | (1.6 | ) |   |   |  - |   |   |   |  - |   |   |   | (.1 | ) |   |   | (1.7 | ) |
|   Asset      and liability provisions of ASC   Topic      715     |   |                                  |  - |   |                    |   |  - |                           |   |   |  - |   |   |   | (2.2 | ) |   |   |  1.2 |   |   |   |  - |   |   |   | (.2 | ) |   |   | (1.2 | ) |
| Issuance      of preferred stock                                                           |   |                                  | 667.3   |   |                    |   | -       |                           |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 667.3 |   |
| Other      comprehensive income, net                                                       |   |                                  | -       |   |                    |   | -       |                           |   |   | - |   |   |   | - |   |   |   | 85.4 |   |   |   | - |   |   |   | 11.6 |   |   |   | 97.0 |   |
| Treasury      stock:                                                                       |   |                                  |    |   |                    |   |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Acquired                                                                       |   |                                  | -       |   |                    |   | -       |                           |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (11.1 | ) |   |   | - |   |   |   | (11.1 | ) |
|   Retired                                                                        |   |                                  | -       |   |                    |   | -       |                           |   |   | (9.2 | ) |   |   | (1.9 | ) |   |   | - |   |   |   | 11.1 |   |   |   | - |   |   |   | - |   |
| Equity      transactions with noncontrolling      interest, net                       |   |                                  |  - |   |                    |   |  - |                           |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   | (32.5 | ) |   |   | (32.5 | ) |
| Other,      net                                                                            |   |                                  | -       |   |                    |   | -       |                           |   |   | 1.4 |   |   |   | (.1 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 1.3 |   |
|                                                                                       |   |                                  |    |   |                    |   |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2007                                                          |   |                                  | 667.3   |   |                    |   | 1.2     |                           |   |   | 10.4 |   |   |   | (74.1 | ) |   |   | 51.5 |   |   |   | (37.9 | ) |   |   | 90.5 |   |   |   | 708.9 |   |
|                                                                                       |   |                                  |    |   |                    |   |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                                     |   |                                  | -       |   |                    |   | -       |                           |   |   | - |   |   |   | (.8 | ) |   |   | - |   |   |   | - |   |   |   | 5.7 |   |   |   | 4.9 |   |
| Cash      dividends                                                                        |   |                                  | -       |   |                    |   | -       |                           |   |   | (10.4 | ) |   |   | (35.1 | ) |   |   | - |   |   |   | - |   |   |   | (7.3 | ) |   |   | (52.8 | ) |
| Other      comprehensive loss, net                                                         |   |                                  | -       |   |                    |   | -       |                           |   |   | - |   |   |   | - |   |   |   | (102.5 | ) |   |   | - |   |   |   | (14.3 | ) |   |   | (116.8 | ) |
| Treasury      stock acquired                                                               |   |                                  | -       |   |                    |   | -       |                           |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1.0 | ) |   |   | - |   |   |   | (1.0 | ) |
| Equity      transactions with noncontrolling      interest, net                       |   |                                  |  - |   |                    |   |  - |                           |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   | (1.3 | ) |   |   | (1.3 | ) |
| Other,      net                                                                            |   |                                  | -       |   |                    |   | -       |                           |   |   | - |   |   |   | .2 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | .2 |   |
|                                                                                       |   |                                  |    |   |                    |   |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2008                                                          |   |                                  | 667.3   |   |                    |   | 1.2     |                           |   |   | - |   |   |   | (109.8 | ) |   |   | (51.0 | ) |   |   | (38.9 | ) |   |   | 73.3 |   |   |   | 542.1 |   |
|                                                                                       |   |                                  |    |   |                    |   |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                                                              |   |                                  | -       |   |                    |   | -       |                           |   |   | - |   |   |   | (34.2 | ) |   |   | - |   |   |   | - |   |   |   | (3.9 | ) |   |   | (38.1 | ) |
| Cash      dividends                                                                        |   |                                  | -       |   |                    |   | -       |                           |   |   | (.3 | ) |   |   | (45.1 | ) |   |   | - |   |   |   | - |   |   |   | (4.9 | ) |   |   | (50.3 | ) |
| Other      comprehensive income, net                                                       |   |                                  | -       |   |                    |   | -       |                           |   |   | - |   |   |   | - |   |   |   | 34.9 |   |   |   | - |   |   |   | 5.4 |   |   |   | 40.3 |   |
| Equity      transactions with noncontrolling      interest, net                       |   |                                  |  - |   |                    |   |  - |                           |   |   |  .3 |   |   |   |  - |   |   |   |  - |   |   |   |  - |   |   |   | (.2 | ) |   |   |  .1 |   |
| Transfer      of Medite pension plan                                                       |   |                                  | -       |   |                    |   | -       |                           |   |   | - |   |   |   | (8.6 | ) |   |   | 12.9 |   |   |   | - |   |   |   | - |   |   |   | 4.3 |   |
|                                                                                       |   |                                  |    |   |                    |   |    |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2009                                                          |   | $                                     | 667.3   |   |                    | $      | 1.2     |                           |   | $ | - |   |   | $ | (197.7 | ) |   | $ | (3.2 | ) |   | $ | (38.9 | ) |   | $ | 69.7 |   |   | $ | 498.4 |   |

----

|                                                                                                                                  |   | Years ended December 31, |       |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|------------|
|                                                                                                                                  |   | 2007                     |       |   | 2008 |   |   | 2009 |   |
|                                                                                                                                  |   |                     |       |   |   |   |
|                                                                                                                                  |   |                     |       |   |   |   |   |   |   |
| Cash      flows from operating activities:                                                                                            |   |                     |       |   |   |   |   |   |   |
|   Net      income (loss)                                                                                                    |   | $                        | (49.2      | ) |   | $ | 4.9 |   |   | $ | (38.1 | ) |
|   Depreciation      and amortization                                                                                        |   |                     | 66.3       |   |   |   | 66.1 |   |   |   | 67.4 |   |
|   Gain      on sale of business                                                                                             |   |                     | -          |   |   |   | - |   |   |   | (6.3 | ) |
|   Litigation      settlement gains                                                                                          |   |                     | -          |   |   |   | (47.9 | ) |   |   | (11.1 | ) |
|   Goodwill      impairment                                                                                                  |   |                     | -          |   |   |   | 10.1 |   |   |   | - |   |
|   Assets      held for sale write-down                                                                                      |   |                     | -          |   |   |   | - |   |   |   | .7 |   |
|   Securities      transactions, net                                                                                         |   |                     | .1         |   |   |   | 1.2 |   |   |   | (.5 | ) |
|   Loss      on disposal of property and equipment                                                                           |   |                     | 1.3        |   |   |   | 1.0 |   |   |   | 1.2 |   |
|   Noncash      interest expense                                                                                             |   |                     | 1.6        |   |   |   | 2.1 |   |   |   | 2.0 |   |
|   Benefit      plan expense greater (less) than   cash      funding requirements:                            |   |                     |       |   |   |   |   |   |   |   |   |   |
|     Defined      benefit pension expense                                                                          |   |                     | (4.6       | ) |   |   | (22.3 | ) |   |   | .3 |   |
|     Other      postretirement benefit expense                                                                     |   |                     | .9         |   |   |   | .9 |   |   |   | .4 |   |
|   Deferred      income taxes                                                                                                |   |                     | 86.4       |   |   |   | (12.4 | ) |   |   | (21.9 | ) |
|   Equity      in:                                                                                                           |   |                     |       |   |   |   |   |   |   |   |   |   |
|     TIMET                                                                                                         |   |                     | (26.9      | ) |   |   | - |   |   |   | - |   |
|     Other                                                                                                         |   |                     | (1.7       | ) |   |   | 1.0 |   |   |   | 1.1 |   |
|   Net      distributions from (contributions to):                                                                           |   |                     |       |   |   |   |   |   |   |   |   |   |
|     TiO2      manufacturing joint venture                                                                         |   |                     | (4.9       | ) |   |   | 10.0 |   |   |   | 7.7 |   |
|     Other                                                                                                         |   |                     | 1.0        |   |   |   | - |   |   |   | - |   |
|   Other,      net                                                                                                           |   |                     | 1.9        |   |   |   | 2.7 |   |   |   | 3.5 |   |
|   Change      in assets and liabilities:                                                                                    |   |                     |       |   |   |   |   |   |   |   |   |   |
|     Accounts      and other receivables, net                                                                      |   |                     | 9.1        |   |   |   | 15.0 |   |   |   | 6.0 |   |
|     Inventories,      net                                                                                         |   |                     | 3.9        |   |   |   | (93.0 | ) |   |   | 105.2 |   |
|     Accounts      payable and accrued liabilities                                                                 |   |                     | (4.8       | ) |   |   | 15.6 |   |   |   | 4.3 |   |
|     Income      taxes                                                                                             |   |                     | (9.6       | ) |   |   | 2.7 |   |   |   | (3.0 | ) |
|     Accounts      with affiliates                                                                                 |   |                     | (2.0       | ) |   |   | 10.5 |   |   |   | (18.1 | ) |
|     Other      noncurrent assets                                                                                  |   |                     | (2.7       | ) |   |   | (3.5 | ) |   |   | .3 |   |
|     Other      noncurrent liabilities                                                                             |   |                     | (4.3       | ) |   |   | 5.3 |   |   |   | (9.5 | ) |
|     Other,      net                                                                                               |   |                     | 1.7        |   |   |   | 5.5 |   |   |   | (15.6 | ) |
|                                                                                                                                  |   |                     |       |   |   |   |   |   |   |   |   |   |
|       Net      cash provided by (used in) operating       activities |   |                     |  63.5 |   |   |   | (24.5 | ) |   |   |  76.0 |   |
|                                                                                                                                  |   |                     |       |   |   |   |   |   |   |   |   |   |

----

|                                                                                             |   | Years ended December 31, |   |
|--------------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                             |   | 2007                     |   |   | 2008 |   |   | 2009 |   |
|                                                                                             |   |                     |   |   |   |   |
|                                                                                             |   |                     |   |   |   |   |   |   |   |
| Cash      flows from investing activities:                                                       |   |                     |   |   |   |   |   |   |   |
|   Capital      expenditures                                                            |   | $                        | (63.8  | ) |   | $ | (84.9 | ) |   | $ | (57.5 | ) |
|   Capitalized      permit costs                                                        |   |                     | (7.1   | ) |   |   | (13.8 | ) |   |   | (9.4 | ) |
|   Purchases      of:                                                                   |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Kronos      common stock                                                 |   |                     | -      |   |   |   | (.8 | ) |   |   | - |   |
|     TIMET      common stock                                                  |   |                     | (.7    | ) |   |   | - |   |   |   | - |   |
|     CompX      common stock                                                  |   |                     | (3.3   | ) |   |   | (1.0 | ) |   |   | - |   |
|     Marketable      securities                                               |   |                     | (23.3  | ) |   |   | (6.1 | ) |   |   | (5.4 | ) |
|   Proceeds      from disposal of:                                                      |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Marketable      securities                                               |   |                     | 28.5   |   |   |   | 7.9 |   |   |   | 9.5 |   |
|     Property      and equipment                                              |   |                     | .6     |   |   |   | .3 |   |   |   | - |   |
|     Sale      of business                                                    |   |                     | -      |   |   |   | - |   |   |   | 6.7 |   |
|     Real      estate-related litigation settlement                           |   |                     | -      |   |   |   | 39.6 |   |   |   | 11.8 |   |
|   Change      in restricted cash equivalents, net                                      |   |                     | 2.4    |   |   |   | (2.5 | ) |   |   | .5 |   |
|   Other,      net                                                                      |   |                     | 1.3    |   |   |   | 1.3 |   |   |   |  (.7 | ) |
|                                                                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Net      cash used in investing activities                               |   |                     | (65.4  | ) |   |   | (60.0 | ) |   |   | (44.5 | ) |
|                                                                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                                                       |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Indebtedness:                                                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Borrowings                                                               |   |                     | 331.1  |   |   |   | 427.7 |   |   |   | 447.6 |   |
|     Principal      payments                                                  |   |                     | (324.4 | ) |   |   | (385.6 | ) |   |   | (401.1 | ) |
|     Deferred      financing costs paid                                       |   |                     | -      |   |   |   | (1.2 | ) |   |   | (.8 | ) |
|   Purchases      of Kronos common stock                                                |   |                     | -      |   |   |   | - |   |   |   | (.1 | ) |
|   Valhi      cash dividends paid                                                       |   |                     | (45.6  | ) |   |   | (45.5 | ) |   |   | (45.4 | ) |
|   Distributions      to noncontrolling interest in    subsidiaries |   |                     | (8.5   | ) |   |   | (7.3 | ) |   |   | (4.9 | ) |
|   Treasury      stock acquired                                                         |   |                     | (11.1  | ) |   |   | (1.0 | ) |   |   | - |   |
|   Issuance      of Valhi common stock and other, net                                   |   |                     | 2.4    |   |   |   | - |   |   |   | - |   |
|                                                                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Net      cash used in financing activities                               |   |                     | (56.1  | ) |   |   | (12.9 | ) |   |   | (4.7 | ) |
|                                                                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      increase (decrease)                                                                     |   | $                        | (58.0  | ) |   | $ | (97.4 | ) |   | $ | 26.8 |   |

----

|                                                                                                                                                                     |   | Years ended December 31, |              |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|-------------------|
|                                                                                                                                                                     |   | 2007                     |              |   | 2008 |   |   | 2009 |   |
|                                                                                                                                                                     |   |                     |              |   |   |   |
|                                                                                                                                                                     |   |                     |              |   |   |   |   |   |   |
| Cash      and cash equivalents - net change from:                                                                                                                        |   |                     |              |   |   |   |   |
|   Operating,      investing and financing   activities                                                                                          |   | $                        | (58.0             | ) |   | $ | (97.4 | ) |   | $ | 26.8 |   |
|   Currency      translation                                                                                                                                    |   |                     | 7.1               |   |   |   | (3.9 | ) |   |   | 4.9 |   |
|       Net      change for the year                                                                                                         |   |                     | (50.9             | ) |   |   | (101.3 | ) |   |   | 31.7 |   |
|                                                                                                                                                                     |   |                     |              |   |   |   |   |   |   |   |   |   |
|   Balance      at beginning of year                                                                                                                            |   |                     | 189.2             |   |   |   | 138.3 |   |   |   | 37.0 |   |
|                                                                                                                                                                     |   |                     |              |   |   |   |   |   |   |   |   |   |
|   Balance      at end of year                                                                                                                                  |   | $                        | 138.3             |   |   | $ | 37.0 |   |   | $ | 68.7 |   |
|                                                                                                                                                                     |   |                     |              |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                     |   |                     |              |   |   |   |   |   |   |   |   |   |
| Supplemental      disclosures:  Cash      paid for:                                                                                                            |   |                     |              |   |   |   |   |   |   |   |   |   |
|     Interest,      net of amounts capitalized                                                                                                        |   | $                        | 62.5              |   |   | $ | 66.7 |   |   | $ | 64.8 |   |
|     Income      taxes, net                                                                                                                           |   |                     | 32.3              |   |   |   | 15.2 |   |   |   | 6.4 |   |
|                                                                                                                                                                     |   |                     |              |   |   |   |   |   |   |   |   |   |
|   Noncash      investing activities:                                                                                                                           |   |                     |              |   |   |   |   |   |   |   |   |   |
|     Accruals      for capital expenditures                                                                                                           |   |                     | 9.7               |   |   |   | 12.7 |   |   |   | 11.8 |   |
|     Accruals      for capitalized permits                                                                                                            |   |                     | .3                |   |   |   | .7 |   |   |   | 1.2 |   |
|     Note      receivable from litigation     settlement                                                                     |   |                     |  -           |   |   |   |  15.0 |   |   |   |  - |   |
|     Note      receivable from sale of business                                                                                                       |   |                     | -                 |   |   |   | - |   |   |   | .7 |   |
|                                                                                                                                                                     |   |                     |              |   |   |   |   |   |   |   |   |   |
|   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 noncontrolling     interest |   |                     |    52.6 |   |   |   |    - |   |   |   |    - |   |
|     Transfer      of Medite pension plan     to      Contran                                                                |   |                     |  -           |   |   |   |  - |   |   |   |  4.3 |   |

----

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

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

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

|                                                                           |   | December      31,   |   |
|--------------------------------------------------------------------------------|--------|---------------------|--------|
|                                                                           |   | 2008                |   |   | 2009 |   |
|                                                                           |   | (In      thousands) |   |
|                                                                           |   |                |   |   |   |   |
| Net      permit costs for:                                                     |   |                |   |   |   |   |
|   Pending      renewals of prior permits                             |   | $                   | .6     |   |   | $ | .5 |   |
|                                                                           |   |                |   |   |   |   |   |   |
|   Issued      permits:                                               |   |                |   |   |   |   |   |   |
|      LLRW      license – (expires in 2024)      |   |                | -      |   |   |   | 42.0 |   |
|      Byproduct      license – (expires in 2018) |   |                | 6.5    |   |   |   | 8.0 |   |
|      Other      – (expires 2013 – 2024)   |   |                | 3.2    |   |   |   | 3.0 |   |
|   Total      issued permits                                          |   |                | 10.3   |   |   |   | 53.5 |   |
|                                                                           |   |                |   |   |   |   |   |   |
|   Pending      applications for new permits                          |   |                | 33.4   |   |   |   | - |   |
|                                                                           |   |                |   |   |   |   |   |   |
| Total                                                                          |   | $                   | 43.7   |   |   | $ | 53.5 |   |

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

|   Businesssegment  |   |        Entity       |   | %      control atDecember 31, 2009 |
|-----------------------------------|--------|--------------------------------------------------------------------------------------|--------|------------------------------------|
|                              |   |                                                                                 |   |                               |
| Chemicals                         |   | Kronos                                                                               |   |  95%                          |
| Component      products           |   | CompX                                                                                |   |  87%                          |
| Waste      management             |   | WCS                                                                                  |   |  100%                         |

|   | · | Chemicals – Our      chemicals segment is operated through our majority control of      Kronos.  Kronos is a leading global producer and marketer of      value-added titanium dioxide pigment products (“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 control of      CompX.   CompX is a leading manufacturer of engineered      components utilized in a variety of applications and industries.       Through its Security Products division CompX manufactures mechanical and      electrical cabinet locks and other locking mechanisms used in postal,      office and institutional furniture, transportation, vending, tool storage      and other general cabinetry applications.  CompX’s Furniture      Components division manufactures precision ball bearing slides and      ergonomic computer support systems used in office and institutional      furniture, home appliances, tool storage and a variety of other      applications.  CompX also manufactures stainless steel exhaust      systems, gauges and throttle controls for the performance boat industry      through its Marine Componentsdivision. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 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 began disposal      operations in October 2009.  In January 2009 WCS received a      low-level radioactive waste disposal license, and construction of the      low-level radioactive waste facility is currently expected to begin in      mid-2010, following the completion of some pre-construction licensing and      administrative matters, and is expected to be operational in early      2011. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                           |   | Years ended December 31, |    |
|----------------------------------------------------------------|--------|--------------------------|---------|
|                                                           |   | 2007                     |    |   | 2008 |   |   | 2009 |   |
|                                                           |   | (In      millions)       |    |
| Net      sales:                                                |   |                     |    |   |   |   |   |   |   |
|   Chemicals                                          |   | $                        | 1,310.3 |   |   | $ | 1,316.9 |   |   | $ | 1,142.0 |   |
|   Component      products                            |   |                     | 177.7   |   |   |   | 165.5 |   |   |   | 116.1 |   |
|   Waste      management                              |   |                     | 4.2     |   |   |   | 2.9 |   |   |   | 14.0 |   |
|                                                           |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Total      net sales                   |   | $                        | 1,492.2 |   |   | $ | 1,485.3 |   |   | $ | 1,272.1 |   |
|                                                           |   |                     |    |   |   |   |   |   |   |   |   |   |
| Cost      of sales:                                            |   |                     |    |   |   |   |   |   |   |   |   |   |
|   Chemicals                                          |   | $                        | 1,062.2 |   |   | $ | 1,098.7 |   |   | $ | 1,014.0 |   |
|   Component      products                            |   |                     | 132.4   |   |   |   | 125.7 |   |   |   | 92.3 |   |
|   Waste      management                              |   |                     | 11.7    |   |   |   | 14.7 |   |   |   | 29.4 |   |
|                                                           |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Total      cost of sales               |   | $                        | 1,206.3 |   |   | $ | 1,239.1 |   |   | $ | 1,135.7 |   |
|                                                           |   |                     |    |   |   |   |   |   |   |   |   |   |
| Gross      margin:                                             |   |                     |    |   |   |   |   |   |   |   |   |   |
|   Chemicals                                          |   | $                        | 248.1   |   |   | $ | 218.2 |   |   | $ | 128.0 |   |
|   Component      products                            |   |                     | 45.3    |   |   |   | 39.8 |   |   |   | 23.8 |   |
|   Waste      management                              |   |                     | (7.5    | ) |   |   | (11.8 | ) |   |   | (15.4 | ) |
|                                                           |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Total      gross margin                |   | $                        | 285.9   |   |   | $ | 246.2 |   |   | $ | 136.4 |   |
|                                                           |   |                     |    |   |   |   |   |   |   |   |   |   |
| Operating      income (loss):                                  |   |                     |    |   |   |   |   |   |   |   |   |   |
|   Chemicals                                          |   | $                        | 88.6    |   |   | $ | 52.0 |   |   | $ | (10.6 | ) |
|   Component      products                            |   |                     | 16.0    |   |   |   | 5.5 |   |   |   | (4.0 | ) |
|   Waste      management                              |   |                     | (14.1   | ) |   |   | (21.5 | ) |   |   | (27.0 | ) |
|                                                           |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Total      operating income (loss)     |   |                     | 90.5    |   |   |   | 36.0 |   |   |   | (41.6 | ) |
|                                                           |   |                     |    |   |   |   |   |   |   |   |   |   |
| Equity      in earnings of:                                    |   |                     |    |   |   |   |   |   |   |   |   |   |
|   TIMET                                              |   |                     | 26.9    |   |   |   | - |   |   |   | - |   |
|   Other                                              |   |                     | 1.7     |   |   |   | (1.0 | ) |   |   | (1.1 | ) |
| General      corporate items:                                  |   |                     |    |   |   |   |   |   |   |   |   |   |
|   Securities      earnings                           |   |                     | 30.8    |   |   |   | 30.7 |   |   |   | 26.6 |   |
|   Insurance      recoveries                          |   |                     | 6.1     |   |   |   | 9.6 |   |   |   | 4.6 |   |
|   Gain      on litigation settlements                |   |                     | -       |   |   |   | 47.9 |   |   |   | 23.1 |   |
|   Gain      on sale of business                      |   |                     | -       |   |   |   | - |   |   |   | 6.3 |   |
|   General      expenses, net                         |   |                     | (37.6   | ) |   |   | (32.9 | ) |   |   | (40.1 | ) |
| Interest      expense                                          |   |                     | (64.4   | ) |   |   | (68.7 | ) |   |   | (66.7 | ) |
|                                                           |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Income      (loss) before income taxes |   | $                        | 54.0    |   |   | $ | 21.6 |   |   | $ | (88.9 | ) |

----

|                                |   |  Years ended December    31, |   |
|-------------------------------------|--------|-----------------------------------|--------|
|                                |   | 2007                              |   |   | 2008 |   |   | 2009 |   |
|                                |   | (In      millions)                |   |
|                                |   |                              |   |   |   |   |   |   |   |
| Depreciation      and amortization: |   |                              |   |   |   |   |   |   |   |
|   Chemicals               |   | $                                 | 52.5   |   |   | $ | 53.9 |   |   | $ | 49.5 |   |
|   Component      products |   |                              | 11.0   |   |   |   | 9.2 |   |   |   | 8.2 |   |
|   Waste      management   |   |                              | 2.3    |   |   |   | 2.7 |   |   |   | 9.6 |   |
|   Corporate               |   |                              | .5     |   |   |   | .3 |   |   |   | .1 |   |
|                                |   |                              |   |   |   |   |   |   |   |   |   |   |
|     Total       |   | $                                 | 66.3   |   |   | $ | 66.1 |   |   | $ | 67.4 |   |
|                                |   |                              |   |   |   |   |   |   |   |   |   |   |
| Capital      expenditures:          |   |                              |   |   |   |   |   |   |   |   |   |   |
|   Chemicals               |   | $                                 | 47.4   |   |   | $ | 68.2 |   |   | $ | 23.6 |   |
|   Component      products |   |                              | 13.8   |   |   |   | 6.8 |   |   |   | 2.3 |   |
|   Waste      management   |   |                              | 2.4    |   |   |   | 9.4 |   |   |   | 31.6 |   |
|   Corporate               |   |                              | .2     |   |   |   | .5 |   |   |   | - |   |
|                                |   |                              |   |   |   |   |   |   |   |   |   |   |
|     Total       |   | $                                 | 63.8   |   |   | $ | 84.9 |   |   | $ | 57.5 |   |
|                                |   |                              |   |   |   |   |   |   |   |   |   |   |

|                                                                                    |   | December 31,       |    |
|-----------------------------------------------------------------------------------------|--------|--------------------|---------|
|                                                                                    |   | 2007               |    |   | 2008 |   |   | 2009 |   |
|                                                                                    |   | (In      millions) |    |
| Total      assets:                                                                      |   |               |    |   |   |   |   |   |   |
|   Operating      segments:                                                    |   |               |    |   |   |   |   |   |   |
|     Chemicals                                                       |   | $                  | 1,862.6 |   |   | $ | 1,760.2 |   |   | $ | 1,726.4 |   |
|     Component      products                                         |   |               | 185.4   |   |   |   | 163.9 |   |   |   | 149.2 |   |
|     Waste      management                                           |   |               | 59.7    |   |   |   | 85.8 |   |   |   | 129.7 |   |
|   Joint      venture accounted for by the   equity      method |   |               | 19.4    |   |   |   | 18.4 |   |   |   | 17.4 |   |
|   Corporate      and eliminations                                             |   |               | 475.9   |   |   |   | 361.1 |   |   |   | 387.6 |   |
|                                                                                    |   |               |    |   |   |   |   |   |   |   |   |   |
|     Total                                                           |   | $                  | 2,603.0 |   |   | $ | 2,389.4 |   |   | $ | 2,410.3 |   |

----

|                                   |   | Years ended December 31, |    |
|----------------------------------------|--------|--------------------------|---------|
|                                   |   | 2007                     |    |   | 2008 |   |   | 2009 |   |
|                                   |   | (In      millions)       |    |
|                                   |   |                     |    |   |   |   |   |   |   |
| Net      sales - point of origin:      |   |                     |    |   |   |   |   |   |   |
|   United      States         |   | $                        | 638.4   |   |   | $ | 617.2 |   |   | $ | 521.4 |   |
|   Germany                    |   |                     | 700.6   |   |   |   | 694.8 |   |   |   | 616.5 |   |
|   Canada                     |   |                     | 260.7   |   |   |   | 243.8 |   |   |   | 206.3 |   |
|   Norway                     |   |                     | 184.3   |   |   |   | 194.2 |   |   |   | 139.5 |   |
|   Belgium                    |   |                     | 209.8   |   |   |   | 207.7 |   |   |   | 164.4 |   |
|   Taiwan                     |   |                     | 11.7    |   |   |   | 8.3 |   |   |   | 5.8 |   |
|   Eliminations               |   |                     | (513.3  | ) |   |   | (480.7 | ) |   |   | (381.8 | ) |
|                                   |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Total          |   | $                        | 1,492.2 |   |   | $ | 1,485.3 |   |   | $ | 1,272.1 |   |
|                                   |   |                     |    |   |   |   |   |   |   |   |   |   |
| Net      sales - point of destination: |   |                     |    |   |   |   |   |   |   |   |   |   |
|   North      America         |   | $                        | 545.8   |   |   | $ | 530.2 |   |   | $ | 444.3 |   |
|   Europe                     |   |                     | 811.8   |   |   |   | 814.6 |   |   |   | 671.0 |   |
|   Asia      and other        |   |                     | 134.6   |   |   |   | 140.5 |   |   |   | 156.8 |   |
|                                   |   |                     |    |   |   |   |   |   |   |   |   |   |
|     Total          |   | $                        | 1,492.2 |   |   | $ | 1,485.3 |   |   | $ | 1,272.1 |   |
|                                   |   |                     |    |   |   |   |   |   |   |   |   |   |

|                             |   | December 31,       |   |
|----------------------------------|--------|--------------------|--------|
|                             |   | 2007               |   |   | 2008 |   |   | 2009 |   |
|                             |   | (In      millions) |   |
|                             |   |               |   |   |   |   |   |   |   |
| Net      property and equipment: |   |               |   |   |   |   |   |   |   |
|   United      States   |   | $                  | 82.3   |   |   | $ | 97.0 |   |   | $ | 122.3 |   |
|   Germany              |   |               | 332.1  |   |   |   | 310.7 |   |   |   | 299.7 |   |
|   Canada               |   |               | 89.6   |   |   |   | 69.7 |   |   |   | 77.9 |   |
|   Norway               |   |               | 95.8   |   |   |   | 88.5 |   |   |   | 107.0 |   |
|   Belgium              |   |               | 74.1   |   |   |   | 68.0 |   |   |   | 66.4 |   |
|   Taiwan               |   |               | 7.4    |   |   |   | 7.1 |   |   |   | 7.3 |   |
|                             |   |               |   |   |   |   |   |   |   |   |   |   |
|     Total    |   | $                  | 681.3  |   |   | $ | 641.0 |   |   | $ | 680.6 |   |
|                             |   |               |   |   |   |   |   |   |   |   |   |   |

|                                                                                                     |   | 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,       |   |
|----------------------------------------------------------|--------|--------------------|--------|
|                                                     |   | 2008               |   |   | 2009 |   |
|                                                     |   | (In      millions) |   |
|                                                     |   |               |   |   |   |   |
| Current      assets:                                     |   |               |   |   |   |   |
|   Restricted      debt securities              |   | $                  | 5.5    |   |   | $ | 5.2 |   |
|   Other      debt securities                   |   |               | 3.3    |   |   |   | .9 |   |
|                                                     |   |               |   |   |   |   |   |   |
|     Total                            |   | $                  | 8.8    |   |   | $ | 6.1 |   |
|                                                     |   |               |   |   |   |   |   |   |
| Noncurrent      assets:                                  |   |               |   |   |   |   |   |   |
|   The      Amalgamated Sugar Company LLC       |   | $                  | 250.0  |   |   | $ | 250.0 |   |
|   TIMET                                        |   |               | 20.1   |   |   |   | 28.5 |   |
|   Other      debt securities and common stocks |   |               | 1.9    |   |   |   | 1.0 |   |
|                                                     |   |               |   |   |   |   |   |   |
|     Total                            |   | $                  | 272.0  |   |   | $ | 279.5 |   |

----

|                                                     |   | Fair      Value Measurements |      |
|----------------------------------------------------------|--------|------------------------------|-----------|
|                                                     |   | Total                        |      |   | Quoted      Prices in Active Markets (Level      1) |   |   | Significant      Other Observable Inputs (Level      2) |   |   | Significant      Unobservable Inputs (Level      3) |   |
|                                                     |   | (In      millions)           |      |
|                                                     |   |                         |      |   |   |   |   |   |   |   |   |   |
| December      31, 2008:                                  |   |                         |      |   |   |   |   |   |   |   |   |   |
| 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 |   |                         |  1.9 |   |   |   |  1.5 |   |   |   |  .4 |   |   |   |  - |   |
|                                                     |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total                            |   | $                            | 272.0     |   |   | $ | 21.6 |   |   | $ | .4 |   |   | $ | 250.0 |   |
|                                                     |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December      31, 2009:                                  |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current      assets:                                     |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Restricted      debt securities              |   | $                            | 5.2       |   |   | $ | - |   |   | $ | 5.2 |   |   | $ | - |   |
|   Other      debt securities                   |   |                         | .9        |   |   |   | - |   |   |   | .9 |   |   |   | - |   |
|                                                     |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total                            |   | $                            | 6.1       |   |   | $ | - |   |   | $ | 6.1 |   |   | $ | - |   |
|                                                     |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noncurrent      assets:                                  |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   The      Amalgamated Sugar Company LLC       |   | $                            | 250.0     |   |   | $ | - |   |   | $ | - |   |   | $ | 250.0 |   |
|   TIMET                                        |   |                         | 28.5      |   |   |   | 28.5 |   |   |   | - |   |   |   | - |   |
|   Other      debt securities and common stocks |   |                         |  1.0 |   |   |   |  .1 |   |   |   |  .9 |   |   |   |  - |   |
|                                                     |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total                            |   | $                            | 279.5     |   |   | $ | 28.6 |   |   | $ | .9 |   |   | $ | 250.0 |   |

|                                                       |   | December 31,       |   |
|------------------------------------------------------------|--------|--------------------|--------|
|                                                       |   | 2008               |   |   | 2009 |   |
|                                                       |   | (In      millions) |   |
|                                                       |   |               |   |   |   |   |
| Accounts      receivable                                   |   | $                  | 194.9  |   |   | $ | 204.0 |   |
| Accrued      insurance recoveries – NL (see Note 15) |   |               | 7.2    |   |   |   | - |   |
| Notes      receivable                                      |   |               | 4.0    |   |   |   | 3.4 |   |
| Accrued      interest and dividends receivable             |   |               | .1     |   |   |   | - |   |
| Allowance      for doubtful accounts                       |   |               | (2.7   | ) |   |   | (3.3 | ) |
|                                                       |   |               |   |   |   |   |   |   |
|     Total                              |   | $                  | 203.5  |   |   | $ | 204.1 |   |

|                                                   |   | December      31,  |   |
|--------------------------------------------------------|--------|-------------------------|--------|
|                                                   |   | 2008                    |   |   | 2009 |   |
|                                                   |   | (In      millions)      |   |
|                                                   |   |                    |   |   |   |   |
| Raw      materials:                                    |   |                    |   |   |   |   |
|   Chemicals                                  |   | $                       | 67.1   |   |   | $ | 56.4 |   |
|   Component      products                    |   |                    | 7.5    |   |   |   | 4.8 |   |
|                                                   |   |                    |   |   |   |   |   |   |
|     Total      raw materials       |   |                    | 74.6   |   |   |   | 61.2 |   |
|                                                   |   |                    |   |   |   |   |   |   |
| Work      in process:                                  |   |                    |   |   |   |   |   |   |
|   Chemicals                                  |   |                    | 19.8   |   |   |   | 18.2 |   |
|   Component      products                    |   |                    | 8.2    |   |   |   | 6.2 |   |
|                                                   |   |                    |   |   |   |   |   |   |
|     Total      in-process products |   |                    | 28.0   |   |   |   | 24.4 |   |
|                                                   |   |                    |   |   |   |   |   |   |
| Finished      products:                                |   |                    |   |   |   |   |   |   |
|   Chemicals                                  |   |                    | 243.8  |   |   |   | 161.8 |   |
|   Component      products                    |   |                    | 6.9    |   |   |   | 5.3 |   |
|                                                   |   |                    |   |   |   |   |   |   |
|     Total      finished products   |   |                    | 250.7  |   |   |   | 167.1 |   |
|                                                   |   |                    |   |   |   |   |   |   |
| Supplies      (primarily chemicals)                    |   |                    | 55.2   |   |   |   | 59.3 |   |
|                                                   |   |                    |   |   |   |   |   |   |
|     Total                          |   | $                       | 408.5  |   |   | $ | 312.0 |   |

----

|                                                                            |   | December      31,  |   |
|---------------------------------------------------------------------------------|--------|-------------------------|--------|
|                                                                            |   | 2008                    |   |   | 2009 |   |
|                                                                            |   | (In      millions)      |   |
|                                                                            |   |                    |   |
| Investment      in affiliates:                                                  |   |                    |   |   |   |   |
|   Ti02 manufacturing joint venture                     |   | $                       | 105.6  |   |   | $ | 98.7 |   |
|   Basic Management and Landwell                        |   |                    | 18.4   |   |   |   | 17.4 |   |
|                                                                            |   |                    |   |   |   |   |   |   |
|       Total                                       |   | $                       | 124.0  |   |   | $ | 116.1 |   |
|                                                                            |   |                    |   |   |   |   |   |   |
| Other assets:                                                              |   |                    |   |   |   |   |   |   |
|   Waste disposal site operating permits, net |   | $                       | 43.7   |   |   | $ | 53.5 |   |
|   NL      note receivable                                        |   |                    | 15.0   |   |   |   | 15.0 |   |
|   Deferred financing costs                                  |   |                    | 7.1    |   |   |   | 6.0 |   |
|   IBNR receivables                                               |   |                    | 7.5    |   |   |   | 7.5 |   |
|   Other                                                               |   |                    | 17.5   |   |   |   | 19.8 |   |
|                                                                            |   |                    |   |   |   |   |   |   |
|     Total                                                   |   | $                       | 90.8   |   |   | $ | 101.8 |   |

|                                                                                                 |   | December 31,       |   |
|------------------------------------------------------------------------------------------------------|--------|--------------------|--------|
|                                                                                                 |   | 2008               |   |   | 2009 |   |
|                                                                                                 |   | (In      millions) |   |
|                                                                                                 |   |               |   |   |   |   |
|                                                                                                 |   |               |   |   |   |   |
|   Current assets                                                                      |   | $                  | 68.9   |   |   | $ | 72.7 |   |
|   Property and equipment,      net                                               |   |               | 181.7  |   |   |   | 166.3 |   |
|                                                                                                 |   |               |   |   |   |   |   |   |
|       Total assets                                                |   | $                  | 250.6  |   |   | $ | 239.0 |   |
|                                                                                                 |   |               |   |   |   |   |   |   |
|                                                                                                 |   |               |   |   |   |   |   |   |
|   Liabilities, primarily current                                                 |   | $                  | 36.7   |   |   | $ | 38.8 |   |
|   Partners’ equity                                                         |   |               | 213.9  |   |   |   | 200.2 |   |
|                                                                                                 |   |               |   |   |   |   |   |   |
|       Total liabilities and partners’ equity |   | $                  | 250.6  |   |   | $ | 239.0 |   |

|                |   | Years ended December 31, |   |
|---------------------|--------|--------------------------|--------|
|                |   | 2007                     |   |   | 2008 |   |   | 2009 |   |
|                |   | (In      millions)       |   |
|                |   |                     |   |   |   |   |   |   |   |
| Net      sales:     |   |                     |   |   |   |   |   |   |   |
|   Kronos  |   | $                        | 124.6  |   |   | $ | 140.3 |   |   | $ | 121.2 |   |
|   Tioxide |   |                     | 125.0  |   |   |   | 140.7 |   |   |   | 121.8 |   |
|                |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cost      of sales  |   |                     | 249.6  |   |   |   | 280.5 |   |   |   | 243.0 |   |
|                |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      income     |   |                     | -      |   |   |   | - |   |   |   | - |   |

|                                                                                      |   | September 30,      |   |
|-------------------------------------------------------------------------------------------|--------|--------------------|--------|
|                                                                                      |   | 2008               |   |   | 2009 |   |
|                                                                                      |   | (In      millions) |   |
|                                                                                      |   |               |   |   |   |   |
|                                                                                      |   |               |   |   |   |   |
|   Current assets                                                           |   | $                  | 31.3   |   |   | $ | 26.3 |   |
|   Property and equipment,      net                                    |   |               | 10.4   |   |   |   | 8.3 |   |
|   Prepaid costs and other                                        |   |               | 4.8    |   |   |   | 17.1 |   |
|   Land and development costs                                     |   |               | 15.4   |   |   |   | 15.5 |   |
|   Investment in undeveloped land and water rights |   |               | 50.8   |   |   |   | 32.1 |   |
|                                                                                      |   |               |   |   |   |   |   |   |
|       Total assets                                     |   | $                  | 112.7  |   |   | $ | 99.3 |   |
|                                                                                      |   |               |   |   |   |   |   |   |
|   Current liabilities                                                      |   | $                  | 15.0   |   |   | $ | 5.7 |   |
|   Long-term debt                                                           |   |               | 19.8   |   |   |   | 18.3 |   |
|   Deferred income taxes                                               |   |               | 6.3    |   |   |   | 5.6 |   |
|   Other noncurrent liabilities                                        |   |               | 1.3    |   |   |   | 3.8 |   |
|   Equity                                                                        |   |               | 70.3   |   |   |   | 65.9 |   |
|                                                                                      |   |               |   |   |   |   |   |   |
|       Total liabilities and equity           |   | $                  | 112.7  |   |   | $ | 99.3 |   |

|                                   |   | Twelve months ended September      30, |   |
|----------------------------------------|--------|----------------------------------------|--------|
|                                   |   | 2007                                   |   |   | 2008 |   |   | 2009 |   |
|                                   |   | (In      millions)                     |   |
|                                   |   |                                   |   |   |   |   |   |   |   |
| Total      revenues                    |   | $                                      | 23.5   |   |   | $ | 9.0 |   |   | $ | 8.7 |   |
| Income      (loss) before income taxes |   |                                   | 10.2   |   |   |   | (4.7 | ) |   |   | (2.8 | ) |
| Net      income (loss)                 |   |                                   | 9.0    |   |   |   | (3.9 | ) |   |   | (2.5 | ) |

|                                     |   | Operating segment  |   |   |              |   |
|------------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                                     |   | Chemicals          |   |   | ComponentProducts |   |   | Total |   |
|                                     |   | (In      millions) |   |
|                                     |   |               |   |   |              |   |   |   |   |
| Gross      goodwill 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 |   |
| Changes      in foreign exchange rates   |   |               | -      |   |              |   | .1 |   |   |   | .1 |   |
|                                     |   |               |   |   |              |   |   |   |   |   |   |   |
| Balance      at December 31, 2009        |   | $                  | 359.0  |   |              | $      | 37.9 |   |   | $ | 396.9 |   |
|                                     |   |               |   |   |              |   |   |   |   |   |   |   |

|                                                 |   | December 31,       |   |
|------------------------------------------------------|--------|--------------------|--------|
|                                                 |   | 2008               |   |   | 2009 |   |
|                                                 |   | (In      millions) |   |
|                                                 |   |               |   |   |   |   |
|   Patents      and other intangible assets |   | $                  | 2.0    |   |   | $ | 1.4 |   |

| 2010 |   | $.6 million              |
|------|--------|--------------------------|
| 2011 |   |  .4  million        |
| 2012 |   |  .3  million        |
| 2013 |   |  .1  million        |
| 2014 |   |   -    million |

----

|                                                                 |   | December 31,       |   |
|----------------------------------------------------------------------|--------|--------------------|--------|
|                                                                 |   | 2008               |   |   | 2009 |   |
|                                                                 |   | (In      millions) |   |
|                                                                 |   |               |   |   |   |   |
| Valhi:                                                               |   |               |   |   |   |   |
|   Snake      River Sugar Company                           |   | $                  | 250.0  |   |   | $ | 250.0 |   |
|   Revolving      bank credit facility                      |   |               | 7.3    |   |   |   | - |   |
|   Contran      credit facility                             |   |               | -      |   |   |   | 54.9 |   |
|   Promissory      notes payable to Contran                 |   |               | -      |   |   |   | 30.0 |   |
|       Total      Valhi debt            |   |               | 257.3  |   |   |   | 334.9 |   |
|                                                                 |   |               |   |   |   |   |   |   |
| Subsidiary      debt:                                                |   |               |   |   |   |   |   |   |
|   Kronos International:                               |   |               |   |   |   |   |   |   |
|     6.5% Senior Secured Notes     |   |               | 560.0  |   |   |   | 574.6 |   |
|     European bank credit facility |   |               | 42.2   |   |   |   | 13.0 |   |
|   CompX      promissory note payable to TIMET              |   |               | 43.0   |   |   |   | 42.2 |   |
|   Kronos U.S. bank credit facility     |   |               | 13.7   |   |   |   | 16.7 |   |
|   Other                                                    |   |               | 4.2    |   |   |   | 9.5 |   |
|                                                                 |   |               |   |   |   |   |   |   |
|     Total subsidiary debt              |   |               | 663.1  |   |   |   | 656.0 |   |
|                                                                 |   |               |   |   |   |   |   |   |
|     Total debt                              |   |               | 920.4  |   |   |   | 990.9 |   |
|                                                                 |   |               |   |   |   |   |   |   |
|     Less current maturities            |   |               | 9.4    |   |   |   | 2.5 |   |
|                                                                 |   |               |   |   |   |   |   |   |
|     Total long-term debt               |   | $                  | 911.0  |   |   | $ | 988.4 |   |

----

| Years ending December 31,                 |   | Amount             |   |
|-------------------------------------------|--------|--------------------|--------|
|                                      |   | (In      millions) |   |
|                                      |   |               |   |
|   2010                          |   | $                  | 2.5    |   |
|   2011                          |   |               | 118.0  |   |
|   2012                          |   |               | 3.2    |   |
|   2013                          |   |               | 576.8  |   |
|   2014                          |   |               | 39.7   |   |
|   2015      and thereafter      |   |               | 250.7  |   |
|                                      |   |               |   |   |
|       Total |   | $                  | 990.9  |   |
|                                      |   |               |   |   |

----

|                                                 |   | December 31,       |   |
|------------------------------------------------------|--------|--------------------|--------|
|                                                 |   | 2008               |   |   | 2009 |   |
|                                                 |   | (In      millions) |   |
|                                                 |   |               |   |   |   |   |
| Current:                                             |   |               |   |   |   |   |
|   Employee      benefits                   |   | $                  | 33.6   |   |   | $ | 34.8 |   |
|   Accrued      sales discounts and rebates |   |               | 14.9   |   |   |   | 21.4 |   |
|   Environmental      costs                 |   |               | 11.6   |   |   |   | 11.0 |   |
|   Deferred      income                     |   |               | 8.4    |   |   |   | 7.5 |   |
|   Interest                                 |   |               | 7.9    |   |   |   | 8.0 |   |
|   Reserve      for uncertain tax positions |   |               | .2     |   |   |   | .1 |   |
|   Other                                    |   |               | 51.8   |   |   |   | 54.7 |   |
|                                                 |   |               |   |   |   |   |   |   |
|     Total                        |   | $                  | 128.4  |   |   | $ | 137.5 |   |
|                                                 |   |               |   |   |   |   |   |   |
| Noncurrent:                                          |   |               |   |   |   |   |   |   |
|   Reserve      for uncertain tax positions |   | $                  | 50.4   |   |   | $ | 35.2 |   |
|   Insurance      claims and expenses       |   |               | 13.5   |   |   |   | 11.7 |   |
|   Employee      benefits                   |   |               | 9.1    |   |   |   | 9.2 |   |
|   Deferred      income                     |   |               | .9     |   |   |   | 8.5 |   |
|   Other                                    |   |               | 4.9    |   |   |   | 4.8 |   |
|                                                 |   |               |   |   |   |   |   |   |
|     Total                        |   | $                  | 78.8   |   |   | $ | 69.4 |   |

| 2010         |   | $ 27.0  million                |
|--------------|--------|--------------------------------|
| 2011         |   |    27.8      million |
| 2012         |   |    30.9      million |
| 2013         |   |    29.5      million |
| 2014         |   |    31.0      million |
| Next 5 years |   |  151.6    million         |

----

|                                                                                    |   | Years ended December 31, |   |
|-----------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                    |   | 2008                     |   |   | 2009 |   |
|                                                                                    |   | (In      millions)       |   |
|                                                                                    |   |                     |   |   |   |   |
| Change      in projected benefit obligations ("PBO"):                                   |   |                     |   |   |   |   |
|   Balance      at beginning of the year                   |   | $                        | 87.5   |   |   | $ | 87.6 |   |
|   Interest cost                                                          |   |                     | 5.2    |   |   |   | 5.2 |   |
|   Actuarial losses      (gains)                                          |   |                     | .8     |   |   |   | 3.2 |   |
|   Change in foreign currency exchange rates          |   |                     | (.1    | ) |   |   | .2 |   |
|   Transfer      of Medite Pension Plan to Contran                             |   |                     | -      |   |   |   | (33.1 | ) |
|   Benefits paid                                                          |   |                     | (5.8   | ) |   |   | (5.9 | ) |
|                                                                                    |   |                     |   |   |   |   |   |   |
|       Balance      at end of the year |   | $                        | 87.6   |   |   | $ | 57.2 |   |
|                                                                                    |   |                     |   |   |   |   |   |   |
| Change in plan assets:                                                   |   |                     |   |   |   |   |   |   |
|   Fair value       at beginning of the year     |   | $                        | 133.2  |   |   | $ | 65.3 |   |
|   Actual return on plan assets                            |   |                     | (62.2  | ) |   |   | 10.4 |   |
|   Employer contributions                                                 |   |                     | -      |   |   |   | .2 |   |
|   Change in foreign currency exchange rates          |   |                     | .1     |   |   |   | - |   |
|   Transfer      of Medite pension plan to Contran                             |   |                     | -      |   |   |   | (26.5 | ) |
|   Benefits paid                                                          |   |                     | (5.8   | ) |   |   | (5.9 | ) |
|                                                                                    |   |                     |   |   |   |   |   |   |
|       Fair value at end of year  |   | $                        | 65.3   |   |   | $ | 43.5 |   |
|                                                                                    |   |                     |   |   |   |   |   |   |
| Funded      status                                                                      |   | $                        | (22.3  | ) |   | $ | (13.7 | ) |
|                                                                                    |   |                     |   |   |   |   |   |   |
| Amounts recognized in the Consolidated      Balance Sheets:    |   |                     |   |   |   |   |   |   |
|   Accrued pension costs:                                            |   |                     |   |   |   |   |   |   |
|     Current                                                         |   | $                        | (.2    | ) |   | $ | (.3 | ) |
|     Noncurrent                                                      |   |                     | (22.1  | ) |   |   | (13.4 | ) |
|                                                                                    |   |                     |   |   |   |   |   |   |
|       Total                                               |   |                     | (22.3  | ) |   |   | (13.7 | ) |
|                                                                                    |   |                     |   |   |   |   |   |   |
|   Accumulated other comprehensive loss:                        |   |                     |   |   |   |   |   |   |
|     Actuarial losses                                           |   |                     | 52.7   |   |   |   | 29.7 |   |
|                                                                                    |   |                     |   |   |   |   |   |   |
|     Total                                                           |   | $                        | 30.4   |   |   | $ | 16.0 |   |
|                                                                                    |   |                     |   |   |   |   |   |   |
| Accumulated      benefit obligations (“ABO”)                                |   | $                        | 87.8   |   |   | $ | 57.2 |   |

----

|                                                           |   | Years ended December 31, |   |
|----------------------------------------------------------------|--------|--------------------------|--------|
|                                                           |   | 2007                     |   |   | 2008 |   |   | 2009 |   |
|                                                           |   | (In      millions)       |   |
|                                                           |   |                     |   |   |   |   |   |   |   |
| Net      periodic pension benefit cost for U.S. plans:         |   |                     |   |   |   |   |   |   |   |
|   Interest cost                            |   | $                        | 5.1    |   |   | $ | 5.2 |   |   | $ | 5.2 |   |
|   Expected return on plan assets |   |                     | (12.7  | ) |   |   | (13.1 | ) |   |   | (6.3 | ) |
|   Amortization      of unrecognized:                 |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Net      actuarial losses (gains) |   |                     | (.8    | ) |   |   | (.6 | ) |   |   | 2.2 |   |
|                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total                                  |   | $                        | (8.4   | ) |   | $ | (8.5 | ) |   | $ | 1.1 |   |
|                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |

|                                                   |   | December 31,       |   |
|--------------------------------------------------------|--------|--------------------|--------|
|                                                   |   | 2008               |   |   | 2009 |   |
|                                                   |   | (In      millions) |   |
| Plans      for which the ABO exceeds plan assets: |   |               |   |   |   |   |
|   Projected      benefit obligations         |   | $                  | 87.8   |   |   | $ | 57.2 |   |
|   Accumulated      benefit obligations       |   |               | 87.8   |   |   |   | 57.2 |   |
|   Fair      value of plan assets             |   |               | 65.3   |   |   |   | 43.5 |   |
|                                                   |   |               |   |   |   |   |   |   |

|                                        |   | December 31, |   |
|---------------------------------------------|--------|--------------|--------|
| Rate                                        |   | 2008         |   |   | 2009 |   |
|                                        |   |         |   |   |   |   |
| Discount      rate                          |   |         | 6.1    | % |   |   | 5.7 | % |
| Increase      in future compensation levels |   |         | -      |   |   |   | - |   |

|                                        |   | Years ended December 31, |   |
|---------------------------------------------|--------|--------------------------|--------|
| Rate                                        |   | 2007                     |   |   | 2008 |   |   | 2009 |   |
|                                        |   |                     |   |   |   |   |   |
| Discount      rate                          |   |                     | 5.8    | % |   |   | 6.2 | % |   |   | 6.1 | % |
| Increase      in future compensation levels |   |                     | -      |   |   |   | - |   |   |   | - |   |
| Long-term      return on plan assets        |   |                     | 10.0   | % |   |   | 10.0 | % |   |   | 10.0 | % |

----

|                                                                                    |   | Years ended December 31, |   |
|-----------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                    |   | 2008                     |   |   | 2009 |   |
|                                                                                    |   | (In      millions)       |   |
|                                                                                    |   |                     |   |   |   |   |
| Change      in PBO:                                                                     |   |                     |   |   |   |   |
|   Balance      at beginning of the year                   |   | $                        | 450.6  |   |   | $ | 382.3 |   |
|   Service cost                                                           |   |                     | 9.6    |   |   |   | 8.6 |   |
|   Interest cost                                                          |   |                     | 18.5   |   |   |   | 22.5 |   |
|   Participants’ contributions                                      |   |                     | 1.9    |   |   |   | 1.6 |   |
|   Actuarial gains                                                        |   |                     | (23.4  | ) |   |   | 13.2 |   |
|   Change in foreign currency exchange rates          |   |                     | (49.8  | ) |   |   | 28.1 |   |
|   Benefits paid                                                          |   |                     | (25.1  | ) |   |   | (24.0 | ) |
|                                                                                    |   |                     |   |   |   |   |   |   |
|       Balance      at end of the year |   | $                        | 382.3  |   |   | $ | 432.3 |   |
|                                                                                    |   |                     |   |   |   |   |   |   |
| Change in plan assets:                                                   |   |                     |   |   |   |   |   |   |
|   Fair value       at beginning of the year     |   | $                        | 312.2  |   |   | $ | 258.2 |   |
|   Actual return on plan assets                            |   |                     | (13.4  | ) |   |   | 32.4 |   |
|   Employer contributions                                                 |   |                     | 21.2   |   |   |   | 23.4 |   |
|   Participants’ contributions                                      |   |                     | 1.9    |   |   |   | 1.6 |   |
|   Change in foreign currency exchange rates          |   |                     | (38.6  | ) |   |   | 22.4 |   |
|   Benefits paid                                                          |   |                     | (25.1  | ) |   |   | (24.0 | ) |
|                                                                                    |   |                     |   |   |   |   |   |   |
|       Fair value at end of year  |   | $                        | 258.2  |   |   | $ | 314.0 |   |
|                                                                                    |   |                     |   |   |   |   |   |   |
| Funded      status                                                                      |   | $                        | (124.1 | ) |   | $ | (118.3 | ) |
|                                                                                    |   |                     |   |   |   |   |   |   |
| Amounts recognized in the Consolidated      Balance Sheets:    |   |                     |   |   |   |   |   |   |
|   Pension asset                                                          |   | $                        | -      |   |   | $ | .3 |   |
|   Accrued pension costs:                                            |   |                     |   |   |   |   |   |   |
|     Current                                                         |   |                     | (.1    | ) |   |   | (1.5 | ) |
|     Noncurrent                                                      |   |                     | (124.0 | ) |   |   | (117.1 | ) |
|                                                                                    |   |                     |   |   |   |   |   |   |
|       Total                                               |   |                     | (124.1 | ) |   |   | (118.3 | ) |
|                                                                                    |   |                     |   |   |   |   |   |   |
|   Accumulated other comprehensive loss:                        |   |                     |   |   |   |   |   |   |
|     Actuarial losses                                           |   |                     | 123.3  |   |   |   | 115.4 |   |
|     Prior service cost                                    |   |                     | 5.6    |   |   |   | 4.8 |   |
|     Net transition obligations                            |   |                     | 3.2    |   |   |   | 2.7 |   |
|                                                                                    |   |                     |   |   |   |   |   |   |
|       Total                                               |   |                     | 132.1  |   |   |   | 122.9 |   |
|                                                                                    |   |                     |   |   |   |   |   |   |
|       Total                                               |   | $                        | 8.0    |   |   | $ | 4.6 |   |
|                                                                                    |   |                     |   |   |   |   |   |   |
| ABO                                                                                     |   | $                        | 349.8  |   |   | $ | 455.5 |   |

----

|                                                           |   | Years ended December 31, |   |
|----------------------------------------------------------------|--------|--------------------------|--------|
|                                                           |   | 2007                     |   |   | 2008 |   |   | 2009 |   |
|                                                           |   | (In      millions)       |   |
|                                                           |   |                     |   |   |   |   |   |   |   |
|                                                           |   |                     |   |   |   |   |   |   |   |
| Net      periodic pension cost for foreign plans:              |   |                     |   |   |   |   |   |   |   |
|   Service cost                             |   | $                        | 7.9    |   |   | $ | 9.6 |   |   | $ | 8.6 |   |
|   Interest cost                            |   |                     | 21.7   |   |   |   | 18.5 |   |   |   | 22.5 |   |
|   Expected return on plan assets |   |                     | (15.8  | ) |   |   | (18.6 | ) |   |   | (15.7 | ) |
|   Amortization      of unrecognized:                 |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Prior service cost           |   |                     | .7     |   |   |   | .9 |   |   |   | .8 |   |
|     Net transition obligations   |   |                     | .5     |   |   |   | .5 |   |   |   | .5 |   |
|     Net      actuarial losses (gains) |   |                     | 9.0    |   |   |   | (.5 | ) |   |   | 5.9 |   |
|                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total                                  |   | $                        | 24.0   |   |   | $ | 10.4 |   |   | $ | 22.6 |   |
|                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |

|                                                   |   | December 31,       |   |
|--------------------------------------------------------|--------|--------------------|--------|
|                                                   |   | 2008               |   |   | 2009 |   |
|                                                   |   | (In      millions) |   |
|                                                   |   |               |   |   |   |   |
| Plans      for which the ABO exceeds plan assets: |   |               |   |   |   |   |
|   Projected      benefit obligations         |   | $                  | 332.2  |   |   | $ | 374.3 |   |
|   Accumulated      benefit obligations       |   |               | 309.2  |   |   |   | 349.1 |   |
|   Fair      value of plan assets             |   |               | 213.9  |   |   |   | 257.3 |   |
|                                                   |   |               |   |   |   |   |   |   |

|                                        |   | December 31, |   |
|---------------------------------------------|--------|--------------|--------|
| Rate                                        |   | 2008         |   |   | 2009 |   |
|                                        |   |         |   |   |   |   |
| Discount      rate                          |   |         | 5.9    | % |   |   | 5.5 | % |
| Increase      in future compensation levels |   |         | 3.2    | % |   |   | 3.0 | % |

|                                        |   | Years ended December 31, |   |
|---------------------------------------------|--------|--------------------------|--------|
| Rate                                        |   | 2007                     |   |   | 2008 |   |   | 2009 |   |
|                                        |   |                     |   |   |   |   |   |
| Discount      rate                          |   |                     | 4.7    | % |   |   | 5.5 | % |   |   | 5.9 | % |
| Increase      in future compensation levels |   |                     | 3.0    | % |   |   | 3.0 | % |   |   | 3.2 | % |
| Long-term      return on plan assets        |   |                     | 5.9    | % |   |   | 6.0 | % |   |   | 5.9 | % |

----

|                                                                                                    |   | Years ended December 31, |   |
|---------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                                    |   | 2007                     |   |   | 2008 |   |   | 2009 |   |
|                                                                                                    |   | (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 | ) |   | $ | 3.0 |   |
|   Amortization      of unrecognized:                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Prior service cost                                                    |   |                     | .7     |   |   |   | .9 |   |   |   | .8 |   |
|     Net transition obligations                                            |   |                     | .5     |   |   |   | .5 |   |   |   | .5 |   |
|     Net      actuarial losses (gains)                                          |   |                     | 8.2    |   |   |   | (1.1 | ) |   |   | 8.1 |   |
|   Plan      amendment                                                                         |   |                     | (4.4   | ) |   |   | - |   |   |   | - |   |
|   Change      in measurement date:                                                            |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Prior      service cost                                                         |   |                     | .2     |   |   |   | - |   |   |   | - |   |
|     Transition      obligations                                                     |   |                     | .1     |   |   |   | - |   |   |   | - |   |
|     Actuarial      losses                                                           |   |                     | 2.5    |   |   |   | - |   |   |   | - |   |
|                                                                                                    |   |                     |   |   |   |   |   |   |   |   |   |   |
|       Total                                                               |   | $                        | 77.4   |   |   | $ | (81.3 | ) |   | $ | 12.4 |   |
|                                                                                                    |   |                     |   |   |   |   |   |   |   |   |   |   |

|   | · | Germany      - the composition of our plan assets is established to satisfy the      requirements of the German insurance commissioner.  As more      fully described in Note 17, we lease the land under our principal German      Chemicals Segment facility pursuant to a lease with Bayer AG, and Bayer      provides some raw materials and other services to us.  In this      regard, our German pension plan assets represent an investment in a large      collective investment fund established and maintained by Bayer in which      several pension plans, including our German pension plan and Bayer’s      pension plans, have invested.  These plan assets are a Level 3      input because there is not an active market that approximates the value of      our investment in the Bayer investment fund.  We determine the      fair value of the Bayer plan assets based on periodic reports we receive      from the manager’s of the Bayer plan on the fair value of the plan assets,      which are subject to audit by the German pension  regulator. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | · | Norway      - we currently have a plan asset target allocation of 14% to equity      securities, 72% 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.  The majority of Norwegian plan assets are Level 1      inputs because they are traded in active markets; however a portion of our      Norwegian plan assets are invested in certain individualized fixed income      insurance contracts for the benefit of each plan participant as required      by the local regulators and are therefore a Level 3  input. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Other      – we have plan assets in Belgium and the United Kingdom.  The      Belgian plan assets are invested in certain individualized fixed income      insurance contracts for the benefit of each plan participant as required      by the local regulators and are therefore a Level 3 input.  The      U.K. plan assets consist of marketable securities which are Level 1 inputs      because they trade in activemarkets. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                 |   | 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 | % |

----

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

|                                                                       |   | Amount             |   |
|----------------------------------------------------------------------------|--------|--------------------|--------|
|                                                                       |   | (In      millions) |   |
|                                                                       |   |               |   |
| Level      3 fair value at December 31, 2008 :                             |   | $                  | 178.9  |   |
|   Gain      on assets held at December 31, 2009                  |   |               | 19.8   |   |
|   Loss      on assets sold during the year                       |   |               | (1.4   | ) |
|   Assets      purchased                                          |   |               | 20.2   |   |
|   Assets      sold                                               |   |               | (19.0  | ) |
|   Currency                                                       |   |               | 8.6    |   |
|                                                                       |   |               |   |   |
|      Level      3 fair value at December 31, 2009 |   | $                  | 207.1  |   |
|                                                                       |   |               |   |   |

|         |   |                         |
|--------------|--------|------------------------------|
| 2010         |   | $ 2.5    million        |
| 2011         |   |   2.4      million |
| 2012         |   |   2.3      million |
| 2013         |   |   2.2      million |
| 2014         |   |   2.0      million |
| Next 5 years |   |   8.9    million        |

|                                                                                                      |   | Years ended December 31, |   |
|-----------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                                      |   | 2008                     |   |   | 2009 |   |
|                                                                                                      |   | (In      millions)       |   |
|                                                                                                      |   |                     |   |   |   |   |
| Actuarial      present value of accumulated OPEB obligations:                                        |   |                     |   |   |   |   |
|   Balance      at beginning of the year                                          |   | $                        | 37.1   |   |   | $ | 32.5 |   |
|   Service cost                                                                             |   |                     | .3     |   |   |   | .2 |   |
|   Interest cost                                                                            |   |                     | 2.1    |   |   |   | 1.8 |   |
|   Actuarial gains                                                                          |   |                     | (2.6   | ) |   |   | (.3 | ) |
|   Plan      amendment                                                                           |   |                     | -      |   |   |   | (4.8 | ) |
|   Change in foreign currency exchange rates                            |   |                     | (1.7   | ) |   |   | 1.2 |   |
|   Benefits paid from      employer contributions                                 |   |                     | (2.7   | ) |   |   | (2.6 | ) |
|                                                                                                      |   |                     |   |   |   |   |   |   |
|   Balance at end of the year                                           |   | $                        | 32.5   |   |   | $ | 28.0 |   |
|                                                                                                      |   |                     |   |   |   |   |   |   |
| Fair      value of plan assets                                                                            |   | $                        | -      |   |   | $ | - |   |
|                                                                                                      |   |                     |   |   |   |   |   |   |
| Funded      status                                                                                        |   | $                        | (32.5  | ) |   | $ | (28.0 | ) |
|                                                                                                      |   |                     |   |   |   |   |   |   |
| Accrued OPEB costs recognized in the Consolidated Balance Sheets: |   |                     |   |   |   |   |   |   |
|   Current                                                                                       |   | $                        | (3.2   | ) |   | $ | (2.5 | ) |
|   Noncurrent                                                                                    |   |                     | (29.3  | ) |   |   | (25.5 | ) |
|                                                                                                      |   |                     |   |   |   |   |   |   |
|     Total                                                                             |   |                     | (32.5  | ) |   |   | (28.0 | ) |
|                                                                                                      |   |                     |   |   |   |   |   |   |
|   Accumulated      other comprehensive income (loss):                                           |   |                     |   |   |   |   |   |   |
|     Net actuarial losses (gains)                                       |   |                     | (1.4   | ) |   |   | .2 |   |
|     Prior service cost      (credit)                                        |   |                     | .8     |   |   |   | (5.8 | ) |
|                                                                                                      |   |                     |   |   |   |   |   |   |
|     Total                                                                             |   |                     | (.6    | ) |   |   | (5.6 | ) |
|                                                                                                      |   |                     |   |   |   |   |   |   |
|     Total                                                                             |   | $                        | (33.1  | ) |   | $ | (33.6 | ) |

|                                                                                           |   | Years ended December 31, |   |
|------------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                           |   | 2007                     |   |   | 2008 |   |   | 2009 |   |
|                                                                                           |   | (In      millions)       |   |
|                                                                                           |   |                     |   |   |   |   |   |   |   |
| Changes      in benefit obligations recognized in other      comprehensive income (loss): |   |                     |   |   |   |   |   |   |   |
| Net      actuarial loss arising during the year                                                |   | $                        | .8     |   |   | $ | 2.4 |   |   | $ | .4 |   |
| Plan      amendments                                                                           |   |                     | .5     |   |   |   | - |   |   |   | 4.8 |   |
| Amortization      of unrecognized:                                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Prior service cost                                           |   |                     | (.3    | ) |   |   | (.4 | ) |   |   | (.4 | ) |
|     Net      actuarial losses                                         |   |                     | .2     |   |   |   | .2 |   |   |   | .3 |   |
|                                                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total                                                                  |   | $                        | 1.2    |   |   | $ | 2.2 |   |   | $ | 5.1 |   |
|                                                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |

|                                                   |   | Years ended December 31, |   |
|--------------------------------------------------------|--------|--------------------------|--------|
|                                                   |   | 2007                     |   |   | 2008 |   |   | 2009 |   |
|                                                   |   | (In      millions)       |   |
|                                                   |   |                     |   |   |   |   |   |   |   |
| Net      periodic OPEB cost (credit):                  |   |                     |   |   |   |   |   |   |   |
|   Service cost                          |   | $                        | .3     |   |   | $ | .3 |   |   | $ | .2 |   |
|   Interest cost                    |   |                     | 2.2    |   |   |   | 2.1 |   |   |   | 1.8 |   |
|   Amortization      of unrecognized:         |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Prior service credit |   |                     | (.3    | ) |   |   | (.4 | ) |   |   | (.4 | ) |
|     Actuarial losses     |   |                     | .2     |   |   |   | .2 |   |   |   | .3 |   |
|                                                   |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total                          |   | $                        | 2.4    |   |   | $ | 2.2 |   |   | $ | 1.9 |   |

|                                               |         December      31,         |
|----------------------------------------------------|-------------------------------------------------------------------------------------------------------------------|
|                                               | 2008                                                                                                              | 2009 |
|                                               |                                                                                                              |   |
| Healthcare      inflation:                         |                                                                                                              |   |
|   Initial      rate                      | 5.5%      - 8.0%                                                                                                  | 7.5%      - 8.5% |
|   Ultimate      rate                     | 5.5%                                                                                                              | 4.5%      - 5.5% |
|   Year      of ultimate rate achievement | 2015                                                                                                              | 2017 |
| Discount      rate                                 | 5.9%                                                                                                              | 5.4% |

|                                                                     |   | 1% Increase        |      |   | 1% Decrease |   |
|--------------------------------------------------------------------------|--------|--------------------|-----------|--------|-------------|--------|
|                                                                     |   | (In      millions) |      |
|                                                                     |   |               |      |   |        |   |
| Effect      on net OPEB cost during 2009                            |   | $                  | .2        |   |        | $      | (.2 | ) |
| Effect      at December 31, 2009 on postretirement      obligations |   |               |  3.1 |   |        |   | (2.6 | ) |

----

|                                                                                                                                                     |   |  Years ended December    31, |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                                                                                                                     |   | 2007                              |   |   | 2008 |   |   | 2009 |   |
|                                                                                                                                                     |   | (In      millions)                |   |
|                                                                                                                                                     |   |                              |   |   |   |   |   |   |   |
| Pre-tax      income (loss):                                                                                                                              |   |                              |   |   |   |   |   |   |   |
|   United States                                                                                                                           |   | $                                 | 3.0    |   |   | $ | 8.8 |   |   | $ | (9.9 | ) |
|   Non-U.S. subsidiaries                                                                                                                   |   |                              | 51.0   |   |   |   | 12.8 |   |   |   | (79.0 | ) |
|                                                                                                                                                     |   |                              |   |   |   |   |   |   |   |   |   |   |
|     Total                                                                                                                            |   | $                                 | 54.0   |   |   | $ | 21.6 |   |   | $ | (88.9 | ) |
|                                                                                                                                                     |   |                              |   |   |   |   |   |   |   |   |   |   |
| Expected tax expense      (benefit), at U.S.  federal statutory income tax rate of 35%  |   | $                                 | 18.9   |   |   | $ | 7.5 |   |   | $ | (31.1 | ) |
| Non-U.S. tax rates                                                                                                                             |   |                              | .1     |   |   |   | (.6 | ) |   |   | 1.5 |   |
| Incremental U.S. tax and rate differences on equity in earnings                                        |   |                              | (14.1  | ) |   |   |  4.3 |   |   |   | (10.0 | ) |
| German       tax attribute adjustments                                                                                                         |   |                              | 8.7    |   |   |   | (7.2 | ) |   |   | .2 |   |
| U.S. state income taxes, net                                                                                                         |   |                              | 1.5    |   |   |   | 2.0 |   |   |   | (.2 | ) |
| Change      in reserve for uncertain tax positions, net                                                                                        |   |                              | (3.8   | ) |   |   |  5.6 |   |   |   | (14.0 | ) |
| Change      in valuation allowance                                                                                                                       |   |                              | -      |   |   |   | - |   |   |   | 1.4 |   |
| No      income tax benefit on goodwill impairment                                                                                                        |   |                              | -      |   |   |   | 3.5 | (2) |   |   | - |   |
| Nondeductible expenses                                                                                                                              |   |                              | 3.6    |   |   |   | 2.6 |   |   |   | 2.6 |   |
| German      tax rate change                                                                                                                              |   |                              | 87.4   |   |   |   | - |   |   |   | - |   |
| Nontaxable      income                                                                                                                                   |   |                              | (.6    | ) |   |   | (1.0 | ) |   |   | (.9 | ) |
| Other, net                                                                                                                                          |   |                              | 1.5    |   |   |   | - |   |   |   | (.3 | ) |
|                                                                                                                                                     |   |                              |   |   |   |   |   |   |   |   |   |   |
|   Provision for income taxes      (benefit)                                                                                     |   | $                                 | 103.2  |   |   | $ | 16.7 |   |   | $ | (50.8 | ) |
|                                                                                                                                                     |   |                              |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                     |   |                              |   |   |   |   |   |   |   |   |   |   |
| Components of income tax expense (benefit):                                                                                     |   |                              |   |   |   |   |   |   |   |   |   |   |
|   Currently payable      (refundable):                                                                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |
|     U.S. federal and state                                                                                            |   | $                                 | (1.9   | ) |   | $ | 12.8 |   |   | $ | (14.4 | ) |
|     Non-U.S.                                                                                                                         |   |                              | 14.4   |   |   |   | 11.3 |   |   |   | 1.8 |   |
|                                                                                                                                                     |   |                              |   |   |   |   |   |   |   |   |   |   |
|       Total                                                                                                                |   |                              | 12.5   |   |   |   | 24.1 |   |   |   | (12.6 | ) |
|   Deferred income taxes (benefit):                                                                                              |   |                              |   |   |   |   |   |   |   |   |   |   |
|     U.S. federal and state                                                                                            |   |                              | (11.3  | ) |   |   | 4.3 |   |   |   | (7.4 | ) |
|     Non-U.S.                                                                                                                         |   |                              | 102.0  |   |   |   | (11.7 | ) |   |   | (30.8 | ) |
|       Total                                                                                                                |   |                              | 90.7   |   |   |   | (7.4 | ) |   |   | (38.2 | ) |
|                                                                                                                                                     |   |                              |   |   |   |   |   |   |   |   |   |   |
|   Provision for income taxes      (benefit)                                                                                     |   | $                                 | 103.2  |   |   | $ | 16.7 |   |   | $ | (50.8 | ) |
|                                                                                                                                                     |   |                              |   |   |   |   |   |   |   |   |   |   |
| Comprehensive provision for  income taxes (benefit) allocable to:                                                |   |                              |   |   |   |   |   |   |   |   |   |   |
|   Income (loss)      from  operations                                                                                                |   | $                                 | 103.2  |   |   | $ | 16.7 |   |   | $ | (50.8 | ) |
|   Dividend      of TIMET common stock                                                                                                          |   |                              | 668.3  | (1) |   |   | - |   |   |   | - |   |
|   Other comprehensive income:                                                                                                        |   |                              |   |   |   |   |   |   |   |   |   |   |
|     Marketable securities                                                                                                       |   |                              | 11.3   |   |   |   | (15.6 | ) |   |   | 3.9 |   |
|     Currency translation                                                                                                        |   |                              | 8.7    |   |   |   | (10.0 | ) |   |   | 5.6 |   |
|     Pension      plans                                                                                                               |   |                              | 38.5   |   |   |   | (32.7 | ) |   |   | 5.8 |   |
|     OPEB      plans                                                                                                                  |   |                              | .5     |   |   |   | .9 |   |   |   | 1.5 |   |
|     Other                                                                                                                            |   |                              | (.6    | ) |   |   | - |   |   |   | - |   |
|     Adoption      of asset and liability     provisions      of ASC Topic 715                               |   |                              | (1.4   | ) |   |   |  - |   |   |   |  - |   |
|                                                                                                                                                     |   |                              |   |   |   |   |   |   |   |   |   |   |
|         Total                                                                                                    |   | $                                 | 828.5  |   |   | $ | (40.7 | ) |   | $ | (34.0 | ) |
|                                                                                                                                                     |   |                              |   |   |   |   |   |   |   |   |   |   |

| (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 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,       |        |
|--------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|-------------|
|                                                                                                                           |   |  2008         |        |   | 2009 |   |
|                                                                                                                           |   | Assets             |        |   | Liabilities |   |   | Assets |   |   | Liabilities |   |
|                                                                                                                           |   | (In      millions) |        |
|                                                                                                                           |   |               |        |   |   |   |   |   |   |   |   |   |
| Tax effect of temporary differences  related to:                                            |   |               |        |   |   |   |   |   |   |   |   |   |
|   Inventories                                                                                                        |   | $                  | 1.8         |   |   | $ | (4.6 | ) |   | $ | 3.1 |   |   | $ | (4.3 | ) |
|   Marketable securities                                                                                         |   |               | 19.9        |   |   |   | (113.5 | ) |   |   | 15.6 |   |   |   | (120.7 | ) |
|   Property and equipment                                                                                   |   |               | .4          |   |   |   | (78.4 | ) |   |   | - |   |   |   | (86.7 | ) |
|   Accrued OPEB costs                                                                                       |   |               | 10.9        |   |   |   | - |   |   |   | 9.0 |   |   |   | - |   |
|   Accrued      pension costs                                                                                         |   |               | 14.0        |   |   |   | - |   |   |   | 8.0 |   |   |   | - |   |
|   Accrued environmental liabilities and    other deductible differences |   |               |  50.9  |   |   |   |  - |   |   |   |  50.6 |   |   |   |  - |   |
|   Other taxable differences                                                                                |   |               | -           |   |   |   | (28.1 | ) |   |   | - |   |   |   | (30.1 | ) |
|   Investments in subsidiaries and    affiliates                              |   |               |  -     |   |   |   | (216.7 | ) |   |   |  - |   |   |   | (213.7 | ) |
|   Tax      loss and tax credit carryforwards                                                                         |   |               | 171.8       |   |   |   | - |   |   |   | 203.2 |   |   |   | - |   |
|   Valuation      allowance                                                                                           |   |               | (1.2        | ) |   |   | - |   |   |   | (2.0 | ) |   |   | - |   |
|     Adjusted gross deferred tax assets     (liabilities)      |   |               |  268.5 |   |   |   | (441.3 | ) |   |   |  287.5 |   |   |   | (455.5 | ) |
| Netting of items by tax jurisdiction                                                                  |   |               | (90.0       | ) |   |   | 90.0 |   |   |   | (90.1 | ) |   |   | 90.1 |   |
|                                                                                                                           |   |               | 178.5       |   |   |   | (351.3 | ) |   |   | 197.4 |   |   |   | (365.4 | ) |
| Less net current deferred tax asset  (liability)                                            |   |               |  12.1  |   |   |   | (4.7 | ) |   |   |  11.9 |   |   |   | (4.7 | ) |
|                                                                                                                           |   |               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Net noncurrent deferred tax asset      (liability)   |   | $                  | 166.4       |   |   | $ | (346.6 | ) |   | $ | 185.5 |   |   | $ | (360.7 | ) |

----

|                                        |   | December 31,       |   |
|---------------------------------------------|--------|--------------------|--------|
|                                        |   | 2008               |   |   | 2009 |   |
|                                        |   | (In      millions) |   |
|                                        |   |               |   |   |   |   |
| Noncontrolling      interest in net assets: |   |               |   |   |   |   |
|   NL      Industries              |   | $                  | 45.8   |   |   | $ | 43.6 |   |
|   Kronos      Worldwide           |   |               | 15.6   |   |   |   | 15.0 |   |
|   CompX      International        |   |               | 11.9   |   |   |   | 11.1 |   |
|     Total               |   | $                  | 73.3   |   |   | $ | 69.7 |   |

|                                                                    |   |   Years ended December      31, |   |
|-------------------------------------------------------------------------|--------|--------------------------------------|--------|
|                                                                    |   | 2007                                 |   |   | 2008 |   |   | 2009 |   |
|                                                                    |   | (In      millions)                   |   |
|                                                                    |   |                                 |   |   |   |   |   |   |   |
| Noncontrolling      interest in net income (loss) of subsidiaries: |   |                                 |   |   |   |   |   |   |   |
|   NL      Industries                                          |   | $                                    | (2.8   | ) |   | $ | 5.6 |   |   | $ | (1.9 | ) |
|   Kronos      Worldwide                                       |   |                                 | (3.3   | ) |   |   | .4 |   |   |   | (1.7 | ) |
|   CompX      International                                    |   |                                 | 2.6    |   |   |   | (.3 | ) |   |   | (.3 | ) |
|                                                                    |   |                                 |   |   |   |   |   |   |   |   |   |   |
|     Total                                           |   | $                                    | (3.5   | ) |   | $ | 5.7 |   |   | $ | (3.9 | ) |

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

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

|               |   |   Shares  |   |   | Exerciseprice      per share |   |                          | Amountpayableuponexercise |   |
|--------------------|--------|---------------------|--------|--------|-----------------------------------|--------|-------------------------------|---------------------------|--------|
|               |   | (In      thousands) |   |   |                              |   |                          | (In      millions)        |   |
|               |   |                |   |   |                              |   |                          |                      |   |
| NL      Industries |   |                | 81     |   |                              | $      | 5.63      - $11.49            |                      |   | $ | .8 |   |
| CompX              |   |                | 81     |   |                              |   | 12.15 -       19.25 |                      |   |   | 1.4 |   |

----

|                                                                                                                                                                                                                          |   | Years ended December 31, |             |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|------------------|
|                                                                                                                                                                                                                          |   | 2007                     |             |   | 2008 |   |   | 2009 |   |
|                                                                                                                                                                                                                          |   | (In      millions)       |             |
|                                                                                                                                                                                                                          |   |                     |             |   |   |   |   |   |   |
| Accumulated      other comprehensive income (net      of tax):                                                                                                                                                           |   |                     |             |   |   |   |   |   |   |
|   Marketable      securities:                                                                                                                                                                                       |   |                     |             |   |   |   |   |   |   |
|     Balance at beginning of year                                                                                                                                                      |   | $                        | 6.2              |   |   | $ | 27.1 |   |   | $ | 4.3 |   |
|     Other      comprehensive income (loss)                                                                                                                                                      |   |                     | 23.3             |   |   |   | (22.8 | ) |   |   | 4.7 |   |
|     TIMET      distribution                                                                                                                                                                               |   |                     | (2.4             | ) |   |   | - |   |   |   | - |   |
|     Balance at end of year                                                                                                                                                            |   | $                        | 27.1             |   |   | $ | 4.3 |   |   | $ | 9.0 |   |
|                                                                                                                                                                                                                          |   |                     |             |   |   |   |   |   |   |   |   |   |
|   Currency translation:                                                                                                                                                                                        |   |                     |             |   |   |   |   |   |   |   |   |   |
|     Balance at beginning of year                                                                                                                                                      |   | $                        | 39.1             |   |   | $ | 64.5 |   |   | $ | 30.9 |   |
|     Other      comprehensive income (loss)                                                                                                                                                      |   |                     | 29.4             |   |   |   | (33.6 | ) |   |   | 19.4 |   |
|     TIMET      distribution                                                                                                                                                                               |   |                     | (4.0             | ) |   |   | - |   |   |   | - |   |
|     Balance at end of year                                                                                                                                                            |   | $                        | 64.5             |   |   | $ | 30.9 |   |   | $ | 50.3 |   |
|                                                                                                                                                                                                                          |   |                     |             |   |   |   |   |   |   |   |   |   |
|   Defined benefit pension plans:                                                                                                                                                                     |   |                     |             |   |   |   |   |   |   |   |   |   |
|     Balance at beginning of year                                                                                                                                                      |   | $                        | (85.0            | ) |   | $ | (38.8 | ) |   | $ | (86.1 | ) |
|     Other      comprehensive income (loss):                                                                                                                                                               |   |                     |             |   |   |   |   |   |   |   |   |   |
|       Amortization      of prior service cost and net             losses included in net periodic      pension       cost |   |                     |    4.1 |   |   |   |    .1 |   |   |   |    4.9 |   |
|       Net      actuarial gain (loss) arising during       Year                                                                                               |   |                     |  28.0       |   |   |   | (47.4 | ) |   |   |  2.2 |   |
|     Adoption of asset      and liability provisions of       ASC      Topic 715                                                                              |   |                     | 1.2              |   |   |   | - |   |   |   | - |   |
|     TIMET      distribution                                                                                                                                                                               |   |                     | 12.9             |   |   |   | - |   |   |   | - |   |
|     Transfer      of Medite pension plan                                                                                                                                                                  |   |                     | -                |   |   |   | - |   |   |   | 12.9 |   |
|     Balance at end of year                                                                                                                                                            |   | $                        | (38.8            | ) |   | $ | (86.1 | ) |   | $ | (66.1 | ) |
|                                                                                                                                                                                                                          |   |                     |             |   |   |   |   |   |   |   |   |   |
|   OPEB plans:                                                                                                                                                                                                  |   |                     |             |   |   |   |   |   |   |   |   |   |
|     Balance at beginning of year                                                                                                                                                      |   | $                        | (3.4             | ) |   | $ | (1.3 | ) |   | $ | (.1 | ) |
|     Other      comprehensive income (loss):                                                                                                                                                               |   |                     |             |   |   |   |   |   |   |   |   |   |
|       Amortization      of prior service cost and net             losses included in net periodic      OPEB       cost    |   |                     |    -   |   |   |   | (.1 | ) |   |   |    - |   |
|       Net      actuarial gain arising during year                                                                                                                                               |   |                     | .6               |   |   |   | 1.3 |   |   |   | .6 |   |
|     Plan      amendment                                                                                                                                                                                   |   |                     | -                |   |   |   | - |   |   |   | 3.1 |   |
|     TIMET      distribution                                                                                                                                                                               |   |                     | 1.5              |   |   |   | - |   |   |   | - |   |
|     Balance at end of year                                                                                                                                                            |   | $                        | (1.3             | ) |   | $ | (.1 | ) |   | $ | 3.6 |   |
|                                                                                                                                                                                                                          |   |                     |             |   |   |   |   |   |   |   |   |   |
|   Total accumulated other comprehensive    income      (loss):                                                                                                                   |   |                     |             |   |   |   |   |   |   |   |   |   |
|     Balance at beginning of year                                                                                                                                                      |   | $                        | (43.1            | ) |   | $ | 51.5 |   |   | $ | (51.0 | ) |
|     Other      comprehensive income (loss)                                                                                                                                                      |   |                     | 85.4             |   |   |   | (102.5 | ) |   |   | 34.9 |   |
|     Adoption of asset      and liability provisions of       ASC      Topic 715                                                                              |   |                     | 1.2              |   |   |   | - |   |   |   | - |   |
|     TIMET      distribution                                                                                                                                                                               |   |                     | 8.0              |   |   |   | - |   |   |   | - |   |
|     Transfer      of Medite pension plan                                                                                                                                                                  |   |                     | -                |   |   |   | - |   |   |   | 12.9 |   |
|     Balance at end of year                                                                                                                                                            |   | $                        | 51.5             |   |   | $ | (51.0 | ) |   | $ | (3.2 | ) |

----

|                                          |   |  Years ended December 31, |   |
|-----------------------------------------------|--------|--------------------------------|--------|
|                                          |   | 2007                           |   |   | 2008 |   |   | 2009 |   |
|                                          |   | (In      millions)             |   |
|                                          |   |                           |   |   |   |   |   |   |   |
| Securities      earnings:                     |   |                           |   |   |   |   |   |   |   |
|   Dividends      and interest       |   | $                              | 30.9   |   |   | $ | 31.9 |   |   | $ | 26.3 |   |
|   Securities      transactions, net |   |                           | (.1    | ) |   |   | (1.2 | ) |   |   | .5 |   |
|                                          |   |                           |   |   |   |   |   |   |   |   |   |   |
|     Total                 |   |                           | 30.8   |   |   |   | 30.7 |   |   |   | 26.8 |   |
|                                          |   |                           |   |   |   |   |   |   |   |   |   |   |
| Insurance      recoveries                     |   |                           | 6.1    |   |   |   | 9.6 |   |   |   | 4.6 |   |
| Currency      transactions, net               |   |                           | (.8    | ) |   |   | 1.3 |   |   |   | 9.7 |   |
| Disposal      of property and equipment, net  |   |                           | (1.3   | ) |   |   | (1.0 | ) |   |   | (1.2 | ) |
| Litigation      settlement gains              |   |                           | -      |   |   |   | 47.9 |   |   |   | 23.1 |   |
| Gain      on sale of business                 |   |                           | -      |   |   |   | - |   |   |   | 6.3 |   |
| Other,      net                               |   |                           | 7.5    |   |   |   | 5.2 |   |   |   | 1.5 |   |
|                                          |   |                           |   |   |   |   |   |   |   |   |   |   |
|     Total                 |   | $                              | 42.3   |   |   | $ | 93.7 |   |   | $ | 70.8 |   |

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

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

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

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

----

|                                                         |   |   December      31, |   |
|--------------------------------------------------------------|--------|--------------------------|--------|
|                                                         |   | 2008                     |   |   | 2009 |   |
|                                                         |   | (In      millions)       |   |
|                                                         |   |                     |   |   |   |   |
| Current      receivables from affiliates:                    |   |                     |   |   |   |   |
|   Contran      – income taxes, net |   | $                        | -      |   |   | $ | 16.2 |   |
|   Other                                            |   |                     | .1     |   |   |   | - |   |
|                                                         |   |                     |   |   |   |   |   |   |
|     Total                                |   | $                        | .1     |   |   | $ | 16.2 |   |
|                                                         |   |                     |   |   |   |   |   |   |
| Current payables to affiliates:               |   |                     |   |   |   |   |   |   |
|   Louisiana Pigment Company,      L.P.   |   | $                        | 14.3   |   |   | $ | 12.0 |   |
|   Contran:                                         |   |                     |   |   |   |   |   |   |
|     Income      taxes, net               |   |                     | 1.3    |   |   |   | - |   |
|     Trade items                     |   |                     | 9.7    |   |   |   | 14.1 |   |
|   TIMET                                            |   |                     | .5     |   |   |   | - |   |
|                                                         |   |                     |   |   |   |   |   |   |
|     Total                                |   | $                        | 25.8   |   |   | $ | 26.1 |   |
|                                                         |   |                     |   |   |   |   |   |   |
|                                                         |   |                     |   |   |   |   |   |   |
| Noncurrent      payables to affiliates - TIMET               |   | $                        | -      |   |   | $ | .3 |   |
|                                                         |   |                     |   |   |   |   |   |   |
| Notes      payable to affiliates(1):                         |   |                     |   |   |   |   |   |   |
|   Valhi      Contran credit facility               |   | $                        | -      |   |   | $ | 54.9 |   |
|   Valhi      Contran promissory notes              |   |                     | -      |   |   |   | 30.0 |   |
|   CompX      TIMET note payable                    |   |                     | 43.0   |   |   |   | 42.2 |   |
|                                                         |   |                     |   |   |   |   |   |   |
|     Total                                |   | $                        | 43.0   |   |   | $ | 127.1 |   |

----

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

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

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

|                                                                                                                                           |   | Years ended December 31, |   |
|------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                                                                           |   | 2007                     |   |   | 2008 |   |   | 2009 |   |
|                                                                                                                                           |   | (In      millions)       |   |
|                                                                                                                                           |   |                     |   |   |   |   |   |   |   |
| Balance      at the beginning of the year                                                                                                      |   | $                        | 59.7   |   |   | $ | 55.7 |   |   | $ | 52.9 |   |
| Additions      charged to expense, net                                                                                                         |   |                     | 4.4    |   |   |   | 6.5 |   |   |   | 5.4 |   |
| Payments,      net                                                                                                                             |   |                     | (8.4   | ) |   |   | (9.3 | ) |   |   | (9.5 | ) |
| Changes      in currency exchange rates                                                                                                        |   |                     | -      |   |   |   | - |   |   |   | .1 |   |
|                                                                                                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
| Balance      at the end of the year                                                                                                            |   | $                        | 55.7   |   |   | $ | 52.9 |   |   | $ | 48.9 |   |
|                                                                                                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
| Amounts recognized in our Consolidated  Balance Sheet at the end of the year: |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Current liabilities                                                                                                           |   | $                        | 15.4   |   |   | $ | 11.6 |   |   | $ | 11.0 |   |
|   Noncurrent liabilities                                                                                                        |   |                     | 40.3   |   |   |   | 41.3 |   |   |   | 37.9 |   |
|                                                                                                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total                                                                                                                  |   | $                        | 55.7   |   |   | $ | 52.9 |   |   | $ | 48.9 |   |

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

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

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

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

|                                                                                             |   | 2007   |   |   | 2008   |   |   | 2009   |   |
|--------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                             |   |   |   |   |   |   |   |   |   |
|              Europe             |   |   | 50     | %      |   |   | 50     | %      |   |   | 50 | % |
|              North      America |   |   | 34     | %      |   |   | 34     | %      |   |   | 32 | % |

----

| Years ending December 31,                 |   | Amount             |   |
|-------------------------------------------|--------|--------------------|--------|
|                                      |   | (In      millions) |   |
|                                      |   |               |   |
|   2010                          |   | $                  | 5.8    |   |
|   2011                          |   |               | 3.8    |   |
|   2012                          |   |               | 2.9    |   |
|   2013                          |   |               | 2.2    |   |
|   2014                          |   |               | 1.0    |   |
|   2015 and thereafter |   |               | 20.0   |   |
|                                      |   |               |   |   |
|     Total(1)          |   | $                  | 35.7   |   |

----

|                                                                                         |   | Years ended December 31, |   |
|----------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                         |   | 2007                     |   |   | 2008 |   |   | 2009 |   |
|                                                                                         |   | (In      millions)       |   |
|                                                                                         |   |                     |   |   |   |   |   |   |   |
| Unrecognized      tax benefits:                                                              |   |                     |   |   |   |   |   |   |   |
|   Amount      beginning of period                                                  |   | $                        | -      |   |   | $ | 42.4 |   |   | $ | 46.6 |   |
|   Amount      at adoption of FIN No. 48                                            |   |                     | 39.5   |   |   |   | - |   |   |   | - |   |
|   Net      increase (decrease):                                                    |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Tax      positions taken in prior periods                            |   |                     | (1.8   | ) |   |   | (2.1 | ) |   |   | (5.3 | ) |
|     Tax      positions taken in current period                           |   |                     | 10.8   |   |   |   | 11.8 |   |   |   | (6.4 | ) |
|   Settlements      with taxing authorities –   cash      paid |   |                     | (.6    | ) |   |   | (.1 | ) |   |   | (.1 | ) |
|   Lapse      of applicable statute of limitations                                  |   |                     | (6.5   | ) |   |   | (4.1 | ) |   |   | (3.7 | ) |
|   Changes      in currency exchange rates                                          |   |                     | 1.0    |   |   |   | (1.3 | ) |   |   | .7 |   |
|                                                                                         |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Amount      at end of period                                                     |   | $                        | 42.4   |   |   | $ | 46.6 |   |   | $ | 31.8 |   |
|                                                                                         |   |                     |   |   |   |   |   |   |   |   |   |   |

----

|                                        |   | Fair      Value Measurements |   |
|---------------------------------------------|--------|------------------------------|--------|
|                                        |   | Total                        |   |   | Quoted      Prices in Active Markets (Level      1) |   |   | Significant      Other Observable Inputs (Level      2) |   |   | Significant      Unobservable Inputs (Level      3) |   |
|                                        |   | (In      millions)           |   |
|                                        |   |                         |   |   |   |   |   |   |   |   |   |   |
| December      31, 2008:                     |   |                         |   |   |   |   |   |   |   |   |   |   |
|   Marketable      securities:     |   |                         |   |   |   |   |   |   |   |   |   |   |
|     Current             |   | $                            | 8.8    |   |   | $ | - |   |   | $ | 8.8 |   |   | $ | - |   |
|     Noncurrent          |   |                         | 272.0  |   |   |   | 21.6 |   |   |   | .4 |   |   |   | 250.0 |   |
|                                        |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Currency      forward contracts |   |                         | (1.6   | ) |   |   | (1.6 | ) |   |   | - |   |   |   | - |   |
|                                        |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December      31, 2009:                     |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Marketable      securities:     |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Current             |   | $                            | 6.1    |   |   | $ | - |   |   | $ | 6.1 |   |   | $ | - |   |
|     Noncurrent          |   |                         | 279.5  |   |   |   | 28.6 |   |   |   | .9 |   |   |   | 250.0 |   |
|                                        |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Currency      forward contracts |   |                         | 1.6    |   |   |   | 1.6 |   |   |   | - |   |   |   | - |   |
|                                        |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| ·   | an      aggregate of $48.0 million for an equivalent value of Canadian dollars at      an exchange rate of Cdn. $1.04 per U.S. dollar.  These contracts      with Wachovia Bank, National Association, mature from January 2010 through      December 2010 and are subject to early redemption provisions at our      option; and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an      aggregate of $64.0 million for an equivalent value of Norwegian kroner at      exchange rates ranging from kroner 5.83 to kroner 6.06 per U.S.      dollar.  These contracts with DnB Nor Bank ASA mature from      February 2010 through January 2011 and are subject to early redemption      provisins at our option. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                             |   | December 31,         |   |
|------------------------------------------------------------------|--------|----------------------|--------|
|                                                             |   | 2008                 |   |   | 2009 |   |
|                                                             |   | Carrying amount |   |   | FairValue |   |   | Carrying amount |   |   | Fairvalue |   |
|                                                             |   | (In      millions)   |   |
|                                                             |   |                 |   |   |   |   |   |   |   |   |   |   |
| Cash,      cash equivalents and restricted cash equivalents |   | $                    | 46.4   |   |   | $ | 46.4 |   |   | $ | 78.0 |   |   | $ | 78.0 |   |
| Promissory      note receivable                                  |   |                 | 15.0   |   |   |   | 15.0 |   |   |   | 15.0 |   |   |   | 15.0 |   |
|                                                             |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term      debt (excluding capitalized leases):              |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Publicly-traded      fixed rate debt -               |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     KII      Senior Secured Notes            |   | $                    | 560.0  |   |   | $ | 129.4 |   |   | $ | 574.6 |   |   | $ | 466.2 |   |
|   Snake      River Sugar Company fixed rate loans      |   |                 | 250.0  |   |   |   | 250.0 |   |   |   | 250.0 |   |   |   | 250.0 |   |
|   CompX      variable rate promissory note             |   |                 | 43.0   |   |   |   | 43.0 |   |   |   | 42.2 |   |   |   | 42.2 |   |
|   Variable      rate debt to Contran                   |   |                 | -      |   |   |   | - |   |   |   | 84.9 |   |   |   | 84.9 |   |
|   Variable      rate bank credit facilities            |   |                 | 63.2   |   |   |   | 63.2 |   |   |   | 29.1 |   |   |   | 29.1 |   |
|   Other      fixed-rate debt                           |   |                 | .9     |   |   |   | .9 |   |   |   | .5 |   |   |   | .5 |   |
|                                                             |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noncontrolling      interest in:                                 |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   NL      common stock                                 |   | $                    | 45.8   |   |   | $ | 110.0 |   |   | $ | 43.6 |   |   | $ | 57.1 |   |
|   Kronos      common stock                             |   |                 | 15.6   |   |   |   | 27.6 |   |   |   | 15.0 |   |   |   | 38.4 |   |
|   CompX      common stock                              |   |                 | 11.9   |   |   |   | 8.5 |   |   |   | 11.1 |   |   |   | 12.2 |   |
|                                                             |   |                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Valhi      stockholders' equity                                  |   | $                    | 468.8  |   |   | $ | 1,223.4 |   |   | $ | 428.7 |   |   | $ | 1,597.3 |   |

|                                                                                                                                                                 |   | Quarter ended                        |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|--------|
|                                                                                                                                                                 |   | March 31                                  |   |   | June 30 |   |   | Sept. 30 |   |   | Dec. 31 |   |
|                                                                                                                                                                 |   | (In      millions, except per share data) |   |
|                                                                                                                                                                 |   |                                      |   |   |   |   |   |   |   |   |   |   |
| 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)(1)                                                                                                        |   | $                                         | (5.8   | ) |   | $ | 1.1 |   |   | $ | (25.5 | ) |   | $ | 35.1 |   |
|                                                                                                                                                                 |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Net income      (loss) attributable        to      Valhi stockholders      (2)      |   |                                      | (5.9   | ) |   |   | (.2 | ) |   |   | (23.2 | ) |   |   | 28.5 |   |
|                                                                                                                                                                 |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Per basic share      -                                                                                                                                     |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Net      income (loss) attributable        to      Valhi stockholders                    |   | $                                         | (.05   | ) |   | $ | - |   |   | $ | (.20 | ) |   | $ | .25 |   |
|                                                                                                                                                                 |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                 |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Year      ended December 31, 2009                                                                                                                                    |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                 |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net sales                                                                                                                                                       |   | $                                         | 277.3  |   |   | $ | 312.1 |   |   | $ | 341.6 |   |   | $ | 341.1 |   |
| Gross      margin                                                                                                                                                    |   |                                      | 4.6    |   |   |   | 16.2 |   |   |   | 60.1 |   |   |   | 55.5 |   |
| Operating income                                                                                                                                                |   |                                      | (33.0  | ) |   |   | (27.6 | ) |   |   | 13.2 |   |   |   | 5.8 |   |
|                                                                                                                                                                 |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Net      income (loss)(2)                                                                                                        |   | $                                         | (23.4  | ) |   | $ | (20.6 | ) |   | $ | 9.4 |   |   | $ | (3.5 | ) |
|                                                                                                                                                                 |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Net income      (loss) attributable        to      Valhi stockholders      (2) |   |                                      | (20.0  | ) |   |   | (19.0 | ) |   |   | 8.4 |   |   |   | (3.6 | ) |
|                                                                                                                                                                 |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Per basic share:                                                                                                                                           |   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Net      income (loss) attributable        to      Valhi stockholders                    |   | $                                         | (.18   | ) |   | $ | (.16 | ) |   | $ | .07 |   |   | $ | (.03 | ) |

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

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

|   |   |
|--------|--------|

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

|   | · | a      $7.8 million after-tax and noncontrolling interest gain as a result of a litigation      settlement in the first quarter, see Note 15;  and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

----

|                                                                                      |   | December 31,  |    |
|-------------------------------------------------------------------------------------------|--------|--------------------|---------|
|                                                                                      |   | 2008               |    |   | 2009 |   |
|                                                                                      |   |               |    |   |   |   |
| Current      assets:                                                                      |   |               |    |   |   |   |
|   Cash and cash equivalents                                      |   | $                  | 1.6     |   |   | $ | 1.4 |   |
|   Restricted cash equivalents                                         |   |               | .5      |   |   |   | - |   |
|   Accounts receivable                                                      |   |               | .2      |   |   |   | .5 |   |
|   Receivables from subsidiaries and affiliates:             |   |               |    |   |   |   |   |   |
|     Income      taxes, net                                            |   |               | -       |   |   |   | 13.3 |   |
|     Other                                                             |   |               | .9      |   |   |   | .4 |   |
|   Deferred income taxes                                               |   |               | 1.7     |   |   |   | 3.0 |   |
|   Other                                                                         |   |               | .2      |   |   |   | .1 |   |
|                                                                                      |   |               |    |   |   |   |   |   |
|       Total current assets                        |   |               | 5.1     |   |   |   | 18.7 |   |
|                                                                                      |   |               |    |   |   |   |   |   |
| Other assets:                                                                        |   |               |    |   |   |   |   |   |
|   Marketable securities                                               |   |               | 257.3   |   |   |   | 260.3 |   |
|   Investment in and advances to subsidiaries      |   |               | 798.2   |   |   |   | 813.2 |   |
|   Other assets                                                             |   |               | .1      |   |   |   | .7 |   |
|   Property and equipment, net                                    |   |               | 1.2     |   |   |   | - |   |
|                                                                                      |   |               |    |   |   |   |   |   |
|       Total other assets                          |   |               | 1,056.8 |   |   |   | 1,074.2 |   |
|                                                                                      |   |               |    |   |   |   |   |   |
|       Total      assets                                     |   | $                  | 1,061.9 |   |   | $ | 1,092.9 |   |
|                                                                                      |   |               |    |   |   |   |   |   |
| Current liabilities:                                                                 |   |               |    |   |   |   |   |   |
|   Current      maturities of long-term debt                                     |   | $                  | 7.3     |   |   | $ | - |   |
|   Payables to subsidiaries and affiliates:                  |   |               |    |   |   |   |   |   |
|     Income taxes, net                                       |   |               | 2.9     |   |   |   | - |   |
|     Other                                                        |   |               | 3.0     |   |   |   | .1 |   |
|   Accounts payable and accrued liabilities                  |   |               | 2.0     |   |   |   | 1.8 |   |
|                                                                                      |   |               |    |   |   |   |   |   |
|       Total current liabilities                   |   |               | 15.2    |   |   |   | 1.9 |   |
|                                                                                      |   |               |    |   |   |   |   |   |
| Noncurrent liabilities:                                                              |   |               |    |   |   |   |   |   |
|   Long-term debt                                                      |   |               | 250.0   |   |   |   | 334.9 |   |
|   Deferred income taxes                                               |   |               | 302.1   |   |   |   | 311.8 |   |
|   Other                                                                         |   |               | 25.8    |   |   |   | 15.6 |   |
|                                                                                      |   |               |    |   |   |   |   |   |
|       Total noncurrent liabilities                |   |               | 577.9   |   |   |   | 662.3 |   |
|                                                                                      |   |               |    |   |   |   |   |   |
| Stockholders' equity                                                                 |   |               | 468.8   |   |   |   | 428.7 |   |
|                                                                                      |   |               |    |   |   |   |   |   |
|       Total      liabilities and stockholders’ equity |   | $                  | 1,061.9 |   |   | $ | 1,092.9 |   |

----

|                                                                                              |   | Years ended December 31, |   |
|---------------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                              |   | 2007                     |   |   | 2008 |   |   | 2009 |   |
|                                                                                              |   |                     |   |   |   |   |   |   |   |
| Revenues      and other income:                                                                   |   |                     |   |   |   |   |   |   |   |
|   Interest and dividend income                                           |   | $                        | 29.2   |   |   | $ | 27.0 |   |   | $ | 26.2 |   |
|   Equity      in earnings (losses) of   subsidiaries      and affiliates |   |                     | (63.0  | ) |   |   |  2.0 |   |   |   | (60.5 | ) |
|   Gain      on sale of business                                                         |   |                     | -      |   |   |   | - |   |   |   | 6.3 |   |
|   Other      income, net                                                           |   |                     | 3.8    |   |   |   | 2.3 |   |   |   | .1 |   |
|                                                                                              |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total      revenues and other income                                      |   |                     | (30.0  | ) |   |   | 31.3 |   |   |   | (27.9 | ) |
|                                                                                              |   |                     |   |   |   |   |   |   |   |   |   |   |
| Costs and expenses:                                                                     |   |                     |   |   |   |   |   |   |   |   |   |   |
|   General and administrative                                                  |   |                     | 7.6    |   |   |   | 6.6 |   |   |   | 6.3 |   |
|   Interest                                                                              |   |                     | 24.1   |   |   |   | 24.2 |   |   |   | 24.5 |   |
|                                                                                              |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total      costs and expenses                                             |   |                     | 31.7   |   |   |   | 30.8 |   |   |   | 30.8 |   |
|                                                                                              |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Income (loss)      before income taxes                                 |   |                     | (61.7  | ) |   |   | .5 |   |   |   | (58.7 | ) |
|                                                                                              |   |                     |   |   |   |   |   |   |   |   |   |   |
| Provision for income taxes (benefit)                                          |   |                     | (16.0  | ) |   |   | 1.3 |   |   |   | (24.5 | ) |
|                                                                                              |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Net      income (loss)                                                                |   | $                        | (45.7  | ) |   | $ | (.8 | ) |   | $ | (34.2 | ) |
|                                                                                              |   |                     |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |                     |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                                                       |   | Years ended December 31, |       |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|------------|
|                                                                                                                                       |   | 2007                     |       |   | 2008 |   |   | 2009 |   |
|                                                                                                                                       |   |                     |       |   |   |   |   |   |   |
| Cash      flows from operating activities:                                                                                                 |   |                     |       |   |   |   |   |   |   |
|   Net income      (loss)                                                                                                    |   | $                        | (45.7      | ) |   | $ | (.8 | ) |   | $ | (34.2 | ) |
|   Deferred income taxes                                                                                                |   |                     | (19.5      | ) |   |   | (1.8 | ) |   |   | .5 |   |
|   Gain      on sale of business                                                                                                  |   |                     | -          |   |   |   | - |   |   |   | (6.3 | ) |
|   Equity in earnings of subsidiaries   and affiliates                                    |   |                     |  63.0 |   |   |   | (2.0 | ) |   |   |  60.5 |   |
|   Cash      dividends from subsidiaries                                                                           |   |                     | 49.2       |   |   |   | 51.0 |   |   |   | 31.2 |   |
|   Other, net                                                                                                                |   |                     | .1         |   |   |   | .1 |   |   |   | (.1 | ) |
|   Net change in assets and liabilities                                                                  |   |                     | 12.8       |   |   |   | 8.1 |   |   |   | (26.8 | ) |
|                                                                                                                                       |   |                     |       |   |   |   |   |   |   |   |   |   |
|       Net cash provided by operating       activities |   |                     |  59.9 |   |   |   |  54.6 |   |   |   |  24.8 |   |
|                                                                                                                                       |   |                     |       |   |   |   |   |   |   |   |   |   |
| Cash flows from investing activities:                                                                                  |   |                     |       |   |   |   |   |   |   |   |   |   |
|   Purchases of TIMET common stock                                                                            |   |                     | (27.5      | ) |   |   | - |   |   |   | - |   |
|   Loans to subsidiaries and affiliates:                                                                      |   |                     |       |   |   |   |   |   |   |   |   |   |
|     Loans                                                                                                              |   |                     | (20.1      | ) |   |   | (32.2 | ) |   |   | (55.2 | ) |
|     Collections                                                                                                        |   |                     | -          |   |   |   | - |   |   |   | .6 |   |
|   Proceeds      from sale of business                                                                                            |   |                     | -          |   |   |   | - |   |   |   | 6.7 |   |
|   Investment in other subsidiary                                                                                  |   |                     | (5.3       | ) |   |   | (3.1 | ) |   |   | (5.5 | ) |
|   Change in restricted cash equivalents, net                                                            |   |                     | .1         |   |   |   | - |   |   |   | - |   |
|   Other, net                                                                                                                |   |                     | -          |   |   |   | (.2 | ) |   |   | (.8 | ) |
|                                                                                                                                       |   |                     |       |   |   |   |   |   |   |   |   |   |
|       Net cash used      in investing activities                                         |   |                     | (52.8      | ) |   |   | (35.5 | ) |   |   | (54.2 | ) |
|                                                                                                                                       |   |                     |       |   |   |   |   |   |   |   |   |   |

----

|                                                                                                                                                 |   | Years ended December 31, |        |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|-------------|
|                                                                                                                                                 |   | 2007                     |        |   | 2008 |   |   | 2009 |   |
|                                                                                                                                                 |   |                     |        |   |   |   |   |   |   |
| Cash      flows from financing activities:                                                                                                           |   |                     |        |   |   |   |   |   |   |
|   Indebtedness:                                                                                                                            |   |                     |        |   |   |   |   |   |   |
|     Borrowings                                                                                                                   |   | $                        | -           |   |   | $ | 47.6 |   |   | $ | 70.7 |   |
|     Principal payments                                                                                                      |   |                     | -           |   |   |   | (40.3 | ) |   |   | (78.0 | ) |
|   Loans      from affiliates:                                                                                                              |   |                     |        |   |   |   |   |   |   |   |   |   |
|     Borrowings                                                                                                                   |   |                     | -           |   |   |   | 3.0 |   |   |   | 99.6 |   |
|     Principal      payments                                                                                                      |   |                     | -           |   |   |   | (.7 | ) |   |   | (17.7 | ) |
|   Cash      dividends paid                                                                                                                 |   |                     | (45.6       | ) |   |   | (45.5 | ) |   |   | (45.4 | ) |
|   Treasury stock acquired                                                                                                        |   |                     | (11.1       | ) |   |   | - |   |   |   | - |   |
|   Other, net                                                                                                                          |   |                     | .7          |   |   |   | - |   |   |   | - |   |
|                                                                                                                                                 |   |                     |        |   |   |   |   |   |   |   |   |   |
|       Net cash provided      by (used in)       financing activities |   |                     | (56.0       | ) |   |   | (35.9 | ) |   |   |  29.2 |   |
|                                                                                                                                                 |   |                     |        |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents:                                                                                                            |   |                     |        |   |   |   |   |   |   |   |   |   |
|   Net decrease                                                                                                                        |   |                     | (48.9       | ) |   |   | (16.8 | ) |   |   | (.2 | ) |
|   Balance at beginning of year                                                                                         |   |                     | 67.3        |   |   |   | 18.4 |   |   |   | 1.6 |   |
|                                                                                                                                                 |   |                     |        |   |   |   |   |   |   |   |   |   |
|   Balance at end of year                                                                                               |   | $                        | 18.4        |   |   | $ | 1.6 |   |   | $ | 1.4 |   |
|                                                                                                                                                 |   |                     |        |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                 |   |                     |        |   |   |   |   |   |   |   |   |   |
| Supplemental disclosures –   Cash paid (received) for:                                                 |   |                     |        |   |   |   |   |   |   |   |   |   |
|     Interest                                                                                                                     |   | $                        | 24.0        |   |   | $ | 24.1 |   |   | $ | 24.5 |   |
|     Income taxes, net                                                                                                  |   |                     | (10.9       | ) |   |   | (6.2 | ) |   |   | .5 |   |
|                                                                                                                                                 |   |                     |        |   |   |   |   |   |   |   |   |   |
|   Noncash      investing activity:                                                                                                         |   |                     |        |   |   |   |   |   |   |   |   |   |
|     Note      receivable from sale of business                                                                                   |   |                     | -           |   |   |   | - |   |   |   | .7 |   |
|                                                                                                                                                 |   |                     |        |   |   |   |   |   |   |   |   |   |
|   Noncash      financing activity:                                                                                                         |   |                     |        |   |   |   |   |   |   |   |   |   |
|     Dividend      of TIMET common stock                                                                                          |   |                     | 897.4       |   |   |   | - |   |   |   | - |   |
|     Issuance      of preferred stock in     Settlement      of tax obligation                           |   |                     |  667.3 |   |   |   |  - |   |   |   |  - |   |

----

|                                                   |   | December 31, |   |
|--------------------------------------------------------|--------|--------------|--------|
|                                                   |   | 2008         |   |   | 2009 |   |
|                                                   |   |         |   |   |   |   |
| Investment      in:                                    |   |         |   |   |   |   |
|   Kronos      Worldwide, Inc. (NYSE: KRO)    |   | $            | 451.2  |   |   | $ | 447.9 |   |
|   NL      Industries (NYSE: NL)              |   |         | 284.9  |   |   |   | 264.2 |   |
|   Tremont      LLC                           |   |         | 11.1   |   |   |   | 15.1 |   |
|   Waste      Control Specialists LLC         |   |         | 50.1   |   |   |   | 81.5 |   |
|   Medite                                     |   |         | (5.9   | ) |   |   | (.1 | ) |
|       Total              |   |         | 791.4  |   |   |   | 808.6 |   |
|                                                   |   |         |   |   |   |   |   |   |
| Noncurrent      loans to Waste Control Specialists LLC |   |         | 6.8    |   |   |   | 4.6 |   |
|                                                   |   |         |   |   |   |   |   |   |
|       Total              |   | $            | 798.2  |   |   | $ | 813.2 |   |
|                                                   |   |         |   |   |   |   |   |   |
|                                                   |   |         |   |   |   |   |   |   |

|                                                       |   | Years ended December 31, |   |
|------------------------------------------------------------|--------|--------------------------|--------|
|                                                       |   | 2007                     |   |   | 2008 |   |   | 2009 |   |
|                                                       |   | (In      millions)       |   |
|                                                       |   |                     |   |   |   |   |   |   |   |
| Equity      in earnings of subsidiaries and affiliate |   |                     |   |   |   |   |   |   |   |
|                                                       |   |                     |   |   |   |   |   |   |   |
| Kronos      Worldwide                                      |   | $                        | (39.0  | ) |   | $ | 4.2 |   |   | $ | (21.6 | ) |
| NL      Industries                                         |   |                     | (29.9  | ) |   |   | 19.4 |   |   |   | (16.9 | ) |
| Tremont      LLC                                           |   |                     | 16.6   |   |   |   | (1.9 | ) |   |   | 6.0 |   |
| Waste      Control Specialists LLC                         |   |                     | (15.2  | ) |   |   | (22.6 | ) |   |   | (27.6 | ) |
| Valcor      and Medite                                     |   |                     | 2.6    |   |   |   | 2.9 |   |   |   | (.4 | ) |
| TIMET                                                      |   |                     | 1.9    |   |   |   | - |   |   |   | - |   |
|                                                       |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total                              |   | $                        | (63.0  | ) |   | $ | 2.0 |   |   | $ | (60.5 | ) |
|                                                       |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash      dividends from subsidiaries                      |   |                     |   |   |   |   |   |   |   |   |   |   |
|                                                       |   |                     |   |   |   |   |   |   |   |   |   |   |
| Kronos      Worldwide                                      |   | $                        | 29.0   |   |   | $ | 29.0 |   |   | $ | - |   |
| NL      Industries                                         |   |                     | 20.2   |   |   |   | 20.2 |   |   |   | 20.2 |   |
| Tremont      LLC                                           |   |                     | -      |   |   |   | 1.8 |   |   |   | 11.0 |   |
|                                                       |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total                              |   | $                        | 49.2   |   |   | $ | 51.0 |   |   | $ | 31.2 |   |

|                                              |   | December 31, |   |
|---------------------------------------------------|--------|--------------|--------|
|                                              |   | 2008         |   |   | 2009 |   |
|                                              |   |         |   |   |   |   |
| Snake      River Sugar Company                    |   | $            | 250.0  |   |   | $ | 250.0 |   |
| Revolving      bank credit facility               |   |         | 7.3    |   |   |   | - |   |
| Contran      credit facility                      |   |         | -      |   |   |   | 54.9 |   |
| Promissory      note payable to Contran           |   |         | -      |   |   |   | 30.0 |   |
|     Total                     |   |         | 257.3  |   |   |   | 334.9 |   |
|   Less      current maturities          |   |         | 7.3    |   |   |   | - |   |
|     Total      long-term debt |   | $            | 250.0  |   |   | $ | 334.9 |   |

|                                                                              |   | Years ended December 31, |   |
|-----------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                              |   | 2007                     |   |   | 2008 |   |   | 2009 |   |
|                                                                              |   | (In      millions)       |   |
|                                                                              |   |                     |   |   |   |   |   |   |   |
| Components of provision for income taxes (benefit): |   |                     |   |   |   |   |   |   |   |
|   Currently payable (refundable)                         |   | $                        | .2     |   |   | $ | (4.8 | ) |   | $ | (15.6 | ) |
|   Deferred income taxes (benefit)                        |   |                     | (16.2  | ) |   |   | 6.1 |   |   |   | (8.9 | ) |
|                                                                              |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total                                                     |   | $                        | (16.0  | ) |   | $ | 1.3 |   |   | $ | (24.5 | ) |
|                                                                              |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash paid (received) for income taxes, net:         |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Received from subsidiaries                                  |   | $                        | (16.8  | ) |   | $ | (11.0 | ) |   | $ | (1.9 | ) |
|   Paid to Contran                                             |   |                     | 5.8    |   |   |   | 4.6 |   |   |   | 2.2 |   |
|   Paid to tax authorities                                |   |                     | .1     |   |   |   | .2 |   |   |   | .2 |   |
|                                                                              |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Total                                                     |   | $                        | (10.9  | ) |   | $ | (6.2 | ) |   | $ | .5 |   |

|                                                                                                                                |   |               |      |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|-----------|
|                                                                                                                                |   | December 31,       |      |
|                                                                                                                                |   | 2008               |      |   | 2009 |   |
|                                                                                                                                |   | (In      millions) |      |
|                                                                                                                                |   |               |      |   |   |   |
| Components of the net deferred tax asset (liability) -                                      |   |               |      |   |   |   |
|  tax effect of temporary differences related to:                                                 |   |               |      |   |   |   |
|     Investment      in:                                                                                         |   |               |      |   |   |   |
|       The      Amalgamated Sugar Company LLC                                                |   | $                  | (106.3    | ) |   | $ | (114.6 | ) |
|       Kronos Worldwide                                                                           |   |               | (194.2    | ) |   |   | (192.1 | ) |
|     Federal      and state loss carryforwards and other     income      tax attributes |   |               |  3.9 |   |   |   |  5.3 |   |
|     Accrued liabilities and other deductible differences                               |   |               | 7.1       |   |   |   | 3.5 |   |
|     Other taxable differences                                                                         |   |               | (10.9     | ) |   |   | (10.9 | ) |
|                                                                                                                                |   |               |      |   |   |   |   |   |
|       Total                                                                                           |   | $                  | (300.4    | ) |   | $ | (308.8 | ) |
|                                                                                                                                |   |               |      |   |   |   |   |   |
| Current      deferred tax asset                                                                                                     |   | $                  | 1.7       |   |   | $ | 3.0 |   |
| Noncurrent      deferred tax liability                                                                                              |   |               | (302.1    | ) |   |   | (311.8 | ) |
|                                                                                                                                |   |               |      |   |   |   |   |   |
|       Total                                                                                           |   | $                  | (300.4    | ) |   | $ | (308.8 | ) |