##### 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 June 30, 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 and Six Months Ended June 30, 2008 and
    2007


1Condensed Consolidated Balance Sheets at
    June 30, 2008, and December 31, 2007


2Condensed Consolidated Statements of Cash Flows
    for the Six Months Ended June 30, 2008 and 2007


3Notes to Condensed Consolidated Financial
    Statements


4Item 2.


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


31Item 3.


Quantitative and Qualitative Disclosures About
    Market Risk


42Item 4.


Controls and Procedures


43PART II  OTHER
    INFORMATIONItem 1.


Legal Proceedings


44Item 1A.


Risk Factors


46Item 2.


Unregistered Sales of Equity Securities and Use
    of Proceeds


47Item 3.


Defaults Upon Senior Securities


47Item 4.


Submission of Matters to a Vote of Security
    Holders


47Item 5.


Other Information


48Item 6.


Exhibits


48Signatures


49Executive Employment AgreementCertification 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


Six MonthsEnded June 30,


Ended June 30,2008


2007


2008


2007Net sales

$
403.8


$
366.5


$
752.9


$
705.6Cost of goods sold


403.6



336.5



727.2



638.4Gross margin


0.2



30.0



25.7



67.2Selling, general and administrative expenses


27.2



30.0



54.8



65.0Gain on land sales


(12.4
)






(17.7
)


Impairment of goodwill


13.5







13.5



Restructuring charges


4.2







4.2



Provision for environmental remediation and restoration, net of
    reimbursements


0.5



1.5



0.5



1.7(32.8
)


(1.5
)


(29.6
)


0.5Interest and debt expense


(12.7
)


(12.4
)


(25.0
)


(24.7
)Other income, net


0.7



0.7



6.8



2.4Loss from continuing operations before income taxes


(44.8
)


(13.2
)


(47.8
)


(21.8
)Income tax benefit (provision)


14.9



(6.8
)


16.5



(7.2
)Loss from continuing operations


(29.9
)


(20.0
)


(31.3
)


(29.0
)Loss from discontinued operations, net of income tax benefit of
    nil, $0.8, nil and $1.0, respectively


(4.5
)


(1.2
)


(3.3
)


(1.6
)Net loss

$
(34.4
)

$
(21.2
)

$
(34.6
)

$
(30.6
)Loss per common share:Basic Continuing operations

$
(0.73
)

$
(0.49
)

$
(0.76
)

$
(0.71
)Discontinued operations


(0.11
)


(0.03
)


(0.08
)


(0.04
)Net loss

$
(0.84
)

$
(0.52
)

$
(0.84
)

$
(0.75
)Diluted Continuing operations

$
(0.73
)

$
(0.49
)

$
(0.76
)

$
(0.71
)Discontinued operations


(0.11
)


(0.03
)


(0.08
)


(0.04
)Net loss

$
(0.84
)

$
(0.52
)

$
(0.84
)

$
(0.75
)Dividends declared per common share

$



$



$



$
0.05Weighted average shares outstanding:Basic


41.0



40.7



41.0



40.7Diluted


41.0



40.7



41.0



40.7    1




---



##### Table of Contents



TRONOX
    INCORPORATED
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (In millions, except share data)
    (Unaudited)  June 30,


December 31,2008


2007ASSETSCurrent assets:Cash and cash equivalents

$
23.3


$
21.0Accounts receivable, net


289.9



290.5Inventories, net


344.8



350.0Prepaid and other assets


34.9



23.6Income tax receivable


7.9



4.3Deferred income taxes


2.7



3.7Total current assets


703.5



693.1Property, plant and equipment, net


830.9



848.9Goodwill






12.7Other long-term assets


176.4



168.7Total assets

$
1,710.8


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

$
201.9


$
234.9Accrued liabilities


187.2



197.7Long-term debt due within one year


10.3



9.2Income taxes payable


8.6



6.4Long-term debt classified as current


529.8



Total current liabilities


937.8



448.2Noncurrent liabilities:Deferred income taxes


50.9



57.2Environmental remediation and/or restoration


91.8



93.9Long-term debt






475.6Other


194.2



218.9Total noncurrent liabilities


336.9



845.6Commitments and contingencies (Notes 13 and 14)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


493.3



490.8Accumulated deficit


(171.4
)


(136.8
)Accumulated other comprehensive income


117.5



78.2Treasury stock, at cost  303,927 shares and
    210,638 shares, respectively


(3.7
)


(3.0
)Total stockholders equity


436.1



429.6Total liabilities and stockholders equity

$
1,710.8


$
1,723.4    2




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##### Table of Contents



TRONOX
    INCORPORATED
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In millions)
    (Unaudited)  Six MonthsEndedJune 30,2008


2007Cash flows from operating activitiesNet loss

$
(34.6
)

$
(30.6
)Adjustments to reconcile net cash flows from operating
    activities Depreciation and amortization


57.5



55.8Deferred income taxes


(15.1
)


(0.3
)Impairment of goodwill


13.5



Gain on sales of land


(17.7
)


Provision for environmental remediation and restoration, net of
    reimbursement receivables


0.7



2.0Other noncash items affecting net loss


9.8



15.9Changes in assets and liabilities


(52.7
)


(28.7
)Net cash flows from operating activities


(38.6
)


14.1Cash flows from investing activitiesCapital expenditures


(15.6
)


(33.8
)Proceeds from sale of assets


17.9



Net cash flows from investing activities


2.3



(33.8
)Cash flows from financing activitiesProceeds from borrowings


69.0



Repayment of debt


(13.8
)


(12.0
)Debt costs


(2.1
)


(0.3
)Stock option exercises






1.4Dividends paid


(4.2
)


(4.1
)Net cash flows from financing activities


48.9



(15.0
)Effects of exchange rate changes on cash and cash equivalents


(10.3
)


(2.2
)Net change in cash and cash equivalents


2.3



(36.9
)Cash and cash equivalents at beginning of period


21.0



76.6Cash and cash equivalents at end of period

$
23.3


$
39.7    3




---



##### Table of Contents



TRONOX
    INCORPORATED



NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS  1.
    The
    Company  2
    Formation
  Kerr-McGee
  2.
    Basis of
    Presentation and Accounting Policies  Form 10-K
  Form 10-Q
   4




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Fair Value Measurements FAS 157-2
       5




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  3.
    Statement
    of Operations Data    Three Months


Six MonthsEnded


EndedJune 30,


June 30,2008


2007


2008


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

$
0.8


$
(1.2
)

$
7.8


$
(1.5
)Equity in net earnings of equity method investees


(0.1
)


1.3



(0.4
)


2.0Loss on sale of accounts receivable (1)


(0.7
)






(1.5
)


Interest income


0.1



0.5



0.3



1.3Other income, net


0.6



0.1



0.6



0.6Total

$
0.7


$
0.7


$
6.8


$
2.4     (1)
    
    Includes interest income accreted
    on collections of securitized receivables. See discussion of
    accounts receivable program in Note 4.    Three Months


Three MonthsEnded


EndedJune 30, 2008


June 30, 2007Loss








Lossfrom





Per-


from





Per-Continuing





Share


Continuing





ShareOperations


Shares


Loss


Operations


Shares


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

$
(29.9
)


41.0


$
(0.73
)

$
(20.0
)


40.7


$
(0.49
)Effect of dilutive securities:Restricted stock and stock options






















Diluted earnings per share

$
(29.9
)


41.0


$
(0.73
)

$
(20.0
)


40.7


$
(0.49
)   Six Months


Six MonthsEnded


EndedJune 30, 2008


June 30, 2007Loss








Lossfrom





Per-


from





Per-Continuing





Share


Continuing





ShareOperations


Shares


Loss


Operations


Shares


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

$
(31.3
)


41.0


$
(0.76
)

$
(29.0
)


40.7


$
(0.71
)Effect of dilutive securities:Restricted stock and stock options






















Diluted earnings per share

$
(31.3
)


41.0


$
(0.76
)

$
(29.0
)


40.7


$
(0.71
)    6




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    4.
    Balance
    Sheet Data    June 30,


December 31,2008


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

$
259.8


$
238.7Receivable from Kerr-McGee


17.6



17.9Receivable from the U.S. Department of Energy






11.0Receivable from insurers


5.4



7.3Other


19.0



29.5Accounts receivable, gross


301.8



304.4Allowance for doubtful accounts


(11.9
)


(13.9
)Accounts receivable, net

$
289.9


$
290.5     (1)
    
    Includes $48.9 million and
    $39.5 million in subordinated retained interest at
    June 30, 2008 and December 31, 2007, respectively,
    related to the accounts receivable securitization program
    discussed below.       7




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      June 30,


December 31,2008


2007(In millions)Raw materials

$
64.1


$
69.6Work-in-process


14.9



12.8Finished goods (1)


193.2



200.6Materials and supplies, net


72.6



67.0Total inventories

$
344.8


$
350.0     (1)
    
    Includes $28.7 million and
    $20.8 million in inventory on consignment to others at
    June 30, 2008, and December 31, 2007, respectively.    June 30,


December 31,2008


2007(In millions)Land

$
84.1


$
83.8Buildings


176.3



167.3Machinery and equipment


1,856.2



1,798.6Construction-in-progress


28.7



38.3Other


89.8



88.0Property, plant and equipment, gross


2,235.1



2,176.0Less accumulated depreciation


(1,404.2
)


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

$
830.9


$
848.9     June 30,


December 31,2008


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

$
19.2


$
16.1Investments in equity method investees


20.9



21.3Receivables from insurers


20.9



15.3Debt issuance costs, net


9.5



8.4Prepaid pension cost


45.6



46.5Intangible asset  proprietary technology (1)


57.3



55.2Other


3.0



5.9Total other long-term assets

$
176.4


$
168.7     (1)
    
    Associated with the companys
    reportable pigment segment. 8




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     June 30,


December 31,2008


2007(In millions)Employee-related costs and benefits

$
38.7


$
37.6Reserves for environmental remediation and
    restoration  current portion


92.0



94.9Sales rebates


17.6



23.3Other


38.9



41.9Total accrued liabilities

$
187.2


$
197.7     June 30,


December 31,2008


2007(In millions)Reserve for uncertain tax positions

$
77.8


$
69.7Pension and postretirement obligations


47.9



77.6Asset retirement obligations (1)


35.1



32.9Reserve for workers compensation and general liability
    claims


15.8



16.6Other (1)


17.6



22.1Total other long-term liabilities

$
194.2


$
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.  Goodwill
    and intangible assets
    Fair
    value measurement
         9




---



##### Table of Contents



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


Level 2


Level 3(In millions)AssetsForeign currency derivatives

$



$
1.1


$
Natural gas forward contracts






3.3



Interest rate swap derivatives






0.1



Subordinated retained interest in accounts receivable (1)









$
48.9Total assets at fair value

$



$
4.5


$
48.9LiabilitiesForeign currency derivatives

$



$
0.2


$
Natural gas forward contracts










Interest rate swap derivatives






0.9



Total liabilities at fair value

$



$
1.8


$
     (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    Three Months


Six MonthsEnded


EndedJune 30,


June 30,2008


2007


2008


2007(In millions)Departmental revenues

$
3.0


$
8.9


$
4.7


$
16.8Departmental income (loss)


(0.4
)


5.2



(1.6
)


9.4Income (loss) before taxes


(0.7
)


5.2



(1.9
)


9.4Net income (loss)


(0.6
)


4.4



(1.5
)


8.1  10




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  6.
    Work
    Force Reduction      7.
    Debt    June 30,


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


121.1



126.9Revolving credit facility available through November 2010


69.0



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






7.9Total debt


540.1



484.8Less: Long-term debt due in one year


(10.3
)


(9.2
)Less: Long-term debt classified as current


(529.8
)


Total long-term debt

$



$
475.6    11




---



##### Table of Contents



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


ConsolidatedTotal


InterestLeverage Ratio


Coverage RatioFiscal Quarter EndedJune 30, 2008


5.20:1



1.00:1September 30, 2008


5.55:1



0.80:1December 31, 2008


5.35:1



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
     12




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  8.
    Comprehensive
    income (loss)    Three Months


Six MonthsEnded


EndedJune 30,


June 30,2008


2007


2008


2007(In millions)Net loss

$
(34.4
)

$
(21.2
)

$
(34.6
)

$
(30.6
)After tax changes in:Foreign currency translation adjustments


(1.8
)


3.6



18.8



6.9Cash flow hedge activity:Unrealized gain (loss)


2.1



(0.6
)


3.9



0.4Reclassification adjustments


(1.3
)






(1.5
)


0.8Benefit plan activity:Amortization of net actuarial loss


0.5



0.8



0.9



1.7Amortization of net prior service cost


(1.2
)


0.3



(2.3
)


0.5Partial settlement on nonqualified pension plan


0.9







0.9



Postretirement benefit plan changes


17.6







17.6



Valuation allowance on deferred tax (1)


0.6







1.0



Total comprehensive income (loss)

$
(17.0
)

$
(17.1
)

$
4.7


$
(20.3
)     (1)
    
    A valuation allowance on certain
    deferred tax assets of the U.S. consolidated group was
    recognized in the year ending December 31, 2007. In 2008,
    the valuation allowance was adjusted for changes in
    comprehensive income items in which a valuation allowance was
    previously established.  9.
    Income
    Taxes    Three Months


Six MonthsEnded


EndedJune 30,


June 30,2008


2007


2008


2007U.S. statutory tax rate


35.0
%


35.0
%


35.0
%


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


(10.5
)


(17.0
)


(8.6
)


(19.6
)State income taxes


(0.2
)


(4.5
)


(0.3
)


(2.1
)Valuation allowances


17.3



(30.1
)


14.2



(23.8
)Prior year accrual adjustments


(5.5
)






(0.8
)


Changes in unrecognized tax benefits


(3.7
)


(29.7
)


(4.9
)


(20.3
)Other  net


0.9



(5.2
)


(0.1
)


(2.2
)Effective income tax rate


33.3
%


(51.5
)%


34.5
%


(33.0
)%    13




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Kerr-McGee Kerr-McGee
  and/or
  Tax Sharing Agreement and Tax Allocations Kerr-McGee
   14




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Kerr-McGees
  10.
    Discontinued
    Operations    Three Months Ended


Six Months EndedJune 30,


June 30,2008


2007


2008


2007(In millions)Environmental provisions/(reimbursements) (1)

$
2.4


$
(1.2
)

$
0.2


$
0.3Litigation provisions, legal and other costs (1)


2.1



3.2



3.1



2.3Total pretax loss


4.5



2.0



3.3



2.6Tax benefit (2)






(0.8
)






(1.0
)Total after-tax loss

$
4.5


$
1.2


$
3.3


$
1.6     (1)
    
    Environmental provisions,
    litigation provisions, legal and other costs are allocated to
    discontinued operations primarily on a specific identification
    basis. 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 loss from
    discontinued operations. 15




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   11.
    Retirement
    Plans    Retirement


PostretirementPlans


PlansThree Months Ended June 30,2008


2007


2008


2007(In millions)Service cost

$
2.0


$
3.0


$
0.1


$
0.4Interest cost


7.5



7.1



0.8



2.1Expected return on plan assets


(9.2
)


(9.9
)






Net amortization Prior service cost (credit)


0.7



0.7



(2.5
)


(0.3
)Net actuarial loss


0.6



0.8



0.2



0.5Sub-total
    net periodic cost


1.6



1.7



(1.4
)


2.7Settlement loss (1)


1.2











Special termination benefits (2)


2.7











Total retirement expense

$
5.5


$
1.7


$
(1.4
)

$
2.7     (1)
    
    The 2008 settlement loss is
    associated with a partial settlement of a U.S. nonqualified
    pension plan and is discussed below.(2)
    
    The 2008 special termination
    benefits are associated with the work force reduction program
    announced by the company and discussed in Note 6.  Retirement


PostretirementPlans


PlansSix Months Ended June 30,2008


2007


2008


2007(In millions)Service cost

$
4.2


$
5.9


$
0.3


$
0.8Interest cost


15.0



14.1



1.6



4.2Expected return on plan assets


(18.4
)


(19.7
)






Net amortization Prior service cost (credit)


1.4



1.4



(5.1
)


(0.6
)Net actuarial loss


1.1



1.7



0.3



0.9Sub-total
    net periodic cost


3.3



3.4



(2.9
)


5.3Settlement loss (1)


1.2











Special termination benefits (2)


2.7











Total retirement expense

$
7.2


$
3.4


$
(2.9
)

$
5.3     (1)
    
    The 2008 settlement loss is
    associated with a partial settlement of a U.S. nonqualified
    pension plan and is discussed below.(2)
    
    The 2008 special termination
    benefits are associated with the work force reduction program
    announced by the company and discussed in Note 6.   16




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Employers Accounting for
    Settlements and Curtailments of Defined Benefit Pension Plans
    and for Termination Benefits
    12.
    Employee
    Stock-Based Compensation   17




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##### 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 (1)


2.67
%Expected volatility


36
%Expected life (years)


6.2Per-unit
    fair value of options granted

$
2.31     (1)
    
    Awards subsequent to those issued
    in January 2008 will incorporate revised assumptions on the
    expected dividend yield as a result of the suspension of
    quarterly dividends announced by the company in May 2008.      13.
    Contingencies    Reserves forReserves for


Environmental


ReimbursementsLitigation


Remediation (1)


Receivable (2)(In millions)Balance, December 31, 2007

$
9.6


$
188.8


$
67.6Provisions/accruals






10.2



9.5Payments/settlements






(15.2
)


(14.0
)Balance, June 30, 2008

$
9.6


$
183.8


$
63.1     (1)
    
    Provisions for environmental
    remediation and restoration include $4.0 million related to
    the companys former thorium compounds manufacturing,
    uranium and refining operations. These charges are reflected in
    the Condensed Consolidated Statements of Operations as a
    component of loss from discontinued operations (net of taxes).(2)
    
    Accruals for environmental
    remediation and restoration reimbursements include
    $3.8 million related to the companys former thorium
    compounds manufacturing, uranium, 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). 18




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       
    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
    19




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Provisions/Accruals


Reserve


Reimbursementfor the


Balance at


Receivable atSix Months Ended


June 30,


June 30,Location of Site

June 30, 2008


2008


2008(Millions of dollars)Henderson, Nevada (1)

$
6.2


$
27.3


$
26.3West Chicago, Illinois


0.2



49.2



19.2Ambrosia Lake, New Mexico






7.9



Crescent, Oklahoma






9.1



Manville, New Jersey






35.0



17.5Sauget, Illinois






5.6



Cleveland, Oklahoma (2)


3.8



7.1



Cushing, Oklahoma






9.0



Jacksonville, Florida






4.8



Riley Pass, South Dakota






1.5



Other sites






27.3



0.1Total of all sites with reserves

$
10.2


$
183.8


$
63.1     (1)
    
    A $6.2 million provision was
    recorded in the second quarter of 2008 for the Henderson
    Environmental Conditions Assessment (ECA) with a corresponding
    reimbursement receivable of $5.6 million.(2)
    
    A $3.8 million provision was
    recorded in the second quarter of 2008 for a reassessment of
    soil volumes to be disposed of subsequent to discovery of
    asbestos impacted material at the site.    Environmental
  Henderson,
    Nevada
     20




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Litigation
  Insurance Reimbursement 10-year,
   21




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  West
    Chicago, Illinois
    Closed Facility
  Vicinity Areas
    Government Reimbursement
  clean-up
 22




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Ambrosia
    Lake, New Mexico
  and/or
    Litigation
  Crescent,
    Oklahoma
   23




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  New
    Jersey Wood-Treatment Site
      follow-up
      MSA Reimbursement 
 24




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Sauget,
    Illinois
  60-acre
  Cleveland,
    Oklahoma
  on-site
    Cushing,
    Oklahoma
         25




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Jacksonville,
    Florida
      Riley
    Pass, South Dakota
    Other
    Sites
    Master
    Separation Agreement
   26




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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
   27




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Jeans v. Tronox
  Financial Reserves
  Savannah
    Plant
      Financial Reserves
 28




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Table
    Mountain Site
  on-site. on-site
  Other
    Matters
  and/or and/or and/or
  14.
    Commitments  clean-up
    Form 10-K
 29




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  15.
    Reporting
    by Business Segment and Geographic Locations  2
  Three Months


Six MonthsEnded


EndedJune 30,


June 30,2008


2007


2008


2007(In millions)Net salesPigment

$
374.4


$
340.2


$
696.0


$
655.6Electrolytic and other chemical products


29.4



26.3



56.9



50.0Total net sales

$
403.8


$
366.5


$
752.9


$
705.6Operating profit (loss)Pigment (1)

$
(42.3
)

$
3.7


$
(45.3
)

$
11.2Electrolytic and other chemical products (2)


0.8



0.6



2.5



(0.2
)(41.5
)


4.3



(42.8
)


11.0Provision for environmental remediation and restoration


(0.5
)


(1.4
)


(0.5
)


(1.6
)Gain on land sales


(12.4
)






(17.7
)


Corporate and nonoperating sites (3)


(3.2
)


(4.4
)


(4.0
)


(8.9
)Total operating profit (loss)


(32.8
)


(1.5
)


(29.6
)


0.5Interest and debt expense


(12.7
)


(12.4
)


(25.0
)


(24.7
)Other income, net


0.7



0.7



6.8



2.4Income tax benefit (provision)


14.9



(6.8
)


16.5



(7.2
)Loss from continuing operations

$
(29.9
)

$
(20.0
)

$
(31.3
)

$
(29.0
)     (1)
    
    The three and six months ended
    June 30, 2008, includes goodwill impairment of
    $13.5 million as described in Note 4.(2)
    
    The three and six months ended
    June 30, 2008, includes restructuring charges of
    $0.3. million related to the companys work force
    reduction described in Note 6.(3)
    
    The three and six months ended
    June 30, 2008, includes restructuring charges of
    $3.9 million related to the companys work force
    reduction described in Note 6.  16.
    Related
    Party Transactions  2 2
 30




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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
    2 2 start-up
   31




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##### Table of Contents



2 2
    
    We, along with our 50% joint venture partner, a subsidiary of
    Exxaro Resources Limited, have given final approval for the
    expansion of the Tiwest
    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 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 after
    commissioning, which will be taken into account when calculating
    its final interest in the expanded production.
    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 June 30, 2008 Compared to Three Months Ended
    June 30, 2007
    Three Months EndedJune 30,2008


2007


$ Change(In millions)Net salesPigment

$
374.4


$
340.2


$
34.2Electrolytic and other chemical products


29.4



26.3



3.1Total

$
403.8


$
366.5


$
37.3   2 2
   32




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##### Table of Contents



2
      Three Months EndedJune 30,2008


2007


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

$
(42.3
)

$
3.7


$
(46.0
)Electrolytic and other chemical products


0.8



0.6



0.2Subtotal


(41.5
)


4.3



(45.8
)Provision for environmental remediation and restoration


(0.5
)


(1.4
)


0.9Gain on land sales


12.4







12.4Corporate and nonoperating sites


(3.2
)


(4.4
)


1.2Total operating loss


(32.8
)


(1.5
)


(31.3
)Interest and debt expense


(12.7
)


(12.4
)


(0.3
)Other income, net


0.7



0.7



Loss from continuing operations before income taxes

$
(44.8
)

$
(13.2
)

$
(31.6
)        33




---



##### Table of Contents



Six
    Months Ended June 30, 2008 Compared to Six Months Ended
    June 30, 2007
    Six Months EndedJune 30,2008


2007


$ Change(In millions)Net salesPigment

$
696.0


$
655.6


$
40.4Electrolytic and other chemical products


56.9



50.0



6.9Total

$
752.9


$
705.6


$
47.3   2
    2
 34




---



##### Table of Contents



Six Months EndedJune 30,2008


2007


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

$
(45.3
)

$
11.2


$
(56.5
)Electrolytic and other chemical products


2.5



(0.2
)


2.7Subtotal


(42.8
)


11.0



(53.8
)Provision for environmental remediation and restoration


(0.5
)


(1.6
)


1.1Gain on land sales


17.7







17.7Corporate and nonoperating sites


(4.0
)


(8.9
)


4.9Total operating profit (loss)


(29.6
)


0.5



(30.1
)Interest and debt expense


(25.0
)


(24.7
)


(0.3
)Other income, net


6.8



2.4



4.4Income (loss) from continuing operations before income taxes

$
(47.8
)

$
(21.8
)

$
(26.0
)            35




---



##### Table of Contents



Financial
    Condition and Liquidity
  General
       36




---



##### Table of Contents



Cash Flows from Operating Activities.
    Cash Flows from Investing Activities.
      Cash Flows from Financing Activities.
  Credit Agreement.
   37




---



##### Table of Contents



2008
    Credit Agreement Covenant Amendments
  2
    Consolidated


ConsolidatedTotal


InterestLeverage Ratio


Coverage RatioFiscal Quarter EndedJune 30, 2008


5.20:1



1.00:1September 30, 2008


5.55:1



0.80:1December 31, 2008


5.35:1



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
 38




---



##### Table of Contents



and/or and/or
    Senior Unsecured Notes. 1 2
  Note Payable due July 2014.
  Receivables Securitization.
     39




---



##### Table of Contents



Off-Balance
    Sheet Arrangements
    Outlook
  Overview
    Risk Factors, Form 10-K
   40




---



##### Table of Contents



Pigment
  2
  2 2 2
  Electrolytic
    and other chemical products
    New
    Accounting Pronouncements
  Fair Value Measurements FIN No. FAS 157-2
       41




---



##### Table of Contents



Item 3.
    Quantitative
    and Qualitative Disclosure about Market Risk      Notional


Weighted-AverageAmount


Contract Rate(In millions)Maturing in 2008 Euro

$
(27.0
)


1.5568Australian dollar


38.4



0.9187Maturing in 2009 Euro


(9.2
)


1.5472Australian dollar


6.8



0.9186         AverageContract Price% Hedged


$/MMBtuQ3, 2008


40
%

$
8.02Q4, 2008


20
%

$
8.53    42




---



##### Table of Contents



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
  SPECIAL
    NOTE REGARDING FORWARD-LOOKING STATEMENTS
  2 and/or Form 10-Q. Form 10-Q Form 10-K.
 43




---



##### Table of Contents



PART II 
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings  Savannah
    Plant
      Hamilton
    Plant
    New
    Jersey Wood-Treatment Site
   44




---



##### Table of Contents



follow-up
      Table
    Mountain Site
  on-site. on-site
  Forest
    Products
  and/or and/or
 45




---



##### Table of Contents



May v. Tronox Avance v. Tronox, Jeans v. Tronox
  Form 10-K Form 10-Q.
  Item 1A.
    Risk
    Factors  Form 10-K
  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
   46




---



##### Table of Contents



If we
    are unsuccessful in pursuing our strategic initiatives, we may
    need to restructure our capital structure including under
    Chapter 11 of the U.S. Bankruptcy Code.
    If we
    are unsuccessful in extending financing under our securitization
    program, which expires in September 2008, we would need to seek
    alternative sources of financing.
    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       47




---



##### Table of Contents



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

Waiver to Credit Agreement, dated as of June 27, 2008, by
    and among Tronox Incorporated, Tronox Worldwide LLC, and Lehman
    Commercial Paper Inc, as administrative agent (in such capacity,
    the Administrative Agent) under that certain Credit
    Agreement dated November 28, 2005, as amended by First
    Amendment dated as of March 12, 2007 and as further amended
    by Second Amendment to Credit Agreement and First Amendment to
    guarantee and Collateral Agreement dated as of February 8,
    2008 (incorporated by reference to Exhibit 99.1 of the
    Registrants current report on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    July 2, 2008).10
.2

Waiver Agreement, dated May 31, 2008, by and among Tronox
    Funding LLC as Seller, Tronox Worldwide LLC as
    Collection Agent, ABN AMRO Bank N.V., as agent for
    the Purchasers, the Committed Purchasers and Amsterdam Funding
    Corporation, as Conduit, to that Receivables Sale
    Agreement dated as of September 26, 2007 2008 (incorporated
    by reference to Exhibit 99.2 of the Registrants
    current report on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    July 2, 2008).10
.3

Third Amendment to Credit Agreement and Second Amendment to
    Guarantee and Collateral Agreement, dated as of July 17,
    2008, among Tronox Incorporated, Tronox Worldwide LLC, 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 and Lehman
    Commercial Paper Inc., as administrative agent, as amended by
    the First amendment dated as of March dated as of March 12,
    2007, and as further amended by the Second Amendment to Credit
    Agreement and First Amendment to Guarantee and Collateral
    Agreement dated as of February 8, 2008 (as amended, the
    Credit Agreement) (incorporated by reference to
    Exhibit 99.1 of Registrants current report on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    July 21, 2008).10
.4*

Executive Employment Agreement, dated July 15, 2008, by and
    between Dennis L. Wanlass and Tronox Incorporated.10
.5

First Amendment and Waiver of Receivables Sale Agreement, dated
    July 29, 2008, among Tronox Funding LLC, Tronox Worldwide
    LLC, Amsterdam Funding Corporation, and ABN AMRO Bank N.V.
    (incorporated by reference to Exhibit 99.1 of
    Registrants current report on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    August 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. 48




---



##### Table of Contents



SIGNATURES      By:
    /s/  Thomas
    W. Adams   Title:
    Chief Executive Officer  By:
    /s/  Mary
    Mikkelson   Title:
    Senior Vice President and
    Chief Financial Officer
    (Principal Financial Officer)  By:
    /s/  Edward
    Ritter   Title:
    Principal Accounting Officer 49