##### 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 September 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)


1Condensed Consolidated Statements of Operations
    for the Three and Nine Months Ended September 30, 2008 and
    2007


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


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


3Notes to Condensed Consolidated Financial
    Statements


4Item 2.


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


34Item 3.


Quantitative and Qualitative Disclosures About
    Market Risk


46Item 4.


Controls and Procedures


47PART II  OTHER
    INFORMATIONItem 1.


Legal Proceedings


48Item 1A.


Risk Factors


50Item 2.


Unregistered Sales of Equity Securities and Use
    of Proceeds


51Item 3.


Defaults Upon Senior Securities


51Item 4.


Submission of Matters to a Vote of Security
    Holders


51Item 5.


Other Information


51Item 6.


Exhibits


52Signatures





53EX-10.3EX-31.1EX-31.2EX-32.1EX-32.2




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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


Nine MonthsEnded September 30,


Ended September 30,2008


2007


2008


2007Net sales

$
418.3


$
363.1


$
1,171.2


$
1,068.7Cost of goods sold


399.2



332.0



1,126.4



970.4Gross margin


19.1



31.1



44.8



98.3Selling, general and administrative expenses


30.3



27.8



85.1



92.8Gain on land sales


(7.4
)


(0.5
)


(25.1
)


(0.5
)Impairment of goodwill










13.5



Restructuring charges






9.6



4.2



9.6Provision for environmental remediation and restoration, net of
    reimbursements






1.3



0.5



3.0(3.8
)


(7.1
)


(33.4
)


(6.6
)Interest and debt expense


(13.9
)


(12.8
)


(38.9
)


(37.5
)Other income (expense), net


(12.7
)


1.7



(5.9
)


4.1Loss from continuing operations before income taxes


(30.4
)


(18.2
)


(78.2
)


(40.0
)Income tax benefit (provision)


(9.5
)


(0.5
)


7.0



(7.7
)Loss from continuing operations


(39.9
)


(18.7
)


(71.2
)


(47.7
)Income (loss) from discontinued operations, net of income tax
    benefit of nil, $0.1, nil and $1.1, respectively


2.0



(0.4
)


(1.3
)


(2.0
)Net loss

$
(37.9
)

$
(19.1
)

$
(72.5
)

$
(49.7
)Loss per common share:Basic Continuing operations

$
(0.97
)

$
(0.46
)

$
(1.74
)

$
(1.17
)Discontinued operations


0.05



(0.01
)


(0.03
)


(0.05
)Net loss

$
(0.92
)

$
(0.47
)

$
(1.77
)

$
(1.22
)Diluted Continuing operations

$
(0.97
)

$
(0.46
)

$
(1.74
)

$
(1.17
)Discontinued operations


0.05



(0.01
)


(0.03
)


(0.05
)Net loss

$
(0.92
)

$
(0.47
)

$
(1.77
)

$
(1.22
)Dividends declared per common share

$



$
0.05


$



$
0.10Weighted 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)
  September 30,


December 31,2008


2007ASSETSCurrent assets:Cash and cash equivalents

$
55.7


$
21.0Accounts receivable, net


252.6



290.5Inventories, net


313.7



350.0Prepaid and other assets


21.7



23.6Income tax receivable


0.5



4.3Deferred income taxes


2.7



3.7Total current assets


646.9



693.1Property, plant and equipment, net


776.2



848.9Goodwill






12.7Other long-term assets


191.6



168.7Total assets

$
1,614.7


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

$
183.7


$
234.9Accrued liabilities


141.8



197.7Long-term debt due within one year


1.1



9.2Income taxes payable


6.7



6.4Long-term debt classified as current


548.3



Total current liabilities


881.6



448.2Noncurrent liabilities:Deferred income taxes


44.4



57.2Environmental remediation and/or restoration


134.2



93.9Long-term debt






475.6Other


177.3



218.9Total noncurrent liabilities


355.9



845.6Commitments and contingencies (Notes 13 and 14)Stockholders equityClass A common stock, par value $0.01 
    100,000,000 shares authorized, 19,098,917 and
    18,746,329 shares issued at September 30, 2008, and
    December 31, 2007, respectively


0.2



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


0.2



0.2Capital in excess of par value


494.6



490.8Accumulated deficit


(209.3
)


(136.8
)Accumulated other comprehensive income


97.7



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


(6.2
)


(3.0
)Total stockholders equity


377.2



429.6Total liabilities and stockholders equity

$
1,614.7


$
1,723.4    2




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##### Table of Contents



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


2007Cash flows from operating activitiesNet loss

$
(72.5
)

$
(49.7
)Adjustments to reconcile net cash flows from operating
    activities Depreciation and amortization


86.4



82.8Deferred income taxes


(5.6
)


(1.6
)Impairment of goodwill


13.5



Gain on sales of land


(25.1
)


Provision for environmental remediation and restoration, net of
    reimbursements


(3.1
)


2.1Other noncash items affecting net loss


8.6



30.7Changes in assets and liabilities


(26.3
)


32.1Net cash flows from operating activities


(24.1
)


96.4Cash flows from investing activitiesCapital expenditures


(25.2
)


(51.5
)Proceeds from sale of assets


25.6



1.0Net cash flows from investing activities


0.4



(50.5
)Cash flows from financing activitiesProceeds from borrowings


96.3



Repayment of debt


(31.9
)


(44.6
)Debt costs


(5.0
)


(0.3
)Stock option exercises






1.6Dividends paid


(4.2
)


(6.2
)Net cash flows from financing activities


55.2



(49.5
)Effects of exchange rate changes on cash and cash equivalents


3.2



(8.1
)Net change in cash and cash equivalents


34.7



(11.7
)Cash and cash equivalents at beginning of period


21.0



76.6Cash and cash equivalents at end of period

$
55.7


$
64.9    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
       5




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##### Table of Contents



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


Nine MonthsEnded


EndedSeptember 30,


September 30,2008


2007


2008


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

$
(11.5
)

$
2.2


$
(3.7
)

$
0.7Equity in net earnings (loss) of equity method investees


(0.3
)


(0.1
)


(0.7
)


1.9Loss on sale of accounts receivable (1)


(0.3
)


(0.7
)


(1.8
)


(0.7
)Interest income


0.1



0.4



0.4



1.7Other income (expense), net


(0.7
)


(0.1
)


(0.1
)


0.5Total

$
(12.7
)

$
1.7


$
(5.9
)

$
4.1     (1)
    
    Includes interest income accreted
    on collections of securitized receivables. See discussion of
    accounts receivable program in Note 4.    Three Months


Three MonthsEnded


EndedSeptember 30, 2008


September 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

$
(39.9
)


41.0


$
(0.97
)

$
(18.7
)


40.7


$
(0.46
)Effect of dilutive securities:Restricted stock and stock options






















Diluted earnings per share

$
(39.9
)


41.0


$
(0.97
)

$
(18.7
)


40.7


$
(0.46
)   Nine Months


Nine MonthsEnded


EndedSeptember 30, 2008


September 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

$
(71.2
)


41.0


$
(1.74
)

$
(47.7
)


40.7


$
(1.17
)Effect of dilutive securities:Restricted stock and stock options






















Diluted earnings per share

$
(71.2
)


41.0


$
(1.74
)

$
(47.7
)


40.7


$
(1.17
)    6




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##### Table of Contents



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


December 31,2008


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

$
237.7


$
238.7Receivable from Kerr-McGee


0.1



17.9Receivable from the U.S. Department of Energy






11.0Receivable from insurers


6.6



7.3Other


20.5



29.5Accounts receivable, gross


264.9



304.4Allowance for doubtful accounts


(12.3
)


(13.9
)Accounts receivable, net

$
252.6


$
290.5     (1)
    
    Includes $39.7 million and
    $39.5 million in subordinated retained interest at
    September 30, 2008 and December 31, 2007,
    respectively, related to the accounts receivable securitization
    program discussed below.     7




---



##### Table of Contents



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


December 31,2008


2007(In millions)Raw materials

$
70.8


$
69.6Work-in-process


14.6



12.8Finished goods (1)


157.9



200.6Materials and supplies, net


70.4



67.0Total inventories

$
313.7


$
350.0     (1)
    
    Includes approximately
    $23.3 million and $20.8 million in inventory on
    consignment to others at September 30, 2008, and
    December 31, 2007, respectively.    September 30,


December 31,2008


2007(In millions)Land (1)

$
72.2


$
72.6Buildings


170.2



167.3Machinery and equipment


1,795.4



1,798.6Construction-in-progress


28.5



38.3Other (1)


100.7



99.2Property, plant and equipment, gross


2,167.0



2,176.0Less accumulated depreciation


(1,390.8
)


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

$
776.2


$
848.9     (1)
    
    Includes reclassification in 2007
    of the companys leasehold improvements in its Australian
    operations from Land to Other. 8




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##### Table of Contents



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


December 31,2008


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

$
22.7


$
16.1Investments in equity method investees


20.6



21.3Receivables from insurers


16.9



15.3Receivables from Kerr-McGee


17.5



Debt issuance costs, net


10.7



8.4Prepaid pension cost


46.5



46.5Intangible asset  proprietary technology (1)


54.2



55.2Other


2.5



5.9Total other long-term assets

$
191.6


$
168.7     (1)
    
    Associated with the companys
    reportable pigment segment.    September 30,


December 31,2008


2007(In millions)Employee-related costs and benefits

$
40.7


$
37.6Reserves for environmental remediation and
    restoration  current portion


36.5



94.9Sales rebates


18.5



23.3Other


46.1



41.9Total accrued liabilities

$
141.8


$
197.7     September 30,


December 31,2008


2007(In millions)Reserve for uncertain tax positions

$
72.7


$
69.7Pension and postretirement obligations


43.3



77.6Asset retirement obligations (1)


30.3



32.9Reserve for workers compensation and general liability
    claims


15.4



16.6Other (1)


15.6



22.1Total other long-term liabilities

$
177.3


$
218.9     (1)
    
    Includes reclassification in 2007
    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
   9




---



##### Table of Contents



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


Level 2


Level 3(In millions)AssetsForeign currency derivatives

$



$
1.2


$
Interest rate swap derivatives






0.1



Subordinated retained interest in accounts receivable (1)









$
39.7Total assets at fair value

$



$
1.3


$
39.7LiabilitiesForeign currency derivatives

$



$
2.4


$
Natural gas forward contracts






0.9



Interest rate swap derivatives






0.7



Total liabilities at fair value

$



$
4.0


$
     (1)
    
    Level 3 inputs were used to
    calculate an unrealized fair value loss of $0.4 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.   10




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    5.
    Summarized
    Combined Financial Information of Affiliates    Three Months


Nine MonthsEnded


EndedSeptember 30,


September 30,2008


2007


2008


2007(In millions)Departmental revenues

$
2.8


$
2.7


$
7.5


$
19.5Departmental income (loss)


(0.9
)


(0.1
)


(2.5
)


9.3Income (loss) before taxes


(0.8
)


(0.1
)


(2.7
)


9.3Net income (loss)


(0.7
)


(0.2
)


(2.2
)


7.9   6.
    Work
    Force Reduction         11




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  7.
    Debt    September 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


103.0



126.9Revolving credit facility available through November 2010


96.4



Variable-rate note payable due in installments through July 2014
    (1)






7.9Total debt


549.4



484.8Less: Long-term debt due in one year


(1.1
)


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


(548.3
)


Total long-term debt

$



$
475.6     (1)
    
    In January 2008, the company
    elected to redeem its Australian dollar denominated
    variable-rate note payable by paying the outstanding principal
    balance and applicable interest.   12




---



##### Table of Contents



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


ConsolidatedTotal


InterestLeverage Ratio


Coverage RatioFiscal Quarter EndedSeptember 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     8.
    Comprehensive
    income (loss)    Three Months


Nine MonthsEnded


EndedSeptember 30,


September 30,2008


2007


2008


2007(In millions)Net loss

$
(37.9
)

$
(19.1
)

$
(72.5
)

$
(49.7
)After tax changes in:Foreign currency translation adjustments


(26.8
)


14.2



(8.0
)


21.1Cash flow hedge activity:Unrealized gain (loss)


(2.1
)


(0.9
)


1.8



(0.5
)Reclassification adjustments


(0.4
)


0.6



(1.9
)


1.4Benefit plan activity:Amortization of net actuarial loss


0.4



0.8



1.3



2.5Amortization of net prior service cost


(1.6
)


(0.5
)


(3.9
)


Partial settlement on nonqualified pension plan


1.0







1.9



Postretirement benefit plan changes (1)






58.0



17.6



58.0Valuation allowance on deferred tax (2)


9.7







10.7



Total comprehensive income (loss)

$
(57.7
)

$
53.1


$
(53.0
)

$
32.8     (1)
    
    The companys postretirement
    obligation was remeasured and reduced in the second quarter of
    2008 and the third quarter of 2007 as a result of changes in
    plan benefits as described in Note 11.(2)
    
    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, primarily, as a result of
    the changes to the unrecognized prior service cost component of
    the companys postretirement benefit plan. 13




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   9.
    Income
    Taxes    Three Months


Nine MonthsEnded


EndedSeptember 30,


September 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


(12.5
)


(20.5
)


(10.1
)


(33.0
)Adjustment of deferred tax balances due to tax rate changes






3.7







1.7State income taxes


(0.2
)


1.4



(0.2
)


(0.5
)Valuation allowances


(41.3
)


(38.3
)


(7.4
)


(17.4
)Prior year accrual adjustments


4.9



0.9



1.4



0.4Interest on foreign tax contingency






0.3







Changes in unrecognized tax benefits


(15.4
)


13.0



(9.0
)


(5.1
)Other  net


(1.8
)


1.8



(0.7
)


(0.4
)Effective income tax rate


(31.3
)%


(2.7
)%


9.0
%


(19.3
)%           Kerr-McGee
 14




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    and/or
  Tax Sharing Agreement and Tax Allocations Kerr-McGee
    Kerr-McGees
 15




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  10.
    Discontinued
    Operations    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


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

$
(3.8
)

$
(1.2
)

$
(3.6
)

$
(0.9
)Litigation provisions, legal and other costs (1)


1.8



1.7



4.9



4.0Total pretax (income) loss


(2.0
)


0.5



1.3



3.1Tax benefit (2)






(0.1
)






(1.1
)Total after-tax (income) loss

$
(2.0
)

$
0.4


$
1.3


$
2.0     (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)
    loss 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) loss
    from discontinued operations.  11.
    Retirement
    Plans    Retirement


PostretirementPlans


PlansThree Months Ended September 30,2008


2007


2008


2007(In millions)Service cost

$
2.2


$
2.9


$
0.1


$
0.5Interest cost


7.5



7.0



0.4



1.0Expected return on plan assets


(9.2
)


(9.9
)






Net amortization 
    Prior service cost (credit)


0.7



0.7



(3.1
)


(1.4
)Net actuarial loss


0.5



0.9







0.2Sub-total net periodic cost


1.7



1.6



(2.6
)


0.3Settlement loss (1)


0.3











Special termination benefits (2)






5.7







Total retirement expense

$
2.0


$
7.3


$
(2.6
)

$
0.3     (1)
    
    The 2008 settlement loss is
    associated with partial settlements of a U.S. nonqualified
    pension plan and is discussed below.(2)
    
    Special termination benefits are
    associated with the work force reduction program announced in
    August 2007. See Note 6 for a discussion.  16




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##### Table of Contents



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


PostretirementPlans


PlansNine Months Ended September 30,2008


2007


2008


2007(In millions)Service cost

$
6.4


$
8.8


$
0.4


$
1.3Interest cost


22.5



21.1



2.0



5.2Expected return on plan assets


(27.6
)


(29.6
)






Net amortization 
    Prior service cost (credit)


2.1



2.1



(8.2
)


(2.0
)Net actuarial loss


1.6



2.6



0.3



1.1Sub-total net periodic cost


5.0



5.0



(5.5
)


5.6Settlement loss (1)


1.5











Special termination benefits (2)


2.7



5.7







Total retirement expense

$
9.2


$
10.7


$
(5.5
)

$
5.6     (1)
    
    The 2008 settlement loss is
    associated with partial settlements of a U.S. nonqualified
    pension plan and is discussed below.(2)
    
    Special termination benefits are
    associated with the work force reduction programs announced in
    May 2008 and August 2007, respectively. See Note 6 for a
    discussion.      Employers Accounting for
    Settlements and Curtailments of Defined Benefit Pension Plans
    and for Termination Benefits
 17




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Form 10-K
  12.
    Employee
    Stock-Based Compensation   18




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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 incorporated an expected dividend yield of nil
    as a result of the suspension of quarterly dividends announced
    by the company in May 2008.     19




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  13.
    Contingencies    Reserves forReserves for


Environmental


ReimbursementsLitigation


Remediation (1)


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

$
9.6


$
188.8


$
67.6Provisions/accruals






10.5



13.6Payments/settlements


(0.3
)


(28.6
)


(17.4
)Balance, September 30, 2008

$
9.3


$
170.7


$
63.8     (1)
    
    Provisions for environmental
    remediation and restoration include $4.2 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
    $7.8 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).      
    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. 20




---



##### Table of Contents



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


Reserve


Reimbursementfor the


Balance at


Receivable atNine Months Ended


September 30,


September 30,Location of Site

September 30, 2008


2008


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

$
6.2


$
24.3


$
23.5West Chicago, Illinois


0.2



42.4



22.7Ambrosia Lake, New Mexico






7.7



Crescent, Oklahoma






8.9



New Jersey Wood-Treatment Site






35.0



17.5Sauget, Illinois






5.4



Cleveland, Oklahoma (2)


3.8



7.0



Cushing, Oklahoma






8.7



Jacksonville, Florida






4.7



Riley Pass, South Dakota






0.9



Other sites


0.3



25.7



0.1Total of all sites with reserves

$
10.5


$
170.7


$
63.8     (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.   21




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Environmental
  Henderson,
    Nevada
          Litigation
 22




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Insurance Reimbursement 10-year,
    West
    Chicago, Illinois
    Closed Facility
  Vicinity Areas
   23




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Grand Pier Center LLC, et al. v. Kerr-McGee Chemical LLC
    2000-00040.
    Government Reimbursement
  clean-up
    Ambrosia
    Lake, New Mexico
   24




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  and/or
    Litigation
  Crescent,
    Oklahoma
    New
    Jersey Wood-Treatment Site
  Kerr-McGee
 25




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  follow-up
    Kerr-McGees
      MSA Reimbursement 
  Sauget,
    Illinois
  60-acre
  Cleveland,
    Oklahoma
  on-site
 26




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Cushing,
    Oklahoma
          Jacksonville,
    Florida
     27




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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
       28




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Litigation
    and Claims
  Birmingham,
    Alabama
    Forest
    Products Litigation
  and/or and/or
     29




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Jeans v. Tronox
  Financial Reserves
  Savannah
    Plant
      Financial Reserves
  Table
    Mountain Site
  on-site. on-site
 30




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Other
    Matters
  and/or and/or and/or
  14.
    Commitments  clean-up
    Form 10-K
 31




---



##### Table of Contents



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


Nine MonthsEnded


EndedSeptember 30,


September 30,2008


2007


2008


2007(In millions)Net salesPigment

$
383.9


$
335.6


$
1,079.9


$
991.2Electrolytic and other chemical products


34.4



27.5



91.3



77.5Total net sales

$
418.3


$
363.1


$
1,171.2


$
1,068.7Operating profit (loss)Pigment (1)

$
(3.2
)

$
8.4


$
(48.5
)

$
19.6Electrolytic and other chemical products (2)


2.6



0.3



5.1



0.1(0.6
)


8.7



(43.4
)


19.7Provision for environmental remediation and restoration






1.3



0.5



3.0Gain on land sales


7.4



0.5



25.1



0.5Corporate and nonoperating sites (3)


(10.6
)


(15.0
)


(14.6
)


(23.8
)Total operating profit (loss)


(3.8
)


(7.1
)


(33.4
)


(6.6
)Interest and debt expense


(13.9
)


(12.8
)


(38.9
)


(37.5
)Other income, net


(12.7
)


1.7



(5.9
)


4.1Income tax benefit (provision)


(9.5
)


(0.5
)


7.0



(7.7
)Loss from continuing operations

$
(39.9
)

$
(18.7
)

$
(71.2
)

$
(47.7
)     (1)
    
    The three months ended
    September 30, 2008 and 2007, includes restructuring charges
    of nil and $2.0 million, respectively. For the three months
    ended September 30, 2008, restructuring charges of
    $2.8 million for a voluntary work force reduction at the
    companys Uerdingen, Germany, pigment facility were
    entirely offset by restructuring income related to changes in
    the estimated timing of expenditures on asset retirement
    obligations at former pigment facilities. The 2007 restructuring
    charge was due to a work force reduction implemented in August
    2007. See Note 6 for a discussion of the companys
    work force reductions. The nine months ended September 30,
    2008, includes goodwill impairment of $13.5 million as
    described in Note 4.(2)
    
    The three months ended
    September 30, 2008 and 2007, includes restructuring charges
    of nil and $0.7 million, respectively. The nine months
    ended September 30, 2008 and 2007, includes restructuring
    charges of $0.3 million and $0.7 million,
    respectively. All restructuring charges for this segment were
    related to work force reduction programs discussed in
    Note 6. 32




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   (3)
    
    The three months ended
    September 30, 2008 and 2007, includes restructuring charges
    of nil and $7.0 million, respectively. The nine months
    ended September 30, 2008 and 2007, includes restructuring
    charges of $3.9 million and $7.0 million,
    respectively. All restructuring charges for this segment were
    related to work force reduction programs discussed in
    Note 6.  16.
    Related
    Party Transactions  2 2
  17.
    Subsequent
    Events   33




---



##### 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
  2 2 start-up
  2
 34




---



##### Table of Contents




    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 now estimates that the plant will come on line
    in 2011, ramping up production thereafter.  Results
    of Operations
  Three
    Months Ended September 30, 2008 Compared to Three Months
    Ended September 30, 2007
    Three Months EndedSeptember 30,2008


2007


$ Change(In millions)Net salesPigment

$
383.9


$
335.6


$
48.3Electrolytic and other chemical products


34.4



27.5



6.9Total

$
418.3


$
363.1


$
55.2  35




---



##### Table of Contents



2
    2 2,
      Three Months EndedSeptember 30,2008


2007


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

$
(3.2
)

$
8.4


$
(11.6
)Electrolytic and other chemical products


2.6



0.3



2.3Subtotal


(0.6
)


8.7



(9.3
)Provision for environmental remediation and restoration






(1.3
)


1.3Gain on land sales


7.4



0.5



6.9Corporate and nonoperating sites


(10.6
)


(15.0
)


4.4Total operating loss


(3.8
)


(7.1
)


3.3Interest and debt expense


(13.9
)


(12.8
)


(1.1
)Other income, net


(12.7
)


1.7



(14.4
)Loss from continuing operations before income taxes

$
(30.4
)

$
(18.2
)

$
(12.2
)    36




---



##### Table of Contents



2
               37




---



##### Table of Contents



Nine
    Months Ended September 30, 2008 Compared to Nine Months
    Ended September 30, 2007
    Nine Months EndedSeptember 30,2008


2007


$ Change(In millions)Net salesPigment

$
1,079.9


$
991.2


$
88.7Electrolytic and other chemical products


91.3



77.5



13.8Total

$
1,171.2


$
1068.7


$
102.5   2
    2 2
   38




---



##### Table of Contents



Nine Months EndedSeptember 30,2008


2007


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

$
(48.5
)

$
19.6


$
(68.1
)Electrolytic and other chemical products


5.1



0.1



5.0Subtotal


(43.4
)


19.7



(63.1
)Provision for environmental remediation and restoration


(0.5
)


(3.0
)


2.5Gain on land sales


25.1



0.5



24.6Corporate and nonoperating sites


(14.6
)


(23.8
)


9.2Total operating loss


(33.4
)


(6.6
)


(26.8
)Interest and debt expense


(38.9
)


(37.5
)


(1.4
)Other income, net


(5.9
)


4.1



(10.0
)Loss from continuing operations before income taxes

$
(78.2
)

$
(40.0
)

$
(38.2
)              39




---



##### Table of Contents



Financial
    Condition and Liquidity
  General
        Cash Flows from Operating Activities.
 40




---



##### Table of Contents



Cash Flows from Investing Activities.
      Cash Flows from Financing Activities.
  Credit Agreement and Covenant Amendments.
    2
   41




---



##### Table of Contents



Consolidated


ConsolidatedTotal


InterestLeverage Ratio


Coverage RatioFiscal Quarter EndedSeptember 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       Senior Unsecured Notes. 1 2
  Note Payable due July 2014.
  Receivables Securitization.
 42




---



##### Table of Contents



Off-Balance
    Sheet Arrangements
    Outlook
  Overview
   43




---



##### Table of Contents



Risk Factors, Form 10-K
  Form 10-Q,
    Pigment
  2
  2 2 2
  2
 44




---



##### Table of Contents



Electrolytic
    and other chemical products
  E-bikes,
    New
    Accounting Pronouncements
  Fair Value Measurements FIN No. FAS 157-2
       45




---



##### Table of Contents



Item 3.
    Quantitative
    and Qualitative Disclosure about Market Risk      Notional


Weighted-AverageAmount


Contract Rate(In millions)Maturing in 2008 Euro

$
(14.5
)


1.5264Australian dollar


18.9



0.9043Maturing in 2009 Euro


(10.6
)


1.5278Australian dollar


6.8



0.9186         AverageContract Price% Hedged


$/MMBtuQ4, 2008


35
%

$
8.81    46




---



##### 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 Form 10-Q
 47




---



##### Table of Contents



PART II 
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings  Savannah
    Plant
      Hamilton
    Plant
    New
    Jersey Wood-Treatment Site
  follow-up
 48




---



##### Table of Contents



Table
    Mountain Site
  on-site. on-site
  Forest
    Products
  and/or and/or
   49




---



##### 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 Form 10-Q
  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.
   50




---



##### Table of Contents



If we
    are unsuccessful in extending financing under our securitization
    program, which expires on November 25, 2008, we would need
    to seek additional 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    Item 5.
    Other
    Information   51




---



##### Table of Contents



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 Receivables Sale Agreement, dated
    July 29, 2008, among Tronox Funding LLC, Amsterdam Funding
    Corporation and ABN AMRO Bank N.V., as agent for the Purchasers
    and as a committed purchaser dated September 26, 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
    August 4, 2008.10
.2

Second Amendment to Receivables Sale Agreement, dated as of
    September 18, 2008, among Tronox Funding LLC, Tronox
    Worldwide LLC, Amsterdam Funding Corporation and ABN AMRO Bank
    N.V., as agent for the Purchasers and as a committed purchaser
    (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
    September 24, 2008.10
.3*

Executive Employment Agreement, dated September 3, 2008, by
    and between Gary L. Pittman and Tronox Incorporated.10
.4

Waiver and Amendment to Credit Agreement, dated October 28,
    2008, with certain lenders under the Credit Agreement dated as
    of November 28, 2005, among the Company, the Borrower, the
    lenders from time to time as 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 12, 2007, the Second Amendment to the to the Credit
    Agreement and First Amendment to Guarantee and Collateral
    Agreement dated as of February 8, 2008, and the Third
    Amendment to the Credit Agreement and Second Amendment to
    Guarantee and Collateral Agreement dated as of July 17,
    2008 (incorporated by reference to Exhibit 99.1 of
    Registrants current report on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    October 31, 2008).10
.5

Third Amendment to and Waiver of Receivables Sale Agreement,
    dated October 28, 2008, to the Receivables Sale Agreement
    among Tronox Funding LLC, the Royal Bank of Scotland plc and
    Amsterdam Funding Corporation, dated as of September 26,
    2007 (incorporated by reference to Exhibit 99.2 of
    Registrants current report on
    Form 8-K,
    filed with the Securities and Exchange Commission on
    October 31, 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. 52




---



##### Table of Contents



SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of
    1934, Tronox Incorporated has duly caused this report to be
    signed on its behalf by the undersigned, thereunto duly
    authorized, on November 7, 2008.



Tronox Incorporated By:
    /s/  Dennis
    L. Wanlass   Title:
    Interim Chief Executive Officer  By:
    /s/  Mary
    Mikkelson   Title:
    Senior Vice President and    By:
    /s/  Edward
    G. Ritter   Title:
    Interim Controller  53