##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-Q
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
 OF THE SECURITIES EXCHANGE ACT OF 1934
  For the quarterly period ended March 31, 2008
  Commission file number 1-32669
  TRONOX INCORPORATED
 (Exact Name of Registrant as
    Specified in its Charter)
  Delaware

20-2868245(State or Other Jurisdiction
    of
    Incorporation or Organization)

(I.R.S. Employer
    Identification Number)   One Leadership Square, Suite 300
 211 N. Robinson Ave, Oklahoma City, Oklahoma
    73102
 (Address of principal executive
    offices)
  Registrants telephone number, including area code:
 (405) 775-5000
   þ o
  Rule 12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ




---



##### 



Tronox
    Incorporated
  Form 10-Q
  Table of
    Contents
  PagePART I  FINANCIAL
    INFORMATIONItem 1.


Financial Statements (Unaudited)Condensed Consolidated Statements of Operations
    for the Three Months Ended March 31, 2008 and 2007


1Condensed Consolidated Balance Sheets at
    March 31, 2008, and December 31, 2007


2Condensed Consolidated Statements of Cash Flows
    for the Three Months Ended March 31, 2008 and 2007


3Notes to Condensed Consolidated Financial
    Statements


4Item 2.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


28Item 3.


Quantitative and Qualitative Disclosures About
    Market Risk


35Item 4.


Controls and Procedures


36PART II  OTHER INFORMATIONItem 1.


Legal Proceedings


37Item 1A.


Risk Factors


39Item 2.


Unregistered Sales of Equity Securities and Use
    of Proceeds


40Item 3.


Defaults Upon Senior Securities


40Item 4.


Submission of Matters to a Vote of Security
    Holders


40Item 5.


Other Information


40Item 6.


Exhibits


40Signatures


42Certification Pursuant to Section 302Certification Pursuant to Section 302Certification Pursuant to Section 906Certification Pursuant to Section 906




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##### Table of Contents



PART I 
    FINANCIAL INFORMATION  Item 1.
    Financial
    Statements  TRONOX
    INCORPORATED
  CONDENSED CONSOLIDATED STATEMENTS OF
    OPERATIONS
 (In millions, except per share data)
 (Unaudited)
  Three Months Ended March 31,2008


2007Net sales

$
349.1


$
339.1Cost of goods sold


323.6



301.9Gross margin


25.5



37.2Selling, general and administrative expenses


27.6



35.0Gain on land sales


5.3



Provision for environmental remediation and restoration, net of
    reimbursements






0.23.2



2.0Interest and debt expense


(12.3
)


(12.3
)Other income, net


6.1



1.7Loss from continuing operations before income taxes


(3.0
)


(8.6
)Income tax benefit (provision)


1.6



(0.4
)Loss from continuing operations


(1.4
)


(9.0
)Income (loss) from discontinued operations, net of income tax
    benefit of nil and $0.2, respectively


1.2



(0.4
)Net loss

$
(0.2
)

$
(9.4
)Income (loss) per common share:Basic Continuing operations

$
(0.03
)

$
(0.22
)Discontinued operations


0.03



(0.01
)Net income (loss)

$



$
(0.23
)Diluted Continuing operations

$
(0.03
)

$
(0.22
)Discontinued operations


0.03



(0.01
)Net income (loss)

$



$
(0.23
)Dividends declared per common share

$



$
0.05Weighted average shares outstanding:Basic


40.9



40.6Diluted


40.9



40.6    1




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##### Table of Contents



TRONOX
    INCORPORATED
  CONDENSED CONSOLIDATED BALANCE SHEETS
 (In millions, except share data)
 (Unaudited)
  March 31,


December 31,2008


2007ASSETSCurrent assets:Cash and cash equivalents

$
9.2


$
21.0Accounts receivable, net


272.2



290.5Inventories, net


391.6



350.0Prepaid and other assets


26.0



23.6Income tax receivable


2.9



4.3Deferred income taxes


2.7



3.7Total current assets


704.6



693.1Property, plant and equipment, net


853.7



848.9Goodwill


13.7



12.7Other long-term assets


174.5



168.7Total assets

$
1,746.5


$
1,723.4LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
204.4


$
234.9Accrued liabilities


188.0



197.7Long-term debt due within one year


1.3



9.2Income taxes payable


3.7



6.4Total current liabilities


397.4



448.2Long-term liabilities:Deferred income taxes


58.0



57.2Environmental remediation and/or restoration


99.6



93.9Long-term debt


516.3



475.6Other


223.3



218.9Total noncurrent liabilities


897.2



845.6Commitments and contingencies (Notes 12 and 13)Stockholders equityClass A common stock, par value $0.01 
    100,000,000 shares authorized, 19,036,117 and
    18,746,329 shares, respectively, issued and outstanding


0.2



0.2Class B common stock, par value $0.01 
    100,000,000 shares authorized, 22,889,431 shares
    issued and outstanding


0.2



0.2Capital in excess of par value


492.3



490.8Accumulated deficit


(137.0
)


(136.8
)Accumulated other comprehensive income


100.1



78.2Treasury stock, at cost  292,198 shares and
    210,638 shares, respectively


(3.9
)


(3.0
)Total stockholders equity


451.9



429.6Total liabilities and stockholders equity

$
1,746.5


$
1,723.4    2




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##### Table of Contents



TRONOX
    INCORPORATED
  CONDENSED CONSOLIDATED STATEMENTS OF CASH
    FLOWS
 (In millions)
 (Unaudited)
  Three Months EndedMarch 31,2008


2007Cash flows from operating activitiesNet loss

$
(0.2
)

$
(9.4
)Adjustments to reconcile net cash flows from operating
    activities Depreciation and amortization


28.5



27.9Deferred income taxes


(0.2
)


(3.8
)Gain on sale of assets


(5.4
)


Provision for environmental remediation and restoration, net of
    reimbursements


(2.2
)


1.7Other noncash items affecting net loss


2.8



8.6Changes in assets and liabilities


(50.5
)


(39.9
)Net cash flows from operating activities


(27.2
)


(14.9
)Cash flows from investing activitiesCapital expenditures


(8.3
)


(14.3
)Proceeds from sale of assets


5.5



Net cash flows from investing activities


(2.8
)


(14.3
)Cash flows from financing activitiesStock option exercises






1.2Proceeds from issuance of debt


43.0



Repayment of debt


(10.3
)


(0.5
)Debt issuance costs


(2.1
)


(0.3
)Dividends paid


(2.1
)


(2.1
)Net cash flows from financing activities


28.5



(1.7
)Effects of exchange rate changes on cash and cash equivalents


(10.3
)


(1.2
)Net change in cash and cash equivalents


(11.8
)


(32.1
)Cash and cash equivalents at beginning of period


21.0



76.6Cash and cash equivalents at end of period

$
9.2


$
44.5    3




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS
  1.
    The
    Company  2
    Formation
    2.
    Basis of
    Presentation and Accounting Policies  form 10-K
     4




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Fair Value Measurements FAS 157-2
      3.
    Statement
    of Operations Data    Three Months EndedMarch 31,2008


2007(In millions)Net foreign currency transaction gain (loss)

$
7.0


$
(0.3
)Equity (loss) in net earnings of equity method investees


(0.3
)


0.7Loss on sale of accounts receivable (1)


(0.8
)


Interest income


0.2



0.8Other income (expense)






0.5Total

$
6.1


$
1.7     (1)
    
    Includes interest income accreted
    on collections of securitized receivables. See discussion of
    accounts receivable securitization program in Note 4. 5




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Three Months Ended


Three Months EndedMarch 31, 2008


March 31, 2007Loss from








Loss fromContinuing





Per-Share


Continuing





Per-ShareOperations


Shares


Loss


Operations


Shares


Loss(In millions, except per share amounts)Basic earnings per share

$
(1.4
)


40.9


$
(0.03
)

$
(9.0
)


40.6


$
(0.22
)Effect of dilutive securities:Restricted stock and stock options






















Diluted earnings per share

$
(1.4
)


40.9


$
(0.03
)

$
(9.0
)


40.6


$
(0.22
)     4.
    Balance
    Sheet Data    March 31,


December 31,2008


2007(In millions)Accounts receivable  trade (1)

$
232.4


$
238.7Receivable from Kerr-McGee


17.6



17.9Receivable from the U.S. Department of Energy


11.0



11.0Receivable from insurers


5.9



7.3Other


19.7



29.5Accounts receivable, gross


286.6



304.4Allowance for doubtful accounts


(14.4
)


(13.9
)Accounts receivable, net

$
272.2


$
290.5     (1)
    
    Includes $39.3 million and
    $39.5 million in subordinated retained interest at
    March 31, 2008 and December 31, 2007, respectively,
    related to the accounts receivable securitization program
    discussed below.   6




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        March 31,


December 31,2008


2007(In millions)Raw materials

$
74.7


$
69.6Work-in-progress


15.5



12.8Finished goods (1)


228.7



200.6Materials and supplies


84.4



78.3Inventories, gross


403.3



361.3Allowance for obsolete materials and supplies


(11.7
)


(11.3
)Inventories, net

$
391.6


$
350.0     (1)
    
    Includes $23.3 million and
    $20.8 million in inventory on consignment to others at
    March 31, 2008, and December 31, 2007, respectively.    March 31,


December 31,2008


2007(In millions)Land

$
83.7


$
83.8Buildings


171.5



167.3Machinery and equipment


1,851.9



1,798.6Construction-in-progress


34.4



38.3Other


91.1



88.0Property, plant and equipment, gross


2,232.6



2,176.0Less accumulated depreciation


(1,378.9
)


(1,327.1
)Property, plant and equipment, net

$
853.7


$
848.9  7




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    March 31,


December 31,2008


2007(In millions)Receivable from the U.S. Department of Energy

$
18.2


$
16.1Investments in equity method investees


21.1



21.3Receivables from insurers


14.8



15.3Debt issuance costs, net


10.2



8.4Prepaid pension cost


47.2



46.5Intangible asset  proprietary technology (1)


57.3



55.2Other


5.7



5.9Total other long-term assets

$
174.5


$
168.7     (1)
    
    Associated with the companys
    reportable pigment segment.    March 31,


December 31,2008


2007(In millions)Employee-related costs and benefits

$
47.5


$
37.6Reserves for environmental remediation and
    restoration  current portion


82.2



94.9Sales rebates


16.3



23.3Other


42.0



41.9Total accrued liabilities

$
188.0


$
197.7     March 31,


December 31,2008


2007(In millions)Reserve for uncertain tax positions

$
75.3


$
69.7Pension and postretirement obligations


79.9



77.6Asset retirement obligations (1)


34.0



32.9Reserve for workers compensation and general liability
    claims


15.8



16.6Other (1)


18.3



22.1Total other long-term liabilities

$
223.3


$
218.9     (1)
    
    Includes reclassification of the
    companys long term obligation to rehabilitate the mine
    used in its Australian operations from Other to
    Asset retirement obligations.  Fair
    value measurement
   8




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
              Level 1


Level 2


Level 3(In millions)Foreign currency derivatives

$



$
0.5


$
Natural gas forward contracts






3.0



Subordinated retained interest in accounts receivable (1)









$
39.3Total assets at fair value

$



$
3.5


$
39.3Foreign currency derivatives

$



$
0.5


$
Natural gas forward contracts










Interest rate swap derivatives






1.8



Total liabilities at fair value

$



$
2.3


$
     (1)
    
    Level 3 inputs were used to
    calculate an unrealized fair value loss of $0.7 million
    subsequently subtracted from the face value of receivables to
    obtain the fair value of the subordinated retained interest
    related to the companys account receivable securitization
    program.    5.
    Summarized
    Combined Financial Information of Affiliates   9




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Three Months EndedMarch 31,2008


2007(In millions)Departmental revenues

$
1.7


$
7.9Departmental income


(1.2
)


4.2Income (loss) before taxes


(1.2
)


4.2Net income (loss)


(0.9
)


3.7   6.
    Long-Term
    Debt    March 31,


December 31,2008


2007(In millions)9.5% Senior Unsecured Notes due December 2012

$
350.0


$
350.0Variable-rate term loan due in installments through November 2011


124.6



126.9Revolving credit facility available through November 2010


43.0



Variable-rate note payable due in installments through July 2014






7.9Total debt


517.6



484.8Less: Current portion of long-term debt


(1.3
)


(9.2
)Total long-term debt

$
516.3


$
475.6      10




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Consolidated


ConsolidatedTotal


InterestLeverage Ratio


Coverage RatioFiscal Quarter EndedMarch 31, 2008


4.45:1



1.00:1June 30, 2008


4.90:1



1.00:1September 30, 2008


4.90:1



0.80:1December 31, 2008


4.90:1



0.80:1March 31, 2009


4.50:1



1.25:1June 30, 2009


4.35:1



1.25:1September 30, 2009


3.90:1



1.75:1December 31, 2009


3.50:1



1.75:1   and/or
    7.
    Comprehensive
    Income (Loss)    Three Months EndedMarch 31,2008


2007(In millions)Net loss

$
(0.2
)

$
(9.4
)After tax changes in:Foreign currency translation adjustments


20.7



3.3Cash flow hedge activity:Unrealized gain, net of taxes of nil and $(0.6)


2.8



1.0Reclassification adjustments, net of taxes of nil and $(0.4)


(0.3
)


0.8Benefit plan activity:Amortization of net actuarial loss, net of taxes of nil and
    $(0.4)


0.6



0.9Amortization of net prior service cost, net of taxes of nil and
    $(0.2)


(1.9
)


0.2Total comprehensive income (loss)

$
21.7


$
(3.2
)  11




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  8.
    Income
    Taxes    Three Months EndedMarch 31,2008


2007U.S. statutory tax rate


35.0
%


35.0
%Increases (decreases) resulting from Taxation of foreign operations


20.8



(23.5
)State income taxes


(1.1
)


1.6FIN 48 adjustment


(22.8
)


(5.7
)Valuation allowances


(34.3
)


(14.1
)Tax and interest on agreed audit adjustments


(6.6
)


(0.7
)Prior year accrual adjustments


68.9



Other  net


(6.6
)


2.8Effective income tax rate


53.3
%


(4.6
)%              12




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  and/or
  Tax Sharing Agreement and Tax Allocations
      9.
    Discontinued
    Operations    LitigationEnvironmental


Provisions, LegalProvisions (1)


and Other Costs (1)


Total(In millions)Three months ended March 31, 2008:Total pretax income

$
2.2


$
(1.0
)

$
1.2Tax provision (2)










Total after tax income









$
1.2Three months ended March 31, 2007:Total pretax loss

$
(1.5
)

$
0.9


$
(0.6
)Tax benefit










0.2Total after tax loss









$
(0.4
)  13




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (1)
    
    Litigation and environmental
    provisions along with legal and other costs are attributed to
    discontinued operations on a specific identification basis.
    Environmental provisions are net of reimbursements. Other costs
    are primarily comprised of insurance and ad valorem taxes.(2)
    
    The tax provision on 2008 income
    from discontinued operations was offset by an adjustment to a
    previously established valuation allowance. As a result, no
    income tax provision has been recognized on 2008 income from
    discontinued operations.  10.
    Retirement
    Plans    Retirement Plans


Postretirement PlansThree Months Ended March 31,2008


2007


2008


2007(In millions)Service cost

$
2.2


$
2.9


$
0.2


$
0.4Interest cost


7.5



7.0



0.8



2.1Expected return on plan assets


(9.2
)


(9.8
)






Net amortization Prior service cost (credit)


0.7



0.7



(2.6
)


(0.3
)Net actuarial loss


0.5



0.9



0.1



0.4Total retirement expense

$
1.7


$
1.7


$
(1.5
)

$
2.6       11.
    Employee
    Stock-Based Compensation   14




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      January 2008AssumptionsGrant-date share price

$
7.48Exercise price

$
7.48Risk-free interest rate


3.47
%Expected dividend yield


2.67
%Expected volatility


36
%Expected life (years)


6.2Per-unit
    fair value of options granted

$
2.31       12.
    Contingencies    Reserves forReserves for


Environmental


ReimbursementsLitigation


Remediation


Receivable (1)(In millions)Balance at December 31, 2007

$
9.6


$
188.8


$
67.6Provisions/Accruals










2.2Payments/Settlements






(7.0
)


(2.3
)Balance at March 31, 2008

$
9.6


$
181.8


$
67.5  15




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (1)
    
    Reimbursements for environmental
    remediation and restoration include $2.2 million related to
    the companys former thorium compounds manufacturing,
    uranium and nuclear and refining operations, which are reflected
    in the Condensed Consolidated Statements of Operations as a
    component of loss from discontinued operations (net of taxes).      
    Some sites are in the early stages of investigation, and other
    sites may be identified in the future.
    Remediation activities vary significantly in duration, scope and
    cost from site to site depending on the mix of unique site
    characteristics, applicable technologies and regulatory agencies
    involved.
    Remediation requirements are difficult to predict at sites where
    remedial investigations have not been completed or final
    decisions have not been made regarding remediation requirements,
    technologies or other factors that bear on remediation costs.
    Environmental laws frequently impose joint and several liability
    on all potentially responsible parties (PRPs), and
    it can be difficult to determine the number and financial
    condition and possible defenses of PRPs and their respective
    shares of responsibility for
    clean-up
    costs.
    Environmental laws and regulations, as well as enforcement
    policies and
    clean-up
    levels, are continually changing, and the outcome of court
    proceedings, alternative dispute resolution proceedings
    (including mediation) and discussions with regulatory agencies
    are inherently uncertain.
    Unanticipated construction problems and weather conditions can
    hinder the completion of environmental remediation.
    Some legal matters are in the early stages of investigation or
    proceeding or their outcomes otherwise may be difficult to
    predict, and other legal matters may be identified in the future.
    The inability to implement a planned engineering design or use
    planned technologies and excavation or extraction methods may
    require revisions to the design of remediation measures, which
    can delay remediation and increase costs.
    The identification of additional areas or volumes of
    contamination and changes in costs of labor, equipment and
    technology generate corresponding changes in environmental
    remediation costs.  and/or
 16




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Reserve


ReimbursementBalance at


Receivable atProvisions/


March 31,


March 31,Location of Site

Accruals


2008


2008(Millions of dollars)Henderson, Nevada

$



$
22.9


$
20.8West Chicago, Illinois






51.4



29.2Ambrosia Lake, New Mexico






8.0



Crescent, Oklahoma






9.4



Manville, New Jersey






35.0



17.5Sauget, Illinois






5.7



Cleveland, Oklahoma






3.4



Cushing, Oklahoma






9.4



Jacksonville, Florida






5.0



Riley Pass, South Dakota






1.8



Other sites






29.8



Total of all sites with reserves

$



$
181.8


$
67.5     Environmental
  Henderson,
    Nevada
     17




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Litigation
  Insurance Reimbursement 10-year,
    West
    Chicago, Illinois
   18




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Closed Facility
  Vicinity Areas
    Government Reimbursement
  clean-up
    Ambrosia
    Lake, New Mexico
   19




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  and/or
    Litigation
  Crescent,
    Oklahoma
    New
    Jersey Wood-Treatment Site
   20




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      follow-up
      MSA Reimbursement 
  Sauget,
    Illinois
  60-acre
 21




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Cleveland,
    Oklahoma
  on-site
    Cushing,
    Oklahoma
          Jacksonville,
    Florida
   22




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Riley
    Pass, South Dakota
    Other
    Sites
    Master
    Separation Agreement
       23




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Litigation
    and Claims
  Birmingham,
    Alabama
    Forest
    Products Litigation
  and/or and/or
      Jeans v. Tronox
 24




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Financial Reserves
  Savannah
    Plant
    Financial Reserves
  Other
    Matters
  and/or and/or and/or
  13.
    Commitments  clean-up
 25




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Form 10-K
  14.
    Reporting
    by Business Segment and Geographic Locations  2
  Three Months EndedMarch 31,2008


2007(In millions)Net salesPigment

$
321.6


$
315.4Electrolytic and other chemical products


27.5



23.7Total net sales

$
349.1


$
339.1Operating profit (loss)Pigment

$
(3.0
)

$
7.3Electrolytic and other chemical products


1.7



(0.6
)(1.3
)


6.7Provision for environmental remediation and restoration






(0.2
)Gain on land sales


5.3



Corporate and nonoperating sites


(0.8
)


(4.5
)Total operating profit


3.2



2.0Interest and debt expense


(12.3
)


(12.3
)Other income, net


6.1



1.7Income tax provision


1.6



(0.4
)Income (loss) from continuing operations

$
(1.4
)

$
(9.0
)  26




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  15.
    Related
    Party Transactions  2 2
  16.
    Subsequent
    Event   27




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##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Form 10-K
  Overview
  2
        General
    Factors Affecting the Results of Operations
      
    We, along with our 50% joint venture partner, a subsidiary of
    Exxaro Resources Limited, have given final approval for the
    expansion of the Tiwest titanium dioxide
    (TiO2)
    pigment plant in Kwinana, Western Australia, which was announced
    last year. The project, which will increase the plants
    current annual capacity from 110,000 tonnes per year to
    approximately 150,000 tonnes per year is expected to cost
    approximately A$100 million. Construction is expected to
    begin in 2008, subject to appropriate regulatory approvals, with
    the additional capacity expected to come on line in early 2010.
    The joint venture partners have signed an agreement under which
    Exxaro will provide ongoing funding for the expansion. Tronox
    has the option to contribute its share of the capital at its
    discretion throughout the project and until a date two years
    from commissioning, which will be taken into account when
    calculating its final interest in the expanded production. 28




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##### Table of Contents




    We signed a definitive agreement with RTI International Metals,
    Inc. under which RTI will purchase titanium tetrachloride
    (TiCl4) from our Hamilton, Mississippi, titanium dioxide plant.
    The TiCl4 will be used in the manufacture of titanium sponge at
    a new plant that RTI will build adjacent to our Hamilton
    facility. We expect to generate annual operating profits from
    TiCl4 sales and incremental cost savings in the range of
    $12 million to $15 million once the plant reaches full
    production. RTI estimates the plant will come on line in 2010,
    ramping up production over the next several years.  Results
    of Operations
  Three
    Months Ended March 31, 2008 Compared to Three Months Ended
    March 31, 2007
    Three Months EndedMarch 31,2008


2007


$ Change(In millions)Net salesPigment

$
321.6


$
315.4


$
6.2Electrolytic and other chemical products


27.5



23.7



3.8Total

$
349.1


$
339.1


$
10.0   2 2
       29




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##### Table of Contents



Three Months EndedMarch 31,2008


2007


$ Change(In millions)Operating profit (loss)Pigment

$
(3.0
)

$
7.3


$
(10.3
)Electrolytic and other chemical products


1.7



(0.6
)


2.3Subtotal


(1.3
)


6.7



(8.0
)Provision for environmental remediation and restoration






(0.2
)


0.2Gain on land sales


5.3







5.3Corporate and nonoperating sites


(0.8
)


(4.5
)


3.7Total operating profit


3.2



2.0



1.2Interest and debt expense


(12.3
)


(12.3
)


Other income, net


6.1



1.7



4.4Loss from continuing operations before income taxes

$
(3.0
)

$
(8.6
)

$
5.6   2 three-day
         30




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##### Table of Contents



Liquidity
    and Capital Resources
  General
            Cash Flows from Operating Activities.
 31




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##### Table of Contents



Cash Flows from Investing Activities.
        Cash Flows from Financing Activities.
  Credit Agreement.
   32




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##### Table of Contents



2008
    Credit Agreement Covenant Amendment
    Consolidated


ConsolidatedTotal


InterestLeverage Ratio


Coverage RatioFiscal Quarter EndedMarch 31, 2008


4.45:1



1.00:1June 30, 2008


4.90:1



1.00:1September 30, 2008


4.90:1



0.80:1December 31, 2008


4.90:1



0.80:1March 31, 2009


4.50:1



1.25:1June 30, 2009


4.35:1



1.25:1September 30, 2009


3.90:1



1.75:1December 31, 2009


3.50:1



1.75:1     Risk Factors, Form 10-K 2
  and/or
   33




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##### Table of Contents



Senior Unsecured Notes. 1 2
  Note Payable due July 2014.
  Receivables Securitization.
  Off-Balance
    Sheet Arrangements
    Outlook
     34




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##### Table of Contents



Risk Factors, Form 10-K
  New
    Accounting Pronouncements
  Fair Value Measurements FIN No. FAS 157-2
    Item 3.
    Quantitative
    and Qualitative Disclosure about Market Risk      Notional


Weighted-AverageAmount


Contract Rate(In millions)Maturing in 2008 Euro

$
(50.5
)


1.5612Australian dollar


15.5



0.8858Maturing in 2009 Euro


(6.5
)


1.5458  35




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##### Table of Contents



AverageContract Price% Hedged


$/MMBtuQ2, 2008


70
%

$
7.70Q3, 2008


40
%

$
8.02Q4, 2008


20
%

$
8.53     Item 4.
    Controls
    and Procedures  a)
    Evaluation
    of Disclosure Controls and Procedures    Rules 13a-15(e) 15d-15(e)
  b)
    Changes
    in Internal Control over Financial Reporting  Form 10-Q
 36




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##### Table of Contents



SPECIAL
    NOTE REGARDING FORWARD-LOOKING STATEMENTS
  Form 10-Q. Form 10-Q Form 10-K.
 PART II 
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings  Savannah
    Plant
      Hamilton
    Plant
   37




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##### Table of Contents



New
    Jersey Wood-Treatment Site
      follow-up
      Forest
    Products
  and/or and/or
 38




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##### Table of Contents



May v. Tronox Avance v. Tronox, Jeans v. Tronox
  Form 10-K Form 10-Q.
  Item 1A.
    Risk
    Factors  The
    labor and employment laws in many jurisdictions in which we
    operate are more restrictive than in the U.S. Our relationship
    with our employees could deteriorate, which could adversely
    affect our operations
   39




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##### Table of Contents



Form 10-K
  Item 2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds    Item 3.
    Defaults
    Upon Senior Securities    Item 4.
    Submission
    of Matters to a Vote of Security Holders    Item 5.
    Other
    Information    Item 6.
    Exhibits  3
.1

Amended and restated Certificate of Incorporation of Tronox
    Incorporated (incorporated by reference to Exhibit 3.1 of
    the Registrants current report on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    December 7, 2005).3
.2

Amended and Restated Bylaws of Tronox Incorporated (incorporated
    by reference to Exhibit 3.2 of the Registrants
    current report on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    December 7, 2005).10
.1

First Amendment to the Tronox Incorporated 2005 Long Term
    Incentive Plan (incorporated by reference to Exhibit 10.1
    of the Registrants current report on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    January 14, 2008).10
.2

Second Amendment to Credit Agreement and First Amendment to
    Guarantee and Collateral Agreement, dated as of February 8,
    2008, among Tronox Incorporated, a Delaware corporation, Tronox
    Worldwide LLC, a Delaware limited liability company, the several
    banks and other financial institutions or entities from time to
    time parties thereto, Lehman Brothers Inc. and Credit Suisse, as
    joint lead arrangers and joint bookrunners, ABN Amro Bank N.V.,
    as syndication agent, JPMorgan Chase Bank, N.A. And Citicorp
    USA, Inc., as co-documentation agents, Lehman Commercial Paper
    Inc., as administrative agent, and the parties listed as
    grantors on the signature pages hereto (incorporated by
    reference to Exhibit 10.1 of Registrants current
    report on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    February 13, 2008).10
.3

First Amendment to Rights Agreement, by and between Tronox
    Incorporated and Computershare Trust Company, N.A., dated
    March 12, 2008 (incorporated by reference to
    Exhibit 10.1 of the Registrants current report on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    March 18, 2008).10
.4

Master Supply Agreement by and between Tronox LLC and RTI
    Hamilton, Inc., dated March 25, 2008 (incorporated by
    reference to Exhibit 10.1 of the Registrants current
    report on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    March 31, 2008). 40




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##### Table of Contents



10
.5

Executive Employment Agreement by and between Tronox
    Incorporated and Thomas W. Adams, dated April 1, 2008
    (incorporated by reference to Exhibit 10.1 of the
    Registrants current report on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    April 4, 2008).10
.6

Executive Employment Agreement by and between Tronox
    Incorporated and Mary Mikkelson, dated April 1, 2008
    (incorporated by reference to Exhibit 10.2 of the
    Registrants current report on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    April 4, 2008).10
.7

Executive Employment Agreement by and between Tronox
    Incorporated and Kelly A. Green, dated April 1, 2008
    (incorporated by reference to Exhibit 10.3 of the
    Registrants current report on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    April 4, 2008).10
.8

Executive Employment Agreement by and between Tronox
    Incorporated and Gregory E. Thomas, dated April 1, 2008
    (incorporated by reference to Exhibit 10.4 of the
    Registrants current report on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    April 4, 2008).10
.9

Executive Employment Agreement by and between Tronox
    Incorporated and Robert Y. Brown, III, dated April 1,
    2008 (incorporated by reference to Exhibit 10.5 of the
    Registrants current report on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    April 4, 2008).31
.1*

Certification Pursuant to 15 U.S.C. Section 7241, as
    adopted pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.31
.2*

Certification Pursuant to 15 U.S.C. Section 7241, as
    adopted pursuant to Section 302 of the Sarbanes-Oxley Act
    of 2002.32
.1*

Certification Pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.32
.2*

Certification Pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.     *
    
    Each document marked with an
    asterisk is filed herewith. 41




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##### Table of Contents



SIGNATURES      By:
    /s/  Thomas
    W. Adams   Title:
    Chief Executive Officer  By:
    /s/  Mary
    Mikkelson   Title:
    Senior Vice President and    By:
    /s/  David
    J. Klvac   Title:
    Vice President and Controller  42