##### 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, 2007
  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
  o þ 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, 2007 and 2006


1Condensed
    Consolidated Balance Sheets at June 30, 2007, and
    December 31, 2006


2Condensed
    Consolidated Statements of Cash Flows for the Six Months Ended
    June 30, 2007 and 2006


3Notes to Condensed
    Consolidated Financial Statements


4Item 2.


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


23Item 3.


Quantitative and
    Qualitative Disclosures About Market Risk


30Item 4.


Controls and
    Procedures


31PART II 
    OTHER INFORMATIONItem 1.


Legal
    Proceedings


32Item 1A.


Risk
    Factors


33Item 2.


Unregistered Sales
    of Equity Securities and Use of Proceeds


33Item 3.


Defaults Upon
    Senior Securities


33Item 4.


Submission of
    Matters to a Vote of Security Holders


33Item 5.


Other
    Information


33Item 6.


Exhibits


33Signatures


34Continuity 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
    INCORPORATEDCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
    (In millions, except per share data)
    (Unaudited)
  Three Months Ended


Six Months EndedJune 30,


June 30,2007


2006


2007


2006Net sales

$
366.5


$
375.9


$
705.6


$
714.7Cost of goods sold


337.1



342.7



638.4



618.7Gross margin


29.4



33.2



67.2



96.0Selling, general and
    administrative expenses


29.4



27.7



65.0



66.0Provision for environmental
    remediation and restoration, net of reimbursements


1.5







1.7



(20.5
)(1.5
)


5.5



0.5



50.5Interest and debt expense


(12.4
)


(12.3
)


(24.7
)


(24.3
)Other income, net


0.7



5.3



2.4



9.7Income (loss) from continuing
    operations before income taxes


(13.2
)


(1.5
)


(21.8
)


35.9Income tax provision


(6.8
)


(4.2
)


(7.2
)


(18.0
)Income (loss) from continuing
    operations


(20.0
)


(5.7
)


(29.0
)


17.9Loss from discontinued operations,
    net of income tax benefit of $0.8, $5.1, $1.0 and $6.9,
    respectively


(1.2
)


(8.7
)


(1.6
)


(11.7
)Net income (loss)

$
(21.2
)

$
(14.4
)

$
(30.6
)

$
6.2Income (loss) per common
    share:Basic Continuing operations

$
(0.49
)

$
(0.14
)

$
(0.71
)

$
0.44Discontinued operations


(0.03
)


(0.22
)


(0.04
)


(0.29
)Net income (loss)

$
(0.52
)

$
(0.36
)

$
(0.75
)

$
0.15Diluted Continuing operations

$
(0.49
)

$
(0.14
)

$
(0.71
)

$
0.44Discontinued operations


(0.03
)


(0.22
)


(0.04
)


(0.29
)Net income (loss)

$
(0.52
)

$
(0.36
)

$
(0.75
)

$
0.15Dividends declared per common
    share

$



$



$
0.05


$
0.05Weighted average shares
    outstanding:Basic


40.7



40.4



40.7



40.4Diluted


40.7



40.4



40.7



40.9    1




---



##### Table of Contents



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


December 31,2007


2006ASSETSCurrent assets:Cash and cash equivalents

$
39.7


$
76.6Accounts receivable, net


344.0



325.6Inventories, net


334.8



319.2Prepaid and other assets


19.2



15.2Income tax receivable


4.4



13.9Deferred income taxes


35.0



43.6Total current assets


777.1



794.1Property, plant and equipment,
    net


852.9



864.6Goodwill


11.7



11.5Other long-term
    assets


144.6



153.2Total assets

$
1,786.3


$
1,823.4LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
186.8


$
183.6Accrued liabilities


219.2



212.0Long-term debt due within one year


3.6



14.7Income taxes payable


3.7



1.6Total current
    liabilities


413.3



411.9Long-term
    liabilities:Deferred income taxes


10.1



33.6Environmental remediation and/or
    restoration


107.2



128.6Long-term debt


533.9



534.1Other long-term liabilities


312.0



277.9Total long-term
    liabilities


963.2



974.2Commitments and contingencies
    (Notes 12 and 13)Stockholders
    equityClass A common stock, par
    value $0.01  100,000,000 shares authorized,
    18,732,369 and 18,388,202 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


487.4



481.6Accumulated deficit


(54.8
)


(12.8
)Accumulated other comprehensive
    loss


(21.1
)


(31.4
)Treasury stock, at
    cost  144,135 shares and 33,533 shares,
    respectively


(2.1
)


(0.5
)Total stockholders
    equity


409.8



437.3Total liabilities and
    stockholders equity

$
1,786.3


$
1,823.4    2




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##### Table of Contents



TRONOX
    INCORPORATEDCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (In millions)
    (Unaudited)
  Six Months EndedJune 30,2007


2006Cash flows from operating
    activitiesNet income (loss)

$
(30.6
)

$
6.2Adjustments to reconcile net cash
    flows from operating activities Depreciation and amortization


55.8



49.3Deferred income taxes


(0.3
)


5.6Provision for environmental
    remediation and restoration, net of reimbursements


2.0



(10.3
)Other noncash items affecting net
    income (loss)


15.9



18.5Changes in assets and liabilities


(28.7
)


(55.9
)Net cash flows from operating
    activities


14.1



13.4Cash flows from investing
    activitiesCapital expenditures


(33.8
)


(43.3
)Other investing activities






0.5Net cash flows from investing
    activities


(33.8
)


(42.8
)Cash flows from financing
    activitiesRepayment of debt


(12.0
)


(1.0
)Debt issuance costs


(0.3
)


(2.4
)Stock option exercises


1.4



Dividends paid


(4.1
)


(2.0
)Net cash flows from financing
    activities


(15.0
)


(5.4
)Effects of exchange rate
    changes on cash and cash equivalents


(2.2
)


(8.3
)Net change in cash and cash
    equivalents


(36.9
)


(43.1
)Cash and cash equivalents at
    beginning of period


76.6



69.0Cash and cash equivalents at
    end of period

$
39.7


$
25.9    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
    
    Sales rebates, previously presented with accounts payable, are
    now presented with accrued liabilities in the companys
    Condensed Consolidated Balance Sheets.
    Vendor commissions, previously a reduction of net sales, have
    been reclassified as selling, general and administrative
    expenses. The increase in net sales and selling, general and
    administrative expenses for the three and six-month periods
    ending June 30, 2006, were $1.1 million and
    $1.9 million, respectively.
    Reimbursements for out-of-pocket selling expenses previously
    accounted for as a reduction of selling, general and
    administrative expenses have been reclassified as net sales. The
    increase in net sales and selling, general and administrative
    expenses for the three and six-month periods ending
    June 30, 2006, were $2.0 million and
    $3.8 million, respectively. 4




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    Railcar expenses previously accounted for as selling, general
    and administrative expenses have been reclassified as cost of
    goods sold. The increase in cost of goods sold and corresponding
    decrease in selling, general and administrative expenses for
    both the three and six-month periods ending June 30, 2006,
    was $0.8 million.  Employers Accounting
    for Defined Benefit Pension and Other Postretirement Plans Form 10-K Form 10-K
  Accounting for Uncertainty in Income Taxes, an interpretation
    of FASB Statement No. 109, Accounting for Income Taxes
  Fair Value Measurements
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities  including an Amendment of FASB Statement
    No. 115 Accounting for Certain Investments in Debt
    and Equity Securities
  3.
    Statement
    of Operations Data    Three Months Ended


Six Months EndedJune 30,


June 30,2007


2006


2007


2006(In millions)Net foreign currency transaction
    gain (loss)

$
(1.2
)

$
3.8


$
(1.5
)

$
8.1Equity in net earnings of equity
    method investees


1.3



4.7



2.0



4.7Provision for litigation
    settlements






(3.7
)






(3.7
)Interest income


0.5



0.6



1.3



1.3Other income (expense)


0.1



(0.1
)


0.6



(0.7
)Total

$
0.7


$
5.3


$
2.4


$
9.7  5




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##### Table of Contents



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


Three Months EndedJune 30, 2007


June 30, 2006Loss








Lossfrom





Per-


from





Per-Continuing





Share


Continuing





ShareOperations


Shares


Loss


Operations


Shares


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

$
(20.0
)


40.7


$
(0.49
)

$
(5.7
)


40.4


$
(0.14
)Effect of dilutive securities:Restricted stock and stock options






















Diluted earnings per share

$
(20.0
)


40.7


$
(0.49
)

$
(5.7
)


40.4


$
(0.14
)   Six Months Ended


Six Months EndedJune 30, 2007


June 30, 2006Loss








Incomefrom





Per-


from





Per-Continuing





Share


Continuing





ShareOperations


Shares


Loss


Operations


Shares


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

$
(29.0
)


40.7


$
(0.71
)

$
17.9



40.4


$
0.44Effect of dilutive securities:Restricted stock and stock options


















0.5



Diluted earnings per share

$
(29.0
)


40.7


$
(0.71
)

$
17.9



40.9


$
0.44     4.
    Balance
    Sheet Data    June 30,


December 31,2007


2006(In millions)Accounts receivable 
    trade

$
299.5


$
281.1Receivable from Kerr-McGee


18.0



17.5Receivable from the U.S.
    Department of Energy


11.0



11.0Receivable from insurers


6.8



7.4Other


22.5



21.3Accounts receivable, gross


357.8



338.3Allowance for doubtful accounts


(13.8
)


(12.7
)Accounts receivable, net

$
344.0


$
325.6  6




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##### Table of Contents



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


December 31,2007


2006(In millions)Raw materials

$
78.0


$
67.5Work-in-progress


14.8



13.4Finished goods


177.6



174.8Materials and supplies


72.1



71.4Inventories, gross


342.5



327.1Allowance for obsolete inventories
    and supplies


(7.7
)


(7.9
)Inventories, net

$
334.8


$
319.2     June 30,


December 31,2007


2006(In millions)Land

$
72.2


$
72.2Buildings


162.7



159.4Machinery and equipment


1,818.2



1,795.6Other


89.5



103.7Property, plant and equipment,
    gross


2,142.6



2,130.9Less accumulated depreciation


(1,289.7
)


(1,266.3
)Property, plant and equipment, net

$
852.9


$
864.6     June 30,


December 31,2007


2006(In millions)Investments in equity method
    investees

$
22.8


$
21.1Receivable from the U.S.
    Department of Energy


6.7



15.9Receivables from insurers


17.5



19.6Debt issuance costs, net


10.0



11.0Prepaid pension cost


27.0



25.3Intangible asset 
    proprietary technology(1)


53.2



52.6Other


7.4



7.7Total other long-term assets

$
144.6


$
153.2     (1)
    
    Associated with the companys
    reportable pigment segment. 7




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##### Table of Contents



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


December 31,2007


2006(In millions)Reserves for environmental
    remediation and restoration  current portion

$
107.1


$
95.3Employee-related costs and benefits


42.8



37.2Sales rebates


19.0



24.7Other


50.3



54.8Total accrued liabilities

$
219.2


$
212.0     June 30,


December 31,2007


2006(In millions)Reserve for uncertain tax positions

$
68.3


$
Reserve for income taxes payable






45.5Pension and postretirement
    obligations


171.7



167.5Asset retirement obligations


25.1



23.6Reserve for workers
    compensation and general liability claims


16.6



18.8Other


30.3



22.5Total other long-term liabilities

$
312.0


$
277.9   5.
    Summarized
    Combined Financial Information of Affiliates    Three Months Ended


Six Months EndedJune 30,


June 30,2007


2006


2007


2006(In millions)Gross revenues

$
8.9


$
25.9


$
16.8


$
27.3Gross profit


6.9



22.0



12.8



22.6Income before taxes


5.2



20.2



9.4



19.0Net income


4.4



16.7



8.1



15.9   6.
    Long-Term
    Debt     8




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    1 2
  7.
    Comprehensive
    Income (Loss)    Three Months


Six MonthsEnded


EndedJune 30,


June 30,2007


2006


2007


2006(In millions)Net income (loss)

$
(21.2
)

$
(14.4
)

$
(30.6
)

$
6.2After tax changes in:Foreign currency translation
    adjustments


3.6



15.4



6.9



21.4Cash flow hedge activity:Unrealized gain (loss)


(0.6
)


(1.1
)


0.4



(1.6
)Reclassification adjustments






0.1



0.8



0.3Benefit plan activity:Amortization of net actuarial loss


0.8







1.7



Amortization of net prior service
    cost


0.3







0.5



Minimum pension liability
    adjustment














(1.1
)Total comprehensive income (loss)

$
(17.1
)

$



$
(20.3
)

$
25.2   8.
    Income
    Taxes    Three Months


Six MonthsEnded


EndedJune 30,


June 30,2007


2006


2007


2006U.S. statutory tax
    rate  provision (benefit)


35.0
%


35.0
%


35.0
%


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


(47.1
)


(294.0
)


(43.4
)


13.8State income taxes


(4.5
)


(3.2
)


(2.1
)


1.2Interest on foreign tax contingency


0.1



(14.0
)


(0.2
)


1.2Changes in unrecognized tax
    benefits


(29.7
)






(20.3
)


Other  net


(5.3
)


(3.8
)


(2.0
)


(1.1
)Effective income tax rate


(51.5
)%


(280.0
)%


(33.0
)%


50.1
%  9




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            9.
    Discontinued
    Operations    Three Months Ended


Six Months EndedJune 30,


June 30,2007


2006


2007


2006(In millions)Environmental
    provisions/(reimbursements)(1)

$
(1.2
)

$
10.0


$
0.3


$
10.2Litigation provisions, legal and
    other costs(1)


3.2



3.8



2.3



8.4Total pretax loss


2.0



13.8



2.6



18.6Tax benefit


(0.8
)


(5.1
)


(1.0
)


(6.9
)Total after-tax loss

$
1.2


$
8.7


$
1.6


$
11.7     (1)
    
    Legal and environmental costs are
    allocated to discontinued operations on a specific
    identification basis. Other costs are primarily comprised of
    insurance and ad valorem taxes. 10




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   10.
    Retirement
    Plans    Retirement Plans


Postretirement PlansThree Months Ended June 30,2007


2006


2007


2006(In millions)Service cost

$
3.0


$
2.5


$
0.4


$
0.4Interest cost


7.1



6.8



2.1



2.1Expected return on plan assets


(9.9
)


(9.6
)






Net amortization Prior service cost (credit)


0.7



0.7



(0.3
)


(0.3
)Net actuarial loss


0.8



0.4



0.5



0.4Total retirement expense

$
1.7


$
0.8


$
2.7


$
2.6   Retirement


PostretirementPlans


PlansSix Months Ended June 30,2007


2006


2007


2006(In millions)Service cost

$
5.9


$
3.1


$
0.8


$
0.4Interest cost


14.1



7.6



4.2



2.1Expected return on plan assets


(19.7
)


(10.4
)






Net amortization Prior service cost (credit)


1.4



0.7



(0.6
)


(0.3
)Net actuarial loss


1.7



0.6



0.9



0.4Sub-total net periodic cost


3.4



1.6



5.3



2.6Allocated benefit plan expense
    from Kerr-McGee






0.7







2.6Total retirement expense

$
3.4


$
2.3


$
5.3


$
5.2   11.
    Employee
    Stock-Based Compensation   11




---



##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    January 2007AssumptionsGrant-date share price

$
15.19Exercise price

$
15.19Risk-free interest rate


4.67
%Expected dividend yield


1.32
%Expected volatility


36
%Expected life (years)


6.4Per-unit
    fair value of options granted

$
5.89       12.
    Contingencies    Reserves forReserves for


Environmental


ReimbursementsLitigation


Remediation(1)


Receivable(2)(In millions)Balance, December 31, 2006

$
15.0


$
223.9


$
71.4Provisions/accruals


0.5



5.5



3.5Payments/settlements


(3.7
)


(15.1
)


(14.9
)Balance, June 30, 2007

$
11.8


$
214.3


$
60.0     (1)
    
    Provisions for environmental
    remediation and restoration include $2.6 million related to
    the companys former forest products 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
    $2.3 million related to the companys former thorium
    compounds manufacturing operations, which are reflected in the
    Condensed Consolidated Statements of Operations as a component
    of loss from discontinued operations (net of taxes). 12




---



##### 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
    Environmental
  Henderson,
    Nevada
   13




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Financial Reserves 
  Litigation
  Insurance Reimbursement 10-year, clean-up
 14




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  clean-up clean-up
  clean-up
  MSA Reimbursement
  West
    Chicago, Illinois
    Closed Facility
  Vicinity Areas clean-up clean-up.
  clean-up
  Financial Reserves
  Government Reimbursement clean-up
 15




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  clean-up
  clean-up
  Ambrosia
    Lake, New Mexico
  and/or
    Financial Reserves
  Litigation
  Crescent,
    Oklahoma
   16




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Financial Reserves
  New
    Jersey Wood-Treatment Site
      Financial Reserves
  MSA Reimbursement
  Sauget,
    Illinois
  60-acre
 17




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Financial Reserves
  Cleveland,
    Oklahoma
  on-site
  Financial Reserves
  Cushing,
    Oklahoma
          Financial Reserves
  Jacksonville,
    Florida
   18




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Financial Reserves clean-up
  Columbus,
    Mississippi
    Financial Reserves
  Other
    Sites
    Master
    Separation Agreement
     19




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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
      May vs.
    Tronox Avance
  Financial Reserves
 20




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Savannah
    Plant
    Financial Reserves
  Other
    Matters
  and/or and/or clean-up and/or
  13.
    Commitments  clean-up
   21




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##### Table of Contents



TRONOX
    INCORPORATED
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   14.
    Reporting
    by Business Segment and Geographic Locations  2
  Three Months


Six MonthsEnded June 30,


Ended June 30,2007


2006


2007


2006(In millions)Net salesPigment

$
340.2


$
352.0


$
655.6


$
663.6Electrolytic and other chemical
    products


26.3



23.9



50.0



51.1Total net sales

$
366.5


$
375.9


$
705.6


$
714.7Operating profit
    (loss)Pigment

$
3.7


$
10.2


$
11.0


$
35.9Electrolytic and other chemical
    products(1)


(0.8
)


1.3



(1.6
)


23.12.9



11.5



9.4



59.0Corporate and nonoperating sites


(4.4
)


(6.0
)


(8.9
)


(8.5
)Total operating profit (loss)


(1.5
)


5.5



0.5



50.5Interest and debt expense


(12.4
)


(12.3
)


(24.7
)


(24.3
)Other income, net(2)


0.7



5.3



2.4



9.7Income tax provision


(6.8
)


(4.2
)


(7.2
)


(18.0
)Income (loss) from continuing
    operations

$
(20.0
)

$
(5.7
)

$
(29.0
)

$
17.9     (1)
    
    The six months ended June 30,
    2006, includes $20.5 million of reimbursements related to
    ammonium perchlorate at the companys Henderson facility.(2)
    
    The three months ended
    June 30, 2007 and 2006, includes net earnings of equity
    method investees of $1.3 million and $4.7 million,
    respectively. The six months ended June 30, 2007 and 2006,
    includes net earnings of equity method investees of
    $2.0 million and $4.7 million, respectively.  15.
    Related
    Party Transactions  2 2
 22




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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
  
    The company, along with its 50% joint venture partner, a
    subsidiary of Exxaro Resources Limited, has begun the process to
    increase annual production capacity at the Tiwest
    TiO2
    plant in Kwinana, Western Australia.
    The company is exploring opportunities to optimize the value of
    its sulfate
    TiO2
    process plant located in Uerdingen, Germany, including a
    possible divestiture of the facility. We believe it is important
    to fully 23




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##### Table of Contents



evaluate the options to ensure that we maximize value for the
    companys shareholders and will complete this process as
    quickly as possible.  Asset Impairment.
  Results
    of Operations
  Three
    Months Ended June 30, 2007 Compared to Three Months Ended
    June 30, 2006
    Three Months Ended June 30,2007


2006


$ Change(In millions)Net salesPigment

$
340.2


$
352.0


$
(11.8
)Electrolytic and other chemical
    products


26.3



23.9



2.4Total

$
366.5


$
375.9


$
(9.4
)       2
   24




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##### Table of Contents



Three Months Ended June 30,2007


2006


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

$
3.7


$
10.2


$
(6.5
)Electrolytic and other chemical
    products


(0.8
)


1.3



(2.1
)Subtotal


2.9



11.5



(8.6
)Corporate and nonoperating sites


(4.4
)


(6.0
)


1.6Total operating profit (loss)


(1.5
)


5.5



(7.0
)Interest and debt expense


(12.4
)


(12.3
)


(0.1
)Other income, net


0.7



5.3



(4.6
)Loss from continuing operations
    before income taxes

$
(13.2
)

$
(1.5
)

$
(11.7
)              25




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##### Table of Contents



Six
    Months Ended June 30, 2007 Compared to Six Months Ended
    June 30, 2006
    Six Months Ended June 30,2007


2006


$ Change(In millions)Net salesPigment

$
655.6


$
663.6


$
(8.0
)Electrolytic and other chemical
    products


50.0



51.1



(1.1
)Total

$
705.6


$
714.7


$
(9.1
)             Six Months Ended June 30,2007


2006


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

$
11.0


$
35.9


$
(24.9
)Electrolytic and other chemical
    products


(1.6
)


23.1



(24.7
)Subtotal


9.4



59.0



(49.6
)Corporate and nonoperating sites


(8.9
)


(8.5
)


(0.4
)Total operating profit


0.5



50.5



(50.0
)Interest and debt expense


(24.7
)


(24.3
)


(0.4
)Other income, net


2.4



9.7



(7.3
)Income (loss) from continuing
    operations before income taxes

$
(21.8
)

$
35.9


$
(57.7
)  26




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##### Table of Contents



Financial
    Condition and Liquidity
  General
     27




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##### Table of Contents



Cash Flows from Operating Activities.
  Cash Flows from Investing Activities.
        Cash Flows from Financing Activities.
  Credit Agreement.
     28




---



##### Table of Contents



and/or
    Note Payable due July 2014.
  Off-Balance
    Sheet Arrangements
  clean-up
 29




---



##### Table of Contents



Outlook
    2
  New
    Accounting Pronouncements
  Accounting for Uncertainty in Income Taxes, an interpretation
    of FASB Statement No. 109, Accounting for Income Taxes
  Fair
    Value Measurements.
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities  including an Amendment of FASB Statement
    No. 115, Accounting for Certain Investments in Debt and
    Equity Securities
  Item 3.
    Quantitative
    and Qualitative Disclosure about Market Risk      Weighted-Notional


AverageAmount


Contract Rate(In millions)Maturing in 2007 Euro

$
(14.3
)


1.3180Australian dollar


3.9



.7794  30




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##### Table of Contents



U.S. Natural Gas PurchasesAverageContract Price% Hedged

$/MMBtuQ3, 2007


91
%

$
6.94Q4, 2007


70
%

$
7.72   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
  Form 10-Q. Form 10-Q Form 10-K.
 31




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##### Table of Contents



PART II 
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings  Savannah
    Plant
    Forest
    Products
  and/or and/or
      May vs.
    Tronox Avance
    Form 10-K Form 10-Q.
 32




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##### Table of Contents



Item 1A.Risk
    Factors  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*

Continuity Agreement, dated as of
    July 16, 2007, between Tronox Incorporated and David J.
    Klvac.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.      33




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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 Chief    By:
    /s/  David
    J. Klvac   Title:
    Vice President and Controller  34