----

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| UNITED      STATES                                                                                                                                                                                                                                             |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| SECURITIES      AND EXCHANGE COMMISSION                                                                                                                                                                                                                        |
| Washington,      D.C. 20549                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                           |
| FORM      10-K                                                                                                                                                                                                                                                 |
| X                                                                                                                                                                                                                                                         |
|  Annual      Report Pursuant to Section 13 or 15(d) of the Securities and Exchange Act      of 1934:                                                                                                                                                      |
| For      the fiscal year ended December 31,      2008                                                                                                                                                                                                          |
| Commission      file number  333-100047                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                           |
| KRONOS INTERNATIONAL,INC                                                                                                                                                                                                                                       |
| (Exact      name of Registrant as specified in its charter)                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                           |
|     DELAWARE                                      |     22-2949593    |
| (State      or other jurisdiction ofincorporation      or organization)                                                                                                                                                                                        | (IRS      Employer Identification No.) |
|                                                                                                                                                                                                                                                      |
| 5430      LBJ Freeway,  Suite 1700                                                                                                                                                                                                                   |
|        Dallas,      Texas   75240-2697                                                                                                                                    |
| (Address      of principal executive offices)                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                           |
| Registrant's      telephone number, including area      code:          (972) 233-1700                                                                                                                   |

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| Part      I                                                                                                                                        |                                                                                                 | Page   |
|----------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                               |                                                                                                 |   |
| Item      1.                                                                                                                                       | Business                                                                                             | 4      |
| Item      1A.                                                                                                                                      | Risk      Factors                                                                                    | 10     |
| Item      1B.                                                                                                                                      | Unresolved      Staff Comments                                                                       | 12     |
| Item      2.                                                                                                                                       | Properties                                                                                           | 12     |
| Item      3.                                                                                                                                       | Legal      Proceedings                                                                               | 13     |
| Item      4.                                                                                                                                       | Submission      of Matters to a Vote of Security Holders*                                            | 13     |
|                                                                                                                                               |                                                                                                 |   |
|                                                                                                                                               |                                                                                                 |   |
| Part      II                                                                                                                                       |                                                                                                 |   |
|                                                                                                                                               |                                                                                                 |   |
| Item      5.                                                                                                                                       | Market      for our Common Equity and Related Stockholder Matters                                    | 13     |
| Item      6.                                                                                                                                       | Selected      Financial Data                                                                         | 14     |
| Item      7.                                                                                                                                       | Management’s      Discussion and Analysis of Financial Condition and Results of      Operation | 15     |
| Item      7A.                                                                                                                                      | Quantitative      and Qualitative Disclosures about Market Risk                                      | 32     |
| Item      8.                                                                                                                                       | Financial      Statements and Supplementary Data                                                     | 33     |
| Item      9.                                                                                                                                       | Changes      in and Disagreements with Accountants on Accounting and Financial      Disclosures      | 33     |
| Item      9A.                                                                                                                                      | Controls      and Procedures                                                                         | 33     |
| Item      9B.                                                                                                                                      | Other      Information                                                                               | 35     |
|                                                                                                                                               |                                                                                                 |   |
| Part      III                                                                                                                                      |                                                                                                 |   |
|                                                                                                                                               |                                                                                                 |   |
| Item      10.                                                                                                                                      | Directors,      Executive Officers and Corporate Governance                                          | 35     |
| Item      11.                                                                                                                                      | Executive      Compensation*                                                                         | 35     |
| Item      12.                                                                                                                                      | Security      Ownership of Certain Beneficial Owners and Management*                                 | 35     |
| Item      13.                                                                                                                                      | Certain      Relationships and related transactions*                                                 | 36     |
| Item      14.                                                                                                                                      | Principal      Accounting Fees and Services                                                          | 36     |
|                                                                                                                                               |                                                                                                 |   |
| Part      IV                                                                                                                                       |                                                                                                 |   |
|                                                                                                                                               |                                                                                                 |   |
| Item      15.                                                                                                                                      | Exhibits      and Financial Statement Schedules                                                      | 36     |
|                                                                                                                                               |                                                                                                 |   |
| Signatures                                                                                                                                         |                                                                                                 |
|                                                                                                                                               |                                                                                                 |   |
| *  We      meet the conditions set forth in the General Instructions I (1)(a) and (b)      and have therefore omitted these items.  |                                                                                                 |

----

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

| ·   | The      extent of the dependence of certain of our businesses on certain market      sectors |
|--------------------|-----------------------------------------------------------------------------------------------|

| ·   | The      cyclicality of our businesses |
|--------------------|----------------------------------------|

| ·   | Customer      inventory levels (such as the extent to which our customers may, from time      to time, accelerate purchases of titanium dioxide pigments (“TiO2”) in      advance of anticipated price increases or defer purchases of TiO2 in      advance of anticipated pricedecreases) |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Changes      in raw material and other operating costs (such as energy      costs) |
|--------------------|------------------------------------------------------------------------------------|

| ·   | General      global economic and political conditions (such as changes in the level of      gross domestic product in various regions of the world and the impact of      such changes on demand for TiO2) |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Competitive      products and substitute products |
|--------------------|---------------------------------------------------|

| ·   | Customer      and competitor strategies |
|--------------------|-----------------------------------------|

| ·   | Potential      consolidation or solvency of ourcompetitors |
|--------------------|------------------------------------------------------------|

| ·   | The      impact of pricing and productiondecisions |
|--------------------|----------------------------------------------------|

| ·   | Competitive      technology positions |
|--------------------|---------------------------------------|

| ·   | Possible      disruption of our business or increases in the cost of doing business      resulting from terrorist activities or global  conflicts |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      introduction of trade barriers |
|--------------------|-----------------------------------------|

| ·   | Fluctuations      in currency exchange rates (such as changes in the exchange rate between      the U.S. dollar and each of the euro and the Norwegian    kroner) |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Operating      interruptions (including, but not limited to, labor disputes, leaks,      natural disasters, fires, explosions, unscheduled or unplanned downtime      and transportation interruptions) |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      timing and amounts of insurancerecoveries |
|--------------------|----------------------------------------------------|

| ·   | Our      ability to renew or refinance creditfacilities |
|--------------------|---------------------------------------------------------|

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

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

| ·   | The      ultimate ability to utilize income tax attributes, the benefits of which      have been recognized under the more-likely-than-not recognition      criteria |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Environmental      matters (such as those requiring compliance with emission and discharge      standards for existing and newfacilities) |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Government      laws and regulations and possible changes  therein |
|--------------------|--------------------------------------------------------------------|

| ·   | The      ultimate resolution of pendinglitigation |
|--------------------|---------------------------------------------------|

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

| ITEM      1. | BUSINESS |
|--------------|----------|

| ·   | We      own and operate an ilmenite mine in Norway pursuant to a governmental      concession with an unlimited term, and we are currently excavating a      second mine located near the first mine.  Ilmenite is a raw      material used directly as a feedstock by some sulfate-process TiO2      plants, including all of our sulfate-process plants.  We also      sell ilmenite ore to third-parties some of whom are our      competitors.  The mines have estimated aggregate reserves that      are expected to last for at least another 60  years. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We      manufacture and sell iron-based chemicals, which are co-products and      processed co-products of the sulfate and chloride process TiO2      pigment production.  These co-product chemicals are marketed      through our Ecochem division, and are used primarily as treatment and      conditioning agents for industrial effluents and municipal wastewater as      well as in the manufacture of iron pigments, cement and agricultural      products. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We      manufacture and sell titanium oxychloride and titanyl sulfate, which are      side-stream products from the production of TiO2.  Titanium      oxychloride is used in specialty applications in the formulation of      pearlescent pigments, production of electroceramic capacitors for cell      phones and other electronic devices.  Titanyl sulfate products      are used primarily in pearlescentpigments. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Production Process/Raw    Material        | Quantities      of Raw Materials      Procured or      Mined       |
|-------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------|
|                                      | (In      thousands of metric tons)                                                                                             |
| Chloride      process plants -            |                                                                                                                           |
| purchased      slag or natural rutile ore | 273                                                                                                                            |
|                                      |                                                                                                                           |
| Sulfate      process plants -             |                                                                                                                           |
| raw      ilmenite ore mined internally    | 305                                                                                                                            |

----

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

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

| ·   | requiring      that a portion of our cash flows from operations be used for the payment      of interest on our debt, which reduces our ability to use our cash flow to      fund working capital, capital expenditures, dividends on our common stock,      acquisitions or general corporaterequirements; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

| Location                        | Description                                                                           |
|---------------------------------|---------------------------------------------------------------------------------------|
| Leverkusen,      Germany (1)    | TiO2      production, chloride and sulfate      process,  co-products       |
| Nordenham,      Germany         | TiO2      production, sulfate process, co-products                                    |
| Langerbrugge,      Belgium      | TiO2      production, chloride process, co-products, titanium chemicals      products |
| Fredrikstad,      Norway (2)    | TiO2      production, sulfate process, co-products                                    |
| Hauge      i Dalane, Norway (3) | Ilmenite      mine                                                                    |

|   | (1) | The      Leverkusen facility is located within an extensive manufacturing complex      owned by Bayer AG. We own the Leverkusen facility, which represents about      one-half of our current Ti02      production capacity, but we lease the land under the facility from Bayer      AG under a long term agreement which expires in 2050.  Lease      payments are periodically negotiated with Bayer for periods of at least      two years at a time.  Bayer provides some raw materials,      including chlorine, auxiliary and operating materials, utilities and      services necessary to operate the Leverkusen facility under separate      supplies and services agreements. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | The      Fredrikstad plant is located on public land and is leased until 2013, with      an option to extend the lease for an additional 50  years. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | We      are currently excavating a second mine located near our current mine in      Norway. |
|--------|-----|----------------------------------------------------------------------------------------------|

| ITEM 5. | MARKET      FOR OUR COMMON EQUITY AND RELATED STOCKHOLDER  MATTERS |
|--------------|--------------------------------------------------------------------|

----

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

|                                                                    |   | Years ended December 31,          |   |
|-------------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                                    |   | 2004                              |   |   | 2005 |   |   | 2006(2) |   |   | 2007 |   |   | 2008 |   |
|                                                                    |   | (In      millions, except ratios) |   |
| STATEMENTS      OF OPERATIONS DATA:                                     |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      sales                                                          |   | $                                 | 808.0  |   |   | $ | 850.9 |   |   | $ | 914.2 |   |   | $ | 946.1 |   |   | $ | 952.9 |   |
| Gross      margin                                                       |   |                              | 197.8  |   |   |   | 238.4 |   |   |   | 223.0 |   |   |   | 196.4 |   |   |   | 170.4 |   |
| Income      from operations                                             |   |                              | 96.9   |   |   |   | 138.2 |   |   |   | 107.4 |   |   |   | 78.7 |   |   |   | 45.1 |   |
| Net      income (loss)                                                  |   |                              | 325.6  |   |   |   | 60.3 |   |   |   | 73.7 |   |   |   | (58.8 | ) |   |   | 21.3 |   |
|                                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE      SHEET DATA (at year end):                                  |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      assets                                                       |   | $                                 | 985.2  |   |   | $ | 955.3 |   |   | $ | 1,080.6 |   |   | $ | 1,103.1 |   |   | $ | 1,053.5 |   |
| Long-term      debt including current maturities                        |   |                              | 533.2  |   |   |   | 453.8 |   |   |   | 529.8 |   |   |   | 590.8 |   |   |   | 605.6 |   |
| Stockholder’s      equity                                         |   |                              | 207.7  |   |   |   | 183.3 |   |   |   | 211.5 |   |   |   | 181.4 |   |   |   | 137.3 |   |
|                                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| STATEMENTS      OF CASH FLOW DATA:                                      |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash provided (used) by:                                       |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      activities                                               |   | $                                 | 142.3  |   |   | $ | 92.7 |   |   | $ | 62.5 |   |   | $ | 84.9 |   |   | $ | 1.0 |   |
| Investing      activities                                               |   |                              | (34.2  | ) |   |   | (35.8 | ) |   |   | (47.1 | ) |   |   | (42.5 | ) |   |   | (61.7 | ) |
| Financing      activities                                               |   |                              | (129.9 | ) |   |   | (8.5 | ) |   |   | (31.1 | ) |   |   | (34.0 | ) |   |   | 7.2 |   |
|                                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TiO2 OPERATING      STATISTICS:                                         |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sales      volume*                                                      |   |                              | 336    |   |   |   | 326 |   |   |   | 353 |   |   |   | 348 |   |   |   | 317 |   |
| Production      volume*                                                 |   |                              | 328    |   |   |   | 335 |   |   |   | 348 |   |   |   | 350 |   |   |   | 350 |   |
| Production      rate as a percentage of capacity                        |   | Full                              |   |   | Full |   |   | Full |   |   |   | 98 | % |   |   | 97 | % |
|                                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER FINANCIAL      DATA:                                              |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio      of earnings to  fixed      charges (unaudited) (1) |   |                              | 2.6    |   |   |   | 3.6 |   |   |   | 2.0 |   |   |   | 2.6 |   |   |   | 1.5 |   |

| *   | Metric      tons in thousands |
|---------------|-------------------------------|

| (1)   | Fixed      charges represents, as applicable, the sum of (i) total interest expense      and (ii) the interest component of rent expense (calculated as one-third      of rent expense).  Earnings represents, as applicable, the sum      of (i) fixed charges, (ii) income before income taxes and (iii)      amortization of capitalizedinterest. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | We      adopted Statement of Financial Accounting Standards No. 158 effective      December 31, 2006.  See Note 8 to our Consolidated Financial      Statements. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ITEM 7. | MANAGEMENT'S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF      OPERATIONS |
|--------------|-------------------------------------------------------------------------------------------------|

| ·   | TiO2      selling prices, |
|--------------------|---------------------------|

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

| ·   | our      TiO2      sales and production volumes, and |
|--------------------|------------------------------------------------------|

| ·   | manufacturing      costs, particularly maintenance and energy-related    expenses. |
|--------------------|------------------------------------------------------------------------------------|

| ·   | Long-lived      assets.  We recognize an impairment charge associated      with our long-lived assets, including property and equipment, whenever we      determine that recovery of such long-lived asset is not      probable.  Such determination is made in accordance with the      applicable GAAP requirements of SFAS No. 144, Accounting for the Impairment      or Disposal of Long-Lived Assets, and is based upon, among other      things, estimates of the amount of future net cash flows to be generated      by the long-lived asset and estimates of the current fair value of the      asset.  Significant judgment is required in estimating such cash      flows.  Adverse changes in such estimates of future net cash      flows or estimates of fair value could result in an inability to recover      the carrying value of the long-lived asset, thereby possibly requiring an      impairment charge to be recognized in the future.  We do not      assess our property and equipment for impairment unless certain impairment      indicators specified in SFAS No. 144 are present.  We did not      evaluate any long-lived assets for impairment during 2008 because no such      impairment indicators were present. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Pension      plans.  We maintain various defined benefit pension      plans.  The amounts recognized as defined benefit pension      expenses, and the reported amounts of pension asset and accrued pension      costs, are actuarially determined based on several assumptions, including      discount rates, expected rates of returns on plan assets and expected      health care trend rates.  Variances from these actuarially      assumed rates will result in increases or decreases, as applicable, in the      recognized pension obligations, pension expenses and funding      requirements.  These assumptions are more fully described below      under “Defined Benefit PensionPlans.” |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Income      taxes.  Deferred taxes are recognized for future tax      effects of temporary differences between financial and income tax      reporting in accordance with the recognition criteria of SFAS No. 109,      Accounting for Income      Taxes.  We record a valuation allowance to reduce our      deferred income tax assets to the amount that is believed to be realized      under the more-likely-than-not recognition criteria.  While we      have considered future taxable income and ongoing prudent and feasible tax      planning strategies in assessing the need for a valuation allowance, it is      possible that in the future we may change our estimate of the amount of      the deferred income tax assets that would more-likely-than-not be realized      in the future, resulting in an adjustment to the deferred income tax asset      valuation allowance that would either increase or decrease, as applicable,      reported net income in the period such change in estimate was      made.  For example, we have substantial net operating loss      carryforwards in Germany (the equivalent of $817 million for German      corporate purposes and $229 million for German trade tax purposes at      December 31, 2008).  At December 31, 2008, we have concluded      that no deferred income tax asset valuation allowance is required to be      recognized with respect to such carryforwards, principally because (i)      such carry forwards have an indefinite carryforward period, (ii) we have      generated cumulative income in Germany over the most recent three-year      period and consequently utilized a portion of such carryforwards during      that period and (iii) we currently expect to utilized the remainder of      such carryforwards over the long term.  However, prior to the      complete utilization of such carryforwards, particularly if the current      economic downturn continues and we were to generate operating losses in      our German operations for an extended period of time, it is possible that      we might conclude the benefit of such carryforwards would no longer meet      the more-likely-than-not recognition criteria, at which point we would be      required to recognize a valuation allowance against some or all of the      then-remaining tax benefit associated with the    carryforwards. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Contingencies.  We      record accruals for legal and other contingencies when estimated future      expenditures associated with such contingencies and commitments become      probable and the amounts can be reasonably estimated.  However,      new information may become available, or circumstances (such as applicable      laws and regulations) may change, thereby resulting in an increase or      decrease in the amount required to be accrued for such matters (and      therefore a decrease or increase in reported net income in the period of      such change). |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                          |   | Year ended December 31,    |   |
|-----------------------------------------------|--------|----------------------------|--------|
|                                          |   | 2007                       |   |   | 2008 |   |
|                                          |   | (Dollars      in millions) |   |
|                                          |   |                       |   |   |   |   |   |   |   |   |   |   |
| Net      sales                                |   | $                          | 946.1  |   |   |   | 100 | % |   | $ | 952.9 |   |   |   | 100 | % |
| Cost      of sales                            |   |                       | 749.7  |   |   |   | 79 | % |   |   | 782.5 |   |   |   | 82 | % |
| Gross      margin                             |   |                       | 196.4  |   |   |   | 21 | % |   |   | 170.4 |   |   |   | 18 | % |
| Other      operating income and expenses, net |   |                       | 117.7  |   |   |   | 13 | % |   |   | 125.3 |   |   |   | 13 | % |
| Income      from operations                   |   | $                          | 78.7   |   |   |   | 8 | % |   | $ | 45.1 |   |   |   | 5 | % |
|                                          |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          |   |                       |   |   |   |   |   |   |   |   |   |   |   | Percent |   |
|                                          |   |                       |   |   |   |   |   |   |   |   |   |   |   | Change |   |
| TiO2      operating statistics:               |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sales      volumes*                           |   |                       | 348    |   |   |   |   |   |   |   | 317 |   |   |   | (9 | )% |
| Production      volumes*                      |   |                       | 350    |   |   |   |   |   |   |   | 350 |   |   |   | - |   |
|                                          |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Percent      change in net sales: |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TiO2      product pricing                     |   |                       |   |   |   |   |   |   |   |   |   |   |   |   | 1 | % |
| TiO2      sales volumes                       |   |                       |   |   |   |   |   |   |   |   |   |   |   |   | (9 | )% |
| TiO2      product mix                         |   |                       |   |   |   |   |   |   |   |   |   |   |   |   | 2 | % |
| Changes      in currency exchange rates       |   |                       |   |   |   |   |   |   |   |   |   |   |   |   | 7 | % |
|                                          |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total                 |   |                       |   |   |   |   |   |   |   |   |   |   |   |   | 1 | % |

| ·   | a      non-cash benefit of $7.2 million relating to a European Court ruling that      resulted in the favorable resolution of certain income tax issues in      Germany and an increase in the amount of our German corporate and trade      tax net operating losscarryforwards. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | a      non-cash charge of $90.8 million relating to a decrease in our net      deferred income tax asset in Germany resulting from the reduction in      its income tax rates; |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      non-cash charge of $8.7 million relating to the adjustment of certain      German income tax attributes; and |
|--------------------|---------------------------------------------------------------------------------------------------------------------|

| ·   | a      non-cash income tax benefit of $.7 million resulting from a net reduction      in our reserve for uncertain taxpositions. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------|

|                                          |   | Year ended December 31,    |   |
|-----------------------------------------------|--------|----------------------------|--------|
|                                          |   | 2006                       |   |   | 2007 |   |
|                                          |   | (Dollars      in millions) |   |
|                                          |   |                       |   |   |   |   |   |   |   |   |   |   |
| Net      sales                                |   | $                          | 914.2  |   |   |   | 100 | % |   | $ | 946.1 |   |   |   | 100 | % |
| Cost      of sales                            |   |                       | 691.2  |   |   |   | 76 | % |   |   | 749.7 |   |   |   | 79 | % |
| Gross      margin                             |   |                       | 223.0  |   |   |   | 24 | % |   |   | 196.4 |   |   |   | 21 | % |
| Other      operating income and expenses, net |   |                       | 115.6  |   |   |   | 13 | % |   |   | 117.7 |   |   |   | 13 | % |
| Income      from operations                   |   | $                          | 107.4  |   |   |   | 11 | % |   | $ | 78.7 |   |   | 8 |  % |
|                                          |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          |   |                       |   |   |   |   |   |   |   |   |   |   |   | Percent |   |
|                                          |   |                       |   |   |   |   |   |   |   |   |   |   |   | Change |   |
| TiO2      operating statistics:               |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sales      volumes*                           |   |                       | 353    |   |   |   |   |   |   |   | 348 |   |   |   | (1 | )% |
| Production      volumes*                      |   |                       | 348    |   |   |   |   |   |   |   | 350 |   |   |   | 1 | % |
|                                          |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Percent      change in net sales: |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TiO2      product pricing                     |   |                       |   |   |   |   |   |   |   |   |   |   |   |   | (3 | )% |
| TiO2      sales volumes                       |   |                       |   |   |   |   |   |   |   |   |   |   |   |   | (1 | )% |
| TiO2      product mix                         |   |                       |   |   |   |   |   |   |   |   |   |   |   |   | 1 | % |
| Changes      in currency exchange rates       |   |                       |   |   |   |   |   |   |   |   |   |   |   |   | 7 | % |
|                                          |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total                 |   |                       |   |   |   |   |   |   |   |   |   |   |   |   |  4 | % |

| ·   | a      non-cash charge of $90.8 million relating to a decrease in our net      deferred income tax asset in Germany resulting from the reduction in its      income tax rates; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      non-cash charge of $8.7 million relating to the adjustment of certain      German income tax attributes; and |
|--------------------|---------------------------------------------------------------------------------------------------------------------|

| ·   | a      non-cash income tax benefit of $.7 million resulting from a net reduction      in our reserve for uncertain taxpositions. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------|

| ·   | an      income tax benefit of $21.7 million resulting from a favorable resolution      of certain income tax audits in Germany that resulted in an increase in      the amount of our German trade tax net operating loss      carryforward; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an      income tax benefit of $10.7 million resulting from the reduction in our      income tax contingency reserves related to favorable developments with      income tax audits in Belgium, Norway and Germany;  and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an      income tax benefit of $1.4 million relating to the favorable resolution of      certain income tax audit issues in Germany and  Belgium. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                    |   | Year      ended December 31,          |   |
|-----------------------------------------|--------|---------------------------------------|--------|
|                                    |   | 2007 vs.      2006               |   |   | 2007 vs.      2008 |   |
|                                    |   | Increase      (decrease), in millions |   |
| Impact      on:                         |   |                                  |   |   |   |   |
|   Net      sales              |   | $                                     | 63     |   |   | $ | 62 |   |
|   Income      from operations |   |                                  | -      |   |   |   | 8 |   |

----

| ·   | lower      income from operations in 2008 of $33.6million; |
|--------------------|------------------------------------------------------------|

| ·   | lower      cash paid for income taxes in 2008 of $8.9 million, in part due to lower      taxable income and the receipt of taxrefunds; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------|

| ·   | higher      cash paid for interest in 2008 of $3.4 million, as a result of increased      borrowing and the effects of currency exchange rates on the annual      interest payments on our 6.5% senior secured notes;  and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      lower amount of net cash used from relative changes in our inventories,      receivables, payables and accruals of $40.2 million in 2008 due primarily      to relative changes in our inventory levels, as discussed below;      and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | higher      depreciation expense of $4.6 million in 2008, primarily as a result of the      effects of currency exchange rates. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------|

| ·   | lower      income from operations in 2007 of $28.7million; |
|--------------------|------------------------------------------------------------|

| ·   | lower      cash paid for income taxes in 2007 of $15.6 million, in part due to the      net payment of $19.2 million in 2006 associated with the settlement of      prior year income tax audits; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | higher      cash paid for interest in 2007 of $4.7 million, primarily as a result of      the effects of foreign currency exchange rates on the semi annual interest      payments on our 6.5% Senior SecuredNotes; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | payment      of the $20.9 million call premium in 2006 as a result of the prepayment of      our 8.875% Senior Secured Notes, which is required to be included in cash      flows from operating activities; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      lower amount of net cash used from relative changes in our inventories,      receivables, payables and accruals of $6.5 million in 2007 due primarily      to relative changes in our inventory levels, as discussed below;      and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | higher      depreciation expense of $4.3 million in 2007, primarily as a result of the      effects of foreign currency exchangerates. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | made      net borrowings of $44.4 million on our European credit      facility. |
|--------------------|---------------------------------------------------------------------------------|

| ·   | issued      euro 400 million principal amount of 6.5% Notes at 99.306% ($498.5 million      when issued); and |
|--------------------|---------------------------------------------------------------------------------------------------------------|

| ·   | redeemed      our euro 375 million principal amount of 8.875% Senior Secured Notes      ($470.5 million when redeemed) using the proceeds from the issuance of the      6.5% Notes. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | euro      400 million principal amount of our 6.5% Senior Secured      Notes  ($560.0 million) due in2013; |
|--------------------|----------------------------------------------------------------------------------------------------------------------|

| ·   | euro      30.0 million ($42.2 million) under our revolving credit facility which      matures in May 2011; and |
|--------------------|----------------------------------------------------------------------------------------------------------------|

| ·   | Approximately      $3.4 million of other indebtedness. |
|--------------------|--------------------------------------------------------|

----

|                                                                  |   | Payment due date   |   |
|-----------------------------------------------------------------------|--------|--------------------|--------|
|  Contractual commitment                                          |   | 2009               |   |   |   | 2010/2011 |   |   |   | 2012/2013 |   |   | 2014      and after |   |   | Total |   |
|                                                                  |   | (In      millions) |   |
|                                                                  |   |               |   |
| Indebtedness      (1)                                                 |   | $                  | .8     |   |   | $ | 43.9 |   |   | $ | 560.9 |   |   | $ | - |   |   | $ | 605.6 |   |
| InInterest      on indebtedness (2)                                   |   |               | 38.6   |   |   |   | 75.9 |   |   |   | 48.8 |   |   |   | - |   |   |   | 163.3 |   |
| Operating      leases                                                 |   |               | 3.9    |   |   |   | 5.0 |   |   |   | 3.2 |   |   |   | 18.9 |   |   |   | 31.0 |   |
| Long-term      service and  other      supply contracts (3) |   |               | 44.7   |   |   |   | 48.2 |   |   |   | 10.0 |   |   |   | 1.8 |   |   |   | 104.7 |   |
| Fixed      asset acquisitions                                         |   |               | 17.6   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 17.6 |   |
| Estimated      tax obligations (4)                                    |   |               | 3.6    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3.6 |   |
|                                                                  |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   | $                  | 109.2  |   |   | $ | 173.0 |   |   | $ | 622.9 |   |   | $ | 20.7 |   |   | $ | 925.8 |   |

| (1)   | A      significant portion of the amount shown for indebtedness relates to our      6.5% Senior Secured Notes ($560.0 million at December 31,      2008).  Such indebtedness is denominated in euro.  See      Item 7A – “Quantitative and Qualitative Disclosures About Market Risk” and      Note 8 to the Consolidated Financial Statements.  With respect      to the revolving credit facilities the amounts shown for indebtedness are      based upon the actual amount outstanding at December 31,    2008. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | The      amounts shown for interest for any outstanding variable-rate indebtedness      is based upon the December 31, 2008 interest rates and assumes that such      variable-rate indebtedness remains outstanding until    maturity. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | The      amounts shown for the long-term service and other supply contracts      primarily pertain to agreements we have entered into with various      providers of products or services which help to run our plant facilities      (electricity, natural gas, etc.), utilizing December 31, 2008 exchange      rates. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)   | The      amount shown for estimated tax obligations is the consolidated amount of      income taxes payable at December 31, 2008, which is assumed to be paid      during 2009. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Any      amounts that we might pay to fund our defined benefit pension plans, as      the timing and amount of any such future fundings are unknown and      dependent on, among other things, the future performance of defined      benefit pension plan assets and interest rate assumptions.  We      expect to be required to contribute approximately $14 million to our      defined benefit pension plans during 2009.  Our defined benefit      pension plans are discussed below in greater detail.  See Note 8      to our Consolidated FinancialStatements. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Any      amounts that we might pay related to our asset retirement obligations as      the terms and amounts of such future fundings are unknown;    and |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Any      amounts that we might pay to settle any of our uncertain tax positions, as      the timing and amount of any such future settlements are unknown and      dependent on, among other things, the timing of tax audits.  See      Notes 7 and 14 to our Consolidated Financial  Statements. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|    |   | Discount      rates used for:                                 |   |
|---------|--------|---------------------------------------------------------------|--------|
|    |   | Obligations      atDecember      31, 2006 and expense in 2007 |   |   | Obligations      atDecember      31, 2007 and expense in 2008 |   |   | Obligations      atDecember      31, 2008 and expense in 2009 |   |
|    |   |                                                          |   |   |   |   |   |   |   |
| Germany |   |                                                          | 4.5    | % |   |   | 5.5 | % |   |   | 5.8 | % |
| Norway  |   |                                                          | 4.8    | % |   |   | 5.5 | % |   |   | 5.8 | % |

| ·   | In      Germany, the composition of our plan assets is established to satisfy the      requirements of the German insurance  commissioner. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In      Norway, we currently have a plan asset target allocation of 14% to equity      securities, 64% to fixed income securities and the remainder      primarily to cash and liquid investments such as money      markets.  The expected long-term rate of return for such      investments is approximately 9%, 5.0% and 4%,      respectively. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                 |   | December 31, 2007 |   |   | December 31, 2008 |   |
|------------------------------------------------------|--------|-------------------|--------|--------|-------------------|--------|
|                                                 |   | Germany           |   |   | Norway            |   |   | Germany |   |   | Norway |   |
|                                                 |   |              |   |   |              |   |   |   |   |   |   |   |
| Equity      securities and limited partnerships |   |              | 23     | %      |              |   | 18 | % |   |   | 24 | % |   |   | 14 | % |
| Fixed      income securities                         |   |              | 48     |   |              |   | 68 |   |   |   | 52 |   |   |   | 83 |   |
| Real      estate                                     |   |              | 14     |   |              |   | - |   |   |   | 12 |   |   |   | - |   |
| Cash,      cash equivalents and other                |   |              | 15     |   |              |   | 14 |   |   |   | 12 |   |   |   | 3 |   |
|                                                 |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|     Total                        |   |              | 100    | %      |              |   | 100 | % |   |   | 100 | % |   |   | 100 | % |

|                |   | 2006   |   |   | 2007   |   |   | 2008   |   |
|---------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                |   |   |   |   |   |   |   |   |   |
|   Germany |   |   | 5.3    | %      |   |   | 5.8    | %      |   |   | 5.3 | % |
|   Norway  |   |   | 6.5    | %      |   |   | 5.5    | %      |   |   | 6.1 | % |

----

|                                                                                                               |   | Amount              |   |   |            |   |   |
|--------------------------------------------------------------------------------------------------------------------|--------|---------------------|--------|--------|-----------------|--------|--------|
|  Indebtedness                                                                                                 |   | Carrying value |   |   | Fair value |   |   | Interest rate | Maturity  date   |
|                                                                                                               |   | (In      millions)  |   |   |            |   |   |
|                                                                                                               |   |                |   |   |            |   |   |   |   |   |
| Fixed-rate      indebtedness –euro-denominatedSenior      Secured Notes                                      |   | $                   | 560.0  |   |            | $      | 129.4  |   |   |   | 6.5 | % | 2013 |
| Variable      rate indebtedness -    euro-denominated  European      Credit facility |   | $                   | 42.2   |   |            | $      | 42.2   |   |   |   | 4.5 | % | 2011 |

| ·   | an      aggregate $57 million for an equivalent value of Norwegian kroner at      exchange rates ranging from kroner 6.91 to kroner 7.18 per U.S.      dollar.  These contracts with DnB Nor Bank ASA mature from January      2009 through December 2009 at a rate of $.5 million to $2.5 million per      month.  At December 31, 2008, the actual exchange rate was      kroner 7.0 per U.S. dollar.  |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an      aggregate euro 16.4 million for an equivalent value of Norwegian kroner at      exchange rates ranging from kroner 8.64 to kroner 9.23 per euro.       These contracts with DnB Nor Bank ASA mature from January 2009 through      December 2009 at a rate of euro .5 million to euro .7 million per      month.  At December 31, 2008, the actual exchange rate was      kroner 9.7 per euro. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

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

|                  |   | December 31,        |   |
|-----------------------|--------|---------------------|--------|
|                  |   | 2007                |   |   | 2008 |   |
|                  |   | (In      thousands) |   |
|                  |   |                |   |   |   |   |
| Audit(1)              |   | $                   | 1,386  |   |   | $ | 1,346 |   |
| Audit      related(2) |   |                | 10     |   |   |   | 1 |   |
| Tax(3)                |   |                | 19     |   |   |   | 236 |   |
|                  |   |                |   |   |   |   |   |   |
| Total                 |   | $                   | 1,415  |   |   | $ | 1,583 |   |

| 1)   | Fees      for the following services: |
|----------------|---------------------------------------|

| a)   | audits      of our consolidated year-end financials statements for each      year; |
|----------------|------------------------------------------------------------------------------------|

| b)   | reviews      of the unaudited quarterly financial statements appearing in our Form      10-Q’s for each of the first three quarters of each  year; |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

| c)   | consents      and assistance with registration statements filed with the      Commission; |
|----------------|-------------------------------------------------------------------------------------------|

| d)   | normally      provided statutory or regulatory filings or engagements for each year;      and |
|----------------|-----------------------------------------------------------------------------------------------|

| e)   | the      estimated out-of-pocket costs PwC incurred in providing all of such      services for which we reimbursePwC. |
|----------------|-----------------------------------------------------------------------------------------------------------------------|

| 2)   | Fees      for assurance and related services reasonably related to the audit or      review of our financial statements for each year.  These      services included employee benefit plan audits, accounting consultations      and attest services concerning financial accounting and reporting      standards and advice concerning internal  controls. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3)   | Fees      for tax compliance, tax advice and tax planning  services. |
|----------------|----------------------------------------------------------------------|

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

| 3.1 | Certificate      of Incorporation of the Registrant – incorporated by reference to Exhibit      3.1 to the Registrant’s Registration Statement on Form S-4 (File No.      333-100047). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.2 | Certificate      of Amendment to Certificate of Incorporation of the Registrant, dated      March 15, 1989 – incorporated by reference to Exhibit 3.2 to the      Registrant’s Registration Statement on Form S-4 (File No.      333-100047). |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.3 | Certificate      of Amendment to Certificate of Incorporation of the Registrant, dated      January 1, 1999 – incorporated by reference to Exhibit 3.3 to the      Registrant’s Registration Statement on Form S-4 (File No.      333-100047). |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.4 | Certificate      of Amendment to Certificate of Incorporation of the Registrant, dated      February 8, 1999 – incorporated by reference to Exhibit 3.4 to the      Registrant’s Registration Statement on Form S-4 (File No.      333-100047). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.5 | Certificate      of Amendment to Certificate of Incorporation of the Registrant, dated      December 15, 1999 – incorporated by reference to Exhibit 3.5 to the      Registrant’s Registration Statement on Form S-4 (File No.      333-100047). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.6 | Amended      and Restated Bylaws of the Registrant – incorporated by reference to      Exhibit 3.6 to the Registrant’s Registration Statement on Form S-4 (File      No. 333-100047). |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.1 | Indenture      governing the 6.5% Senior Secured Notes due 2013, dated as      of April 11, 2006, between Kronos International,  Inc. and The      Bank of New York, as |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | trustee      (incorporated by reference to Exhibit 4.1 to the Registrant’s Current      Report on Form 8-K (File No. 333-100047) that was filed with the U.S.      Securities and Exchange Commission on April 11,  2006). |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.2 | Form      of certificate of Series A 6.5% Senior Secured Note due      2013   (incorporated by reference to Exhibit 4.2 to the      Registrant’s Current Report on Form 8-K (File No. 333-100047) that was      filed with the U.S.  Securities and Exchange Commission on April      11, 2006). |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.3 | Form      of certificate of Series B 6.5% Senior Secured Note due      2013   (incorporated by reference to Exhibit 4.3 to the      Registrant’s Current Report on Form 8-K (File No. 333-100047) that was      filed with the U.S. Securities and Exchange Commission on April 11,      2006). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.4 | Purchase      Agreement dated April 5, 2006 between      Kronos   International, Inc. and Deutsche Bank AG London      (incorporated by   reference  to      Exhibit  4.1 to the  Registrant’s      Current  Report on Form 8-K (File No. 333-100047) that was filed      with the U.S.  Securities and Exchange Commission on April 11,      2006). |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.5 | Registration      Rights Agreement dated as of April 11, 2006      between   Kronos International, Inc. and Deutsche Bank AG      London   (incorporated  by reference to Exhibit      4.5 to the Registrant’s Current  Report on Form 8-K (File No.      333-100047) that was filed with the U.S.  Securities and      Exchange Commission on April 11,2006) |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.6 | Collateral      Agency Agreement, dated April 11, 2006, among The Bank   of      New York, U.S. Bank, N.A. and Kronos International,      Inc.  (incorporated by reference to Exhibit 4.6 to the      Registrant’s Current  Report on Form 8-K (File No. 333-100047)      that was filed with the U.S. Securities and Exchange Commission on April      11, 2006). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.7 | Security      Over Shares Agreement, dated April 11, 2006, between Kronos International,      Inc. and The Bank of New York (incorporated   by reference      to Exhibit 4.7 to the Registrant’s Current  Report on Form 8-K      (File No. 333-100047) that was filed   with the      U.S.  Securities and Exchange Commission on April      11,   2006). |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.8 | Pledge      of Shares (shares in Kronos Denmark ApS), dated April      11,   2006, between Kronos International, Inc. and U.S.      Bank, N.A.   (incorporated by reference to Exhibit 4.8 to      the Registrant’s Current  Report on Form 8-K (File No.      333-100047) that was filed with the U.S. Securities and Exchange      Commission on April 11, 2006). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.9 | Pledge      Agreement (shares in Societe Industrielle du Titane      S.A.),   dated April 11, 2006, between Kronos      International, Inc. and U.S.   Bank, N.A. (incorporated by      reference to Exhibit 4.9 to the   Registrant’s Current      Report on Form 8-K (File No. 333-100047) that was filed with the U.S.      Securities and Exchange Commission on April 11,  2006) |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.10 | Share      Pledge Agreement (shares in Kronos Titan GmbH), dated      April   11, 2006, between Kronos International, Inc. and      U.S. Bank, N.A.   (incorporated by reference to Exhibit      4.10 to the Registrant’s Current Report on Form 8-K (File No. 333-100047)      that was filed with the U.S. Securities and Exchange Commission on April      11, 2006). |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1 | Euro      80,000,000 Facility Agreement, dated June 25, 2002, among Kronos Titan      GmbH & Co. OHG, Kronos Europe S.A./N.V., Kronos Titan A/S and Titania      A/S, as borrowers, Kronos Titan GmbH & Co. OHG, Kronos Europe      S.A./N.V. and Kronos Norge AS, as guarantors, Kronos Denmark ApS, as      security provider, Deutsche Bank AG, as mandated lead arranger, Deutsche      Bank Luxembourg S.A., as agent and security agent, and KBC Bank NV, as      fronting bank, and the financial institutions listed in Schedule 1      thereto, as lenders – incorporated by reference to Exhibit 10.1 to the      Quarterly Report on Form 10-Q of NL Industries, Inc. for the quarter ended      June 30, 2002. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.2 | First      Amendment Agreement, dated September 3, 2004, Relating to a Facility      Agreement dated June 25, 2002 among Kronos Titan GmbH, Kronos Europe      S.A./N.V., Kronos Titan AS and Titania A/S, as borrowers, Kronos Titan      GmbH, Kronos Europe S.A./N.V. and Kronos Norge AS, as guarantors, Kronos      Denmark ApS, as security provider, with Deutsche Bank Luxembourg S.A.,      acting as agent – incorporated by reference to Exhibit 10.1 of the Current      Report on on Form 8-K of Kronos Worldwide, Inc. dated November 17, 2004      (File No. 333-119639). |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.3 | Second      Amendment Agreement Relating to a Facility Agreement dated June 25, 2002      executed as of June 14, 2005 by and among Deutsche Bank AG, as mandated      lead arranger, Deutsche Bank Luxembourg S.A. as agent, the participating      lenders, Kronos Titan GmbH, Kronos Europe S.A./N.V, Kronos Titan AS,      Kronos Norge AS, Titania AS and Kronos Denmark ApS – incorporated by      reference to Exhibit 10.1 of the Registrant’s Form 8-K dated June 14,      2005.  Certain schedules, exhibits, annexes and similar      attachments to this Exhibit 10.3 have not been filed; upon request, the      Reporting Persons will furnish supplementally to the Commission a copy of      any omitted exhibit, annex orattachment. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.4 | Third      Amendment Agreement Relating to a Facility Agreement dated June 25, 2002      executed as of May 26, 2008 by and among Deutsche Bank AG, as mandated      lead arranger, Deutsche Bank Luxembourg S.A., as agent, the participating      lenders, Kronos Titan GmbH, Kronos Europe S.A.,/N.V, Kronos Titan AS,      Kronos Norge AS, Titania AS and Kronos Denmark ApS – incorporated by      reference to Exhibit 10.1 to the Current Report on Form 8-K of Kronos      International, Inc. (File No. 333-100047) dated May 26,      2008.  Certain schedules, exhibits, annexes and similar      attachments to this Exhibit 10.1 have not been files; upon request, the      registrant will furnish supplementally to the Commission a copy of any      omitted exhibit, annex orattachment. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.5 | Lease      Contract, dated June 21, 1952, between Farbenfabriken Bayer      Aktiengesellschaft and Titangesellschaft mit beschrankter Haftung (German      language version and English translation thereof) – incorporated by      reference to Exhibit 10.14 to the Annual Report on Form 10-K of NL      Industries, Inc. for the year ended December 31,  1985. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.6 | Master      Technology Exchange Agreement, dated as of October 18, 1993, among Kronos,      Inc., Kronos Louisiana, Inc., the Registrant, Tioxide Group Limited and      Tioxide Group Services Limited – incorporated by reference to Exhibit 10.8      to the Quarterly Report on Form 10-Q of NL Industries, Inc. for the      quarter ended September 30, 1993. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.7 | Intercorporate      Services Agreement, dated as of January 1, 2005, among Kronos Worldwide,      Inc., Kronos (US), Inc., Kronos International, Inc. and Kronos Canada,      Inc. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.8 | Tax      Agreement, dated as of May 28, 2002, between Kronos, Inc. and the      Registrant – incorporated by reference to Exhibit 10.7 to the Registrant’s      Registration Statement on Form S-4 (File No.  333-100047). |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.9 | Services      Agreement, dated as of January 1, 2004, among Kronos International, Inc.,      Kronos Europe S.A./N.V., Kronos (US), Inc., Kronos Titan GmbH, Kronos      Denmark ApS, Kronos Canada, Inc., Kronos Limited, Societe Industrielle Du      Titane, S.A., Kronos B.V., Kronos Titan AS and Titania  AS. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.10 | Form      of Assignment and Assumption Agreement, dated as of January 1, 1999,      between Kronos, Inc. (formerly known as Kronos (USA), Inc.) and the      Registrant – incorporated by reference to Exhibit 10.9 to the Registrant’s      Registration Statement on Form S-4 (File No.  333-100047). |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.11 | Form      of Cross License Agreement, effective as of January 1, 1999, between      Kronos Inc. (formerly known as Kronos (USA), Inc.) and the Registrant –      incorporated by reference to Exhibit 10.10 to the Registrant’s      Registration Statement on Form S-4 (File No.  333-100047). |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.12* | NL      Industries, Inc. 1998 Long-Term Incentive Plan – incorporated by reference      to Appendix A to the Proxy Statement on Schedule 14A of NL Industries,      Inc. for the annual meeting of shareholders held on May 6,      1998. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.13* | Form      of Kronos Worldwide, Inc. Long-Term Incentive Plan – incorporated by      reference to Exhibit 10.4 of Kronos Worldwide, Inc.’s Registration      Statement on Form 10 (File No.001-31763). |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.14* | Form      of Indemnity Agreement between the Registrant and the officers and      directors of the Registrant – incorporated by reference to Exhibit 10.12      to the Registrant’s Registration Statement on Form S-4 (File No.      333-100047). |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.15* | Summary      of Consulting arrangement beginning on August 1, 2003, as amended January      14, 2008 between Lawrence A. Wigdor and Kronos Worldwide, inc. –      incorporated by reference to Item 1.01 to the Kronos Worldwide, Inc.      Current Report on Form 8-K filed with the U.S. Securities and Exchange      commission on January 18, 2008. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.16 | Agency      Agreement, dated as of January 1, 2004, among Kronos International, Inc.,      Kronos Titan GmbH, Kronos Europe S.A./N.V., Kronos Canada, Inc., Kronos      Titan AS and Societe Indutrielle Du Titane,S.A. |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.17 | Titanium      Dioxide Products and Titanium Chemicals Distribution Agreement, dated as      of January 1, 2005, among Kronos Titan GmbH, Kronos Europe S.A./N.V.,      Kronos Canada, Inc., Kronos Titan AS, Kronos (US), Inc., Kronos Denmark      ApS, Kronos Titan GmbH, Kronos Limited, Societe Industrielle Du Titane,      S.A. and Kronos B.V. |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.18 | Raw      Material Purchase and Sale Agreement, dated as of January 1, 2004, among      Kronos (US), Inc., Kronos Titan GmbH, Kronos Europe S.A./N.V. and Kronos      Canada, Inc. |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.19 | Promissory      note in the amount of euro 65,000,000, dated as of October 12, 2004      between the Registrant and Kronos Worldwide,  Inc. |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------|

| 10.20 | Promissory      note in the amount of euro 98,094,875, dated as of November 26, 2004      between the Registrant and Kronos Worldwide,  Inc. |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------|

| 12.1 | Statements      of Computation of Ratio of Earnings to Fixed  Charges |
|------|-----------------------------------------------------------------------|

| 31.1 | Certification. |
|------|----------------|

| 31.2 | Certification. |
|------|----------------|

| 32.1 | Certification. |
|------|----------------|

| * | Management      contract, compensatory plan orarrangement |
|---|-----------------------------------------------------------|

----

|   |  March      11, 2009 |
|--------|---------------------------|

|   | (Chief      Executive Officer) |
|--------|--------------------------------|

| s/ Andrew      Kasprowiak                      |   | /s/ Gregory M.    Swalwell_______                                                                                                |
|--------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------|
| Andrew      Kasprowiak, March 11, 2009                                                                                         |   | Gregory      M. Swalwell, March 11, 2009                                                                                         |
| (Director)                                                                                                                     |   | (Vice      President, Finance; Principal Financial Officer)                                                                      |
|                                                                                                                           |   |                                                                                                                             |
|                                                                                                                           |   |                                                                                                                             |
| s/ Dr. Ulfert      Fiand                  |   | /s/ Klemens      Schlueter_                                                         |
| Dr.      Ulfert Fiand, March 11, 2009                                                                                          |   | Klemens      Schlueter, March 11, 2009                                                                                           |
| (Director)                                                                                                                     |   | (Director)                                                                                                                       |
|                                                                                                                           |   |                                                                                                                             |
|                                                                                                                           |   |                                                                                                                             |
|                                                                                                                           |   | /s/ Tim C.      Hafer          ______       |
|                                                                                                                           |   | Tim      C. Hafer, March 11, 2009                                                                                                |
|                                                                                                                           |   | (Vice      President, Controller, Principal Accounting  Officer)                                                                 |

----

| KRONOS      INTERNATIONAL, INC.                                                                                                                                                                                     |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                |   |
| Annual      Report on Form 10-K                                                                                                                                                                                     |   |
|                                                                                                                                                                                                                |   |
| Items      8, 15(a) and 15(c)                                                                                                                                                                                       |   |
|                                                                                                                                                                                                                |   |
| Index      of Financial Statements and Schedules                                                                                                                                                                    |   |
|                                                                                                                                                                                                                |   |
|                                                                                                                                                                                                                |   |
| Financial      Statements                                                                                                                                                                                           | Page   |
|                                                                                                                                                                                                                |   |
| Report      of Independent Registered Public Accounting Firm                                                                                                                                                        | F-2    |
|                                                                                                                                                                                                                |   |
| Consolidated      Balance Sheets -                                                                                                                                                                                  |   |
| December      31, 2007 and 2008                                                                                                                                                                                     | F-3    |
|                                                                                                                                                                                                                |   |
| Consolidated      Statements of Operations -                                                                                                                                                                        |   |
| Year      ended December 31, 2006, 2007 and 2008                                                                                                                                                                    | F-5    |
|                                                                                                                                                                                                                |   |
| Consolidated      Statements of Comprehensive Income (Loss) -                                                                                                                                                       |   |
| Year      ended December 31, 2006, 2007 and 2008                                                                                                                                                                    | F-6    |
|                                                                                                                                                                                                                |   |
| Consolidated      Statements of Stockholder’s Equity -                                                                                                                                                        |   |
| Year      ended December 31, 2006, 2007 and 2008                                                                                                                                                                    | F-7    |
|                                                                                                                                                                                                                |   |
| Consolidated      Statements of Cash Flows -                                                                                                                                                                        |   |
| Year      ended December 31, 2006, 2007 and 2008                                                                                                                                                                    | F-8    |
|                                                                                                                                                                                                                |   |
| Notes      to Consolidated Financial Statements                                                                                                                                                                     | F-10   |
|                                                                                                                                                                                                                |   |
| Financial      Statement Schedule                                                                                                                                                                                   |   |
|                                                                                                                                                                                                                |   |
| Schedule      I – Condensed Financial Information of Registrant                                                                                                                                               | S-1    |
|                                                                                                                                                                                                                |   |
| Schedules      II, III and IV are omitted either because they are not applicable or the      required amounts are either not material, or are presented in the Notes to      our Consolidated Financial Statements. |   |
|                                                                                                                                                                                                                |   |
| Other      Financial Statements filed pursuant to Rule 3-16 of Regulation      S-X                                                                                                                                  |   |
|                                                                                                                                                                                                                |   |
| Financial      Statements of Kronos Titan GmbH                                                                                                                                                                      | FA-1   |
|                                                                                                                                                                                                                |   |
| Financial      Statements of Kronos Denmark ApS                                                                                                                                                                     | FB-1   |

----

----

|               ASSETS |   | December 31, |    |
|--------------------------------------------------------------------------------------------|--------|--------------|---------|
|                                                                                       |   | 2007         |    |   | 2008 |   |
|                                                                                       |   |         |    |   |   |   |
|                                                                                       |   |         |    |   |   |   |
| Current      assets:                                                                       |   |         |    |   |   |   |
| Cash      and cash equivalents                                                             |   | $            | 67.0    |   |   | $ | 10.8 |   |
| Restricted      cash                                                                       |   |         | 1.8     |   |   |   | 1.5 |   |
| Accounts      and other receivables                                                        |   |         | 168.2   |   |   |   | 130.9 |   |
| Receivable      from affiliates                                                            |   |         | 1.5     |   |   |   | 1.2 |   |
| Inventories                                                                                |   |         | 228.9   |   |   |   | 303.9 |   |
| Prepaid      expenses                                                                      |   |         | 3.6     |   |   |   | 3.0 |   |
|                                                                                       |   |         |    |   |   |   |   |   |
| Total      current assets                                                                  |   |         | 471.0   |   |   |   | 451.3 |   |
|                                                                                       |   |         |    |   |   |   |   |   |
| Other      assets:                                                                         |   |         |    |   |   |   |   |   |
| Deferred      financing costs, net                                                         |   |         | 8.1     |   |   |   | 6.8 |   |
| Restricted      marketable debt securities                                                 |   |         | 3.2     |   |   |   | 3.5 |   |
| Deferred      income taxes                                                                 |   |         | 168.7   |   |   |   | 166.4 |   |
| Other                                                                                      |   |         | .8      |   |   |   | 1.1 |   |
|                                                                                       |   |         |    |   |   |   |   |   |
| Total      other assets                                                                    |   |         | 180.8   |   |   |   | 177.8 |   |
|                                                                                       |   |         |    |   |   |   |   |   |
| Property      and equipment:                                                               |   |         |    |   |   |   |   |   |
| Land                                                                                       |   |         | 38.1    |   |   |   | 35.9 |   |
| Buildings                                                                                  |   |         | 177.6   |   |   |   | 171.9 |   |
| Equipment                                                                                  |   |         | 839.5   |   |   |   | 807.8 |   |
| Mining      properties                                                                     |   |         | 89.7    |   |   |   | 73.9 |   |
| Construction      in progress                                                              |   |         | 40.2    |   |   |   | 37.9 |   |
|                                                                                       |   |         |    |   |   |   |   |   |
| Total      property and equipment                                                          |   |         | 1,185.1 |   |   |   | 1,127.4 |   |
|                                                                                       |   |         |    |   |   |   |   |   |
| Less      accumulated depreciation and amortization                                        |   |         | 733.8   |   |   |   | 703.0 |   |
|                                                                                       |   |         |    |   |   |   |   |   |
| Net      property and equipment                                                            |   |         | 451.3   |   |   |   | 424.4 |   |
|                                                                                       |   |         |    |   |   |   |   |   |
| Total      assets                                                                          |   | $            | 1,103.1 |   |   | $ | 1,053.5 |   |
|                                                                                       |   |         |    |   |   |   |   |   |

----

|    LIABILITIES AND STOCKHOLDER’S      EQUITY                      |   | December 31, |     |
|----------------------------------------------------------------------------------------|--------|--------------|----------|
|                                                                                   |   | 2007         |     |   | 2008 |   |
|                                                                                   |   |         |     |   |   |   |
| Current      liabilities:                                                              |   |         |     |   |   |   |
| Current      maturities of long-term debt                                              |   | $            | .8       |   |   | $ | .8 |   |
| Accounts      payable and accrued liabilities                                          |   |         | 138.2    |   |   |   | 134.5 |   |
| Payable      to affiliates                                                             |   |         | 5.6      |   |   |   | 13.3 |   |
| Income      taxes                                                                      |   |         | 9.3      |   |   |   | 3.6 |   |
| Deferred      income taxes                                                             |   |         | 3.3      |   |   |   | 4.6 |   |
|                                                                                   |   |         |     |   |   |   |   |   |
| Total      current liabilities                                                         |   |         | 157.2    |   |   |   | 156.8 |   |
|                                                                                   |   |         |     |   |   |   |   |   |
| Noncurrent      liabilities:                                                           |   |         |     |   |   |   |   |   |
| Long-term      debt                                                                    |   |         | 590.0    |   |   |   | 604.8 |   |
| Deferred      income taxes                                                             |   |         | 16.4     |   |   |   | 13.0 |   |
| Accrued      pension cost                                                              |   |         | 128.0    |   |   |   | 114.0 |   |
| Other                                                                                  |   |         | 30.1     |   |   |   | 27.6 |   |
|                                                                                   |   |         |     |   |   |   |   |   |
|       Total      noncurrent liabilities                  |   |         | 764.5    |   |   |   | 759.4 |   |
|                                                                                   |   |         |     |   |   |   |   |   |
| Stockholder’s      equity:                                                       |   |         |     |   |   |   |   |   |
| Common      stock, $100 par value; 100,000 shares authorized; 2,968 shares      issued |   |         | .3       |   |   |   | .3 |   |
| Additional      paid-in capital                                                        |   |         | 1,944.2  |   |   |   | 1,947.6 |   |
| Retained      deficit                                                                  |   |         | (1,411.5 | ) |   |   | (1,425.1 | ) |
| Notes      receivable from affiliate                                                   |   |         | (209.5   | ) |   |   | (214.5 | ) |
| Accumulated      other comprehensive loss:                                             |   |         |     |   |   |   |   |   |
| Currency      translation                                                              |   |         | (80.3    | ) |   |   | (107.9 | ) |
| Defined      benefit pension plans                                                     |   |         | (61.8    | ) |   |   | (63.1 | ) |
|                                                                                   |   |         |     |   |   |   |   |   |
| Total      stockholder’s equity                                                  |   |         | 181.4    |   |   |   | 137.3 |   |
|                                                                                   |   |         |     |   |   |   |   |   |
| Total      liabilities and stockholder’s equity                                  |   | $            | 1,103.1  |   |   | $ | 1,053.5 |   |
|                                                                                   |   |         |     |   |   |   |   |   |

----

|                                             |   | Years ended December 31, |   |
|--------------------------------------------------|--------|--------------------------|--------|
|                                             |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
|                                             |   |                     |   |   |   |   |   |   |   |
| Net      sales                                   |   | $                        | 914.2  |   |   | $ | 946.1 |   |   | $ | 952.9 |   |
| Cost      of sales                               |   |                     | 691.2  |   |   |   | 749.7 |   |   |   | 782.5 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Gross      margin                                |   |                     | 223.0  |   |   |   | 196.4 |   |   |   | 170.4 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative expense |   |                     | 116.8  |   |   |   | 123.3 |   |   |   | 130.4 |   |
| Other      operating income (expense):           |   |                     |   |   |   |   |   |   |   |   |   |   |
| Currency      transaction losses, net            |   |                     | (4.5   | ) |   |   | (3.9 | ) |   |   | (.8 | ) |
| Disposition      of property and equipment       |   |                     | (1.8   | ) |   |   | (.6 | ) |   |   | (.9 | ) |
| Royalty      income                              |   |                     | 7.2    |   |   |   | 7.2 |   |   |   | 6.5 |   |
| Other      income                                |   |                     | .4     |   |   |   | 3.0 |   |   |   | .4 |   |
| Other      expense                               |   |                     | (.1    | ) |   |   | (.1 | ) |   |   | (.1 | ) |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Income      from operations                      |   |                     | 107.4  |   |   |   | 78.7 |   |   |   | 45.1 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Other      income (expense):                     |   |                     |   |   |   |   |   |   |   |   |   |   |
| Interest      income from affiliates             |   |                     | 18.8   |   |   |   | 20.6 |   |   |   | 17.3 |   |
| Trade      interest income                       |   |                     | 2.2    |   |   |   | 2.1 |   |   |   | 1.0 |   |
| Other      interest income                       |   |                     | .8     |   |   |   | - |   |   |   | - |   |
| Loss      on prepayment of debt                  |   |                     | (22.3  | ) |   |   | - |   |   |   | - |   |
| Interest      expense                            |   |                     | (40.9  | ) |   |   | (37.8 | ) |   |   | (40.7 | ) |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Income      before income taxes                  |   |                     | 66.0   |   |   |   | 63.6 |   |   |   | 22.7 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Provision      (benefit) for income taxes        |   |                     | (7.7   | ) |   |   | 122.4 |   |   |   | 1.4 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                           |   | $                        | 73.7   |   |   | $ | (58.8 | ) |   | $ | 21.3 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                          |   | Years ended December    31, |   |
|-----------------------------------------------------------------------------------------------|--------|----------------------------------|--------|
|                                                                                          |   | 2006                             |   |   | 2007 |   |   | 2008 |   |
|                                                                                          |   |                             |   |   |   |   |   |   |   |
| Net      income (loss)                                                                        |   | $                                | 73.7   |   |   | $ | (58.8 | ) |   | $ | 21.3 |   |
|                                                                                          |   |                             |   |   |   |   |   |   |   |   |   |   |
| Other      comprehensive (loss) income, net of tax:                                           |   |                             |   |   |   |   |   |   |   |   |   |   |
|                                                                                          |   |                             |   |   |   |   |   |   |   |   |   |   |
| Currency      translation                                                                     |   |                             | 30.5   |   |   |   | 19.0 |   |   |   | (27.6 | ) |
|                                                                                          |   |                             |   |   |   |   |   |   |   |   |   |   |
| Pension      plans:                                                                           |   |                             |   |   |   |   |   |   |   |   |   |   |
| Amortization      of prior service cost and net losses included in periodic pension      cost |   |                             | -      |   |   |   | 5.1 |   |   |   | (.5 | ) |
| Net      actuarial gain arising during year                                                   |   |                             | -      |   |   |   | 41.3 |   |   |   | (.8 | ) |
| Minimum      pension liability change                                                         |   |                             | 8.2    |   |   |   | - |   |   |   | - |   |
|                                                                                          |   |                             |   |   |   |   |   |   |   |   |   |   |
|                                                                                          |   |                             | 8.2    |   |   |   | 46.4 |   |   |   | (1.3 | ) |
|                                                                                          |   |                             |   |   |   |   |   |   |   |   |   |   |
| Total      other comprehensive income (loss)                                                  |   |                             | 38.7   |   |   |   | 65.4 |   |   |   | (28.9 | ) |
|                                                                                          |   |                             |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      income (loss)                                                              |   | $                                | 112.4  |   |   | $ | 6.6 |   |   | $ | (7.6 | ) |
|                                                                                          |   |                             |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                              |   |   |    |   |       |   |    |      |   |   |       |   |   | Accumulated      other  |       |    |    |   |
|---------------------------------------------------------------------------------------------------|--------|--------|---------|--------|------------|--------|---------|-----------|--------|--------|------------|--------|--------|-------------------------|------------|---------|---------|--------|
|                                                                                              |   |   |    |   |       |   |    |      |   |   | Notes      |   |   | comprehensive           |       |    |    |   |
|                                                                                              |   |   |    |   | Additional |   |    |      |   |   | receivable |   |   | _____income (loss)_____ |       |    | Total   |   |
|                                                                                              |   | Common |    |   | paid-in    |   |    | Retained  |   |   | from       |   |   | Currency                |       |    | Pension |   |   | stockholder’s |   |
|                                                                                              |   | stock  |    |   | capital    |   |    | (deficit) |   |   | affiliates |   |   | translation             |       |    | plans   |   |   | equity |   |
|                                                                                              |   |   |    |   |       |   |    |      |   |   |       |   |   |                    |       |    |    |   |   |   |   |
| Balance      at December 31, 2005                                                                 |   | $      | .3      |   |       | $      | 1,944.2 |      |   | $      | (1,338.1   | )      |   | $                       | (209.5     | )       |    | $      | (129.8 | ) |   | $ | (83.7 | ) |   | $ | 183.4 |   |
|                                                                                              |   |   |    |   |       |   |    |      |   |   |       |   |   |                    |       |    |    |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                   |   |   | -       |   |       |   | -       |      |   |   | 73.7       |   |   |                    | -          |    |    |   | - |   |   |   | - |   |   |   | 73.7 |   |
| Other      comprehensive loss, net of tax                                                         |   |   | -       |   |       |   | -       |      |   |   | -          |   |   |                    | -          |    |    |   | 30.5 |   |   |   | 8.2 |   |   |   | 38.7 |   |
| Cash      dividends                                                                               |   |   | -       |   |       |   | -       |      |   |   | (50.2      | )      |   |                    | -          |    |    |   | - |   |   |   | - |   |   |   | (50.2 | ) |
| Change      in accounting – asset and liability recognition provisions of SFAS No.      158 |   |   | -       |   |       |   | -       |      |   |   | -          |   |   |                    | -          |    |    |   | - |   |   |   | (34.1 | ) |   |   | (34.1 | ) |
|                                                                                              |   |   |    |   |       |   |    |      |   |   |       |   |   |                    |       |    |    |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2006                                                                 |   |   | .3      |   |       |   | 1,944.2 |      |   |   | (1,314.6   | )      |   |                    | (209.5     | )       |    |   | (99.3 | ) |   |   | (109.6 | ) |   |   | 211.5 |   |
|                                                                                              |   |   |    |   |       |   |    |      |   |   |       |   |   |                    |       |    |    |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                                                                     |   |   | -       |   |       |   | -       |      |   |   | (58.8      | )      |   |                    | -          |    |    |   | - |   |   |   | - |   |   |   | (58.8 | ) |
| Other      comprehensive loss, net of tax                                                         |   |   | -       |   |       |   | -       |      |   |   | -          |   |   |                    | -          |    |    |   | 19.0 |   |   |   | 46.4 |   |   |   | 65.4 |   |
| Cash      dividends                                                                               |   |   | -       |   |       |   | -       |      |   |   | (34.2      | )      |   |                    | -          |    |    |   | - |   |   |   | - |   |   |   | (34.2 | ) |
| Change      in accounting:                                                                        |   |   |    |   |       |   |    |      |   |   |       |   |   |                    |       |    |    |   |   |   |   |   |   |   |   |   |   |   |
| FIN      48                                                                                       |   |   | -       |   |       |   | -       |      |   |   | (.5        | )      |   |                    | -          |    |    |   | - |   |   |   | - |   |   |   | (.5 | ) |
| SFAS      No. 158 – measurement date provisions                                             |   |   | -       |   |       |   | -       |      |   |   | (3.4       | )      |   |                    | -          |    |    |   | - |   |   |   | 1.4 |   |   |   | (2.0 | ) |
|                                                                                              |   |   |    |   |       |   |    |      |   |   |       |   |   |                    |       |    |    |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2007                                                                 |   |   | .3      |   |       |   | 1,944.2 |      |   |   | (1,411.5   | )      |   |                    | (209.5     | )       |    |   | (80.3 | ) |   |   | (61.8 | ) |   |   | 181.4 |   |
|                                                                                              |   |   |    |   |       |   |    |      |   |   |       |   |   |                    |       |    |    |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                   |   |   | -       |   |       |   | -       |      |   |   | 21.3       |   |   |                    | -          |    |    |   | - |   |   |   | - |   |   |   | 21.3 |   |
| Other      comprehensive income, net of tax                                                       |   |   | -       |   |       |   | -       |      |   |   |       |   |   |                    | -          |    |    |   | (27.6 | ) |   |   | (1.3 | ) |   |   | (28.9 | ) |
| Cash      dividends                                                                               |   |   | -       |   |       |   | -       |      |   |   | (34.9      | )      |   |                    | -          |    |    |   | - |   |   |   | - |   |   |   | (34.9 | ) |
| Intercompany      interest Kronos Worldwide, Inc.                                                 |   |   | -  |   |       |   | 3.4     |      |   |   |  -    |   |   |                    |  (5.0 | )  |    |   | - |   |   |   | - |   |   |   | (1.6 | ) |
|                                                                                              |   |   |    |   |       |   |    |      |   |   |       |   |   |                    |       |    |    |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2008                                                                 |   | $      | .3      |   |       | $      | 1,947.6 |      |   | $      | (1,425.1   | )      |   | $                       | (214.5     | )       |    | $      | (107.9 | ) |   | $ | (63.1 | ) |   | $ | 137.3 |   |
|                                                                                              |   |   |    |   |       |   |    |      |   |   |       |   |   |                    |       |    |    |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |    |   |       |   |    |      |   |   |       |   |   |                    |       |    |    |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                          |   | Years ended December 31, |   |
|-------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                          |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
| Cash      flows from operating activities:                                    |   |                     |   |   |   |   |   |   |   |
| Net      income (loss)                                                        |   | $                        | 73.7   |   |   | $ | (58.8 | ) |   | $ |  21.3 |   |
| Depreciation      and amortization                                            |   |                     | 36.7   |   |   |   | 41.0 |   |   |   | 45.6 |   |
| Loss      on prepayment of debt                                               |   |                     | 22.3   |   |   |   | - |   |   |   | - |   |
| Call      premium paid                                                        |   |                     | (20.9  | ) |   |   | - |   |   |   | - |   |
| Deferred      income taxes                                                    |   |                     | (27.9  | ) |   |   | 107.9 |   |   |   | (6.7 | ) |
| Defined      benefit pension plan expense greater (less) than cash    funding |   |                     | 3.2    |   |   |   | 6.9 |   |   |   | (12.3 | ) |
| Other,      net                                                               |   |                     | 2.7    |   |   |   | 3.8 |   |   |   | 4.7 |   |
| Change      in assets and liabilities:                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
| Accounts      and other receivables                                           |   |                     | (14.3  | ) |   |   | 5.4 |   |   |   | 16.7 |   |
| Inventories                                                                   |   |                     | 11.4   |   |   |   | (11.1 | ) |   |   | (89.1 | ) |
| Prepaid      expenses                                                         |   |                     | (1.1   | ) |   |   | .8 |   |   |   | .1 |   |
| Accounts      payable and accrued liabilities                                 |   |                     | (.1    | ) |   |   | (.4 | ) |   |   | 12.8 |   |
| Income      taxes                                                             |   |                     | (15.7  | ) |   |   | (3.6 | ) |   |   | (1.9 | ) |
| Accounts      with affiliates                                                 |   |                     | (5.8   | ) |   |   | (4.3 | ) |   |   | 9.3 |   |
| Other      noncurrent assets                                                  |   |                     | .2     |   |   |   | .3 |   |   |   | (2.3 | ) |
| Other      noncurrent liabilities                                             |   |                     | (1.9   | ) |   |   | (3.0 | ) |   |   | 2.8 |   |
|                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      cash provided by operating activities                                |   |                     | 62.5   |   |   |   | 84.9 |   |   |   | 1.0 |   |
|                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash      flows from investing activities:                                    |   |                     |   |   |   |   |   |   |   |   |   |   |
| Capital      expenditures                                                     |   |                     | (47.1  | ) |   |   | (42.4 | ) |   |   | (61.7 | ) |
| Change      in restricted cash equivalents                                    |   |                     | -      |   |   |   | (.1 | ) |   |   | - |   |
|                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      cash used in investing activities                                    |   |                     | (47.1  | ) |   |   | (42.5 | ) |   |   | (61.7 | ) |

----

|                                                     |   | Years ended December 31, |   |
|----------------------------------------------------------|--------|--------------------------|--------|
|                                                     |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
| Cash      flows from financing activities:               |   |                     |   |   |   |   |   |   |   |
| Indebtedness:                                            |   |                     |   |   |   |   |   |   |   |
| Borrowings                                               |   | $                        | 498.6  |   |   | $ | .6 |   |   | $ | 57.6 |   |
| Principal      payments                                  |   |                     | (470.6 | ) |   |   | (.4 | ) |   |   | (14.6 | ) |
| Deferred      financing fees                             |   |                     | (8.9   | ) |   |   | - |   |   |   | (.9 | ) |
| Dividends      paid                                      |   |                     | (50.2  | ) |   |   | (34.2 | ) |   |   | (34.9 | ) |
|                                                     |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      cash (used in) provided by financing activities |   |                     | (31.1  | ) |   |   | (34.0 | ) |   |   | 7.2 |   |
|                                                     |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents - net change from:        |   |                     |   |   |   |   |   |   |   |   |   |   |
| Operating,      investing and financing activities       |   |                     | (15.7  | ) |   |   | 8.4 |   |   |   | (53.5 | ) |
| Currency      translation                                |   |                     | 5.2    |   |   |   | 5.8 |   |   |   | (2.7 | ) |
|                                                     |   |                     |   |   |   |   |   |   |   |   |   |   |
|                                                     |   |                     | (10.5  | ) |   |   | 14.2 |   |   |   | (56.2 | ) |
|                                                     |   |                     |   |   |   |   |   |   |   |   |   |   |
| Balance      at beginning of year                        |   |                     | 63.3   |   |   |   | 52.8 |   |   |   | 67.0 |   |
|                                                     |   |                     |   |   |   |   |   |   |   |   |   |   |
| Balance      at end of year                              |   | $                        | 52.8   |   |   | $ | 67.0 |   |   | $ | 10.8 |   |
|                                                     |   |                     |   |   |   |   |   |   |   |   |   |   |
| Supplemental      disclosures –Cash      paid for: |   |                     |   |   |   |   |   |   |   |   |   |   |
| Interest                                                 |   | $                        | 32.0   |   |   | $ | 36.7 |   |   | $ | 40.1 |   |
| Income      taxes                                        |   |                     | 34.5   |   |   |   | 18.9 |   |   |   | 10.0 |   |
| Accrual      for capital expenditures                    |   |                     | -      |   |   |   | 8.6 |   |   |   | 6.2 |   |
|                                                     |   |                     |   |   |   |   |   |   |   |   |   |   |

----

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

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

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

|                                                            |   | Years ended December    31,  |   |
|-----------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                            |   | 2006                              |   |   | 2007 |   |   | 2008 |   |
|                                                            |   | (In      millions)                |   |
|        Geographic      areas |   |                              |   |   |   |   |   |   |   |
| Net      sales – point of origin:                         |   |                              |   |   |   |   |   |   |   |
| Germany                                                         |   | $                                 | 672.0  |   |   | $ | 700.6 |   |   | $ | 694.8 |   |
| Belgium                                                         |   |                              | 192.8  |   |   |   | 209.8 |   |   |   | 207.7 |   |
| Norway                                                          |   |                              | 173.5  |   |   |   | 184.3 |   |   |   | 194.3 |   |
| Eliminations                                                    |   |                              | (124.1 | ) |   |   | (148.6 | ) |   |   | (143.9 | ) |
|                                                            |   |                              |   |   |   |   |   |   |   |   |   |   |
| Total                                                           |   | $                                 | 914.2  |   |   | $ | 946.1 |   |   | $ | 952.9 |   |

|                                         |   | Years ended December    31,  |   |
|----------------------------------------------|--------|-----------------------------------|--------|
|                                         |   | 2006                              |   |   | 2007 |   |   | 2008 |   |
|                                         |   | (In      millions)                |   |
| Net      sales – point of destination: |   |                              |   |   |   |   |   |   |   |
|                                         |   |                              |   |   |   |   |   |   |   |
| Europe                                       |   | $                                 | 728.6  |   |   | $ | 807.4 |   |   | $ | 809.8 |   |
| North      America                           |   |                              | 54.4   |   |   |   | 20.9 |   |   |   | 15.5 |   |
| Other                                        |   |                              | 131.2  |   |   |   | 117.8 |   |   |   | 127.6 |   |
|                                         |   |                              |   |   |   |   |   |   |   |   |   |   |
| Total                                        |   | $                                 | 914.2  |   |   | $ | 946.1 |   |   | $ | 952.9 |   |

|                                                   |   | December 31,       |   |
|--------------------------------------------------------|--------|--------------------|--------|
|                                                   |   | 2007               |   |   | 2008 |   |
|                                                   |   | (In      millions) |   |
|                                                   |   |               |   |   |   |   |
| Identifiable      assets - net property and equipment: |   |               |   |   |   |   |
|                                                   |   |               |   |   |   |   |
| Germany                                                |   | $                  | 291.0  |   |   | $ | 273.5 |   |
| Belgium                                                |   |               | 70.5   |   |   |   | 64.5 |   |
| Norway                                                 |   |               | 89.0   |   |   |   | 83.5 |   |
| Other                                                  |   |               | .8     |   |   |   | 2.9 |   |
|                                                   |   |               |   |   |   |   |   |   |
| Total                                                  |   | $                  | 451.3  |   |   | $ | 424.4 |   |

|                                       |   | December 31,       |   |
|--------------------------------------------|--------|--------------------|--------|
|                                       |   | 2007               |   |   | 2008 |   |
|                                       |   | (In      millions) |   |
|                                       |   |               |   |   |   |   |
| Trade      receivables                     |   | $                  | 144.0  |   |   | $ | 113.5 |   |
| Recoverable      VAT and other receivables |   |               | 23.5   |   |   |   | 18.5 |   |
| Refundable      income taxes               |   |               | 2.4    |   |   |   | .7 |   |
| Allowance      for doubtful accounts       |   |               | (1.7   | ) |   |   | (1.8 | ) |
|                                       |   |               |   |   |   |   |   |   |
| Total                                      |   | $                  | 168.2  |   |   | $ | 130.9 |   |

|                   |   | December 31,       |   |
|------------------------|--------|--------------------|--------|
|                   |   | 2007               |   |   | 2008 |   |
|                   |   | (In      millions) |   |
|                   |   |               |   |   |   |   |
| Raw      materials     |   | $                  | 51.4   |   |   | $ | 58.7 |   |
| Work      in process   |   |               | 16.2   |   |   |   | 16.1 |   |
| Finished      products |   |               | 116.3  |   |   |   | 183.2 |   |
| Supplies               |   |               | 45.0   |   |   |   | 45.9 |   |
|                   |   |               |   |   |   |   |   |   |
| Total                  |   | $                  | 228.9  |   |   | $ | 303.9 |   |

|                                     |   | December 31,       |   |
|------------------------------------------|--------|--------------------|--------|
|                                     |   | 2007               |   |   | 2008 |   |
|                                     |   | (In      millions) |   |
|                                     |   |               |   |   |   |   |
| Accounts      payable                    |   | $                  | 77.8   |   |   | $ | 81.8 |   |
| Employee      benefits                   |   |               | 17.3   |   |   |   | 16.0 |   |
| Accrued      sales discounts and rebates |   |               | 12.6   |   |   |   | 11.6 |   |
| Accrued      interest                    |   |               | 8.1    |   |   |   | 7.7 |   |
| Other                                    |   |               | 22.4   |   |   |   | 17.4 |   |
|                                     |   |               |   |   |   |   |   |   |
| Total                                    |   | $                  | 138.2  |   |   | $ | 134.5 |   |

|                           |   | December 31,       |       |
|--------------------------------|--------|--------------------|------------|
|                           |   | 2007               |       |   | 2008 |   |
|                           |   | (In      millions) |       |
|                           |   |               |       |   |   |   |
| Long-term      debt:           |   |               |       |   |   |   |
| 6.5%      Senior Secured Notes |   | $                  | 585.5      |   |   | $ | 560.0 |   |
| Revolving      credit facility |   | ­­-      |       |   |   | 42.2 |   |
| Other                          |   |               |   5.3 |   |   |   | 3.4 |   |
|                           |   |               |       |   |   |   |   |   |
| Total      debt                |   |               | 590.8      |   |   |   | 605.6 |   |
| Less      current maturities   |   |               | .8         |   |   |   | .8 |   |
|                           |   |               |       |   |   |   |   |   |
| Total      long-term debt      |   | $                  | 590.0      |   |   | $ | 604.8 |   |

| Years ending December 31, |   | Amount             |   |
|---------------------------|--------|--------------------|--------|
|                      |   | (In      millions) |   |
|                      |   |               |   |
| 2009                      |   | $                  | .8     |   |
| 2010                      |   |               | .8     |   |
| 2011                      |   |               | 43.1   |   |
| 2012                      |   |               | .9     |   |
| 2013                      |   |               | 560.0  |   |
|                      |   |               |   |   |
| Total                     |   | $                  | 605.6  |   |

|                                                                                            |   | Years ended December 31, |        |
|-------------------------------------------------------------------------------------------------|--------|--------------------------|-------------|
|                                                                                            |   | 2006                     |        |   | 2007 |   |   | 2008 |   |
|                                                                                            |   | (In      millions)       |        |
| Pre-tax      income:                                                                            |   |                     |        |   |   |   |   |   |   |
| Germany                                                                                         |   | $                        | 18.5        |   |   | $ | 31.7 |   |   | $ | (5.5 | ) |
| Other      non-U.S.                                                                             |   |                     |  47.5  |   |   |   |  31.9 |   |   |   |  28.2 |   |
|                                                                                            |   |                     |        |   |   |   |   |   |   |   |   |   |
| Total                                                                                           |   | $                        | 66.0        |   |   | $ | 63.6 |   |   | $ | 22.7 |   |
|                                                                                            |   |                     |        |   |   |   |   |   |   |   |   |   |
| Expected      tax expense (benefit), at U.S. federal statutory income tax rate of      35%      |   | $                        | 23.1        |   |   | $ | 22.2 |   |   | $ | 7.9 |   |
| Non-U.S.      tax rates                                                                         |   |                     | (1.5        | ) |   |   | (.4 | ) |   |   | (1.0 | ) |
| Incremental      tax and rate differences on equity in earnings of non-tax group      companies |   |                     | .5          |   |   |   | .5 |   |   |   | .3 |   |
| Adjustment      of German tax attribute                                                         |   |                     | (21.7       | ) |   |   | 8.7 |   |   |   | (7.2 | ) |
| Nondeductible      expenses                                                                     |   |                     | 4.2         |   |   |   | 2.8 |   |   |   | 2.2 |   |
| Tax      contingency reserve adjustment, net                                                    |   |                     | (10.7       | ) |   |   | (.7 | ) |   |   | - |   |
| Assessment      (refund) of prior year income taxes                                             |   |                     | (1.4        | ) |   |   | (.9 | ) |   |   | .3 |   |
| Nontaxable      income                                                                          |   |                     | (.5         | ) |   |   | (.5 | ) |   |   | (.9 | ) |
| German      tax rate change                                                                     |   |                     | -           |   |   |   | 90.8 |   |   |   | - |   |
| Other,      net                                                                                 |   |                     |  .3    |   |   |   |  (.1 | ) |   |   |  (.2 | ) |
|                                                                                            |   |                     |        |   |   |   |   |   |   |   |   |   |
| Provision      (benefit) for income taxes                                                       |   | $                        | (7.7        | ) |   | $ | 122.4 |   |   | $ | 1.4 |   |
|                                                                                            |   |                     |        |   |   |   |   |   |   |   |   |   |
| Components      of income tax expense (benefit):                                                |   |                     |        |   |   |   |   |   |   |   |   |   |
| Currently      payable:                                                                         |   |                     |        |   |   |   |   |   |   |   |   |   |
| Germany                                                                                         |   | $                        | 5.0         |   |   | $ | 1.4 |   |   | $ | .8 |   |
| Other      non – U.S.                                                                     |   |                     |  15.2  |   |   |   |  12.8 |   |   |   |  7.3 |   |
|                                                                                            |   |                     |        |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |                     |  20.2  |   |   |   |  14.2 |   |   |   |  8.1 |   |
| Deferred      income taxes (benefit):                                                           |   |                     |        |   |   |   |   |   |   |   |   |   |
| Germany                                                                                         |   |                     | (23.5       | ) |   |   | 111.6 |   |   |   | (7.7 | ) |
| Other      non - U.S.                                                                           |   |                     |  (4.4  | ) |   |   | (3.4 | ) |   |   |  1.0 |   |
|                                                                                            |   |                     |        |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |                     |  (27.9 | ) |   |   |  108.2 |   |   |   | (6.7 | ) |
|                                                                                            |   |                     |        |   |   |   |   |   |   |   |   |   |
| Provision      (benefit) for income taxes                                                       |   | $                        | (7.7        | ) |   | $ | 122.4 |   |   | $ | 1.4 |   |

|                                                                  |   | Years ended December 31, |   |
|-----------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                  |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
|                                                                  |   | (In      millions)       |   |
| Comprehensive      provision for income taxes allocable to (benefit): |   |                     |   |   |   |   |   |   |   |
| Net      income                                                       |   | $                        | (7.7   | ) |   | $ | 122.4 |   |   | $ | 1.4 |   |
| Other      comprehensive income –Pension      plans             |   |                     | 6.7    |   |   |   | 28.0 |   |   |   | (.4 | ) |
|                                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |
| Adoption      of SFAS No. 158 –Pension      plans               |   |                     | (18.6  | ) |   |   | (1.2 | ) |   |   | - |   |
|                                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |
| Total                                                                 |   | $                        | (19.6  | ) |   | $ | 149.2 |   |   | $ | 1.0 |   |

|                                                      |   | December 31,       |   |
|-----------------------------------------------------------|--------|--------------------|--------|
|                                                      |   | 2007               |   |   | 2008 |   |
|                                                      |   | Assets             |   |   | Liabilities |   |   | Assets |   |   | Liabilities |   |
|                                                      |   | (In      millions) |   |
|                                                      |   |               |   |   |   |   |   |   |   |   |   |   |
| Tax      effect of temporary differences related to:      |   |               |   |   |   |   |   |   |   |   |   |   |
| Inventories                                               |   | $                  | 1.5    |   |   | $ | (4.5 | ) |   | $ | - |   |   | $ | (4.2 | ) |
| Property      and equipment                               |   |               | -      |   |   |   | (26.0 | ) |   |   | - |   |   |   | (27.9 | ) |
| Accrued      pension cost                                 |   |               | 5.3    |   |   |   | - |   |   |   | 2.2 |   |   |   | - |   |
| Other      accrued liabilities and deductible differences |   |               | 21.8   |   |   |   | - |   |   |   | 19.9 |   |   |   | - |   |
| Other      taxable differences                            |   |               | -      |   |   |   | (4.5 | ) |   |   | - |   |   |   | (4.5 | ) |
| Tax      loss and tax credit carryforwards                |   |               | 155.4  |   |   |   | - |   |   |   | 163.3 |   |   |   | - |   |
| Adjusted      gross deferred tax assets (liabilities)     |   |               | 184.0  |   |   |   | (35.0 | ) |   |   | 185.4 |   |   |   | (36.6 | ) |
| Netting      of items by tax jurisdiction                 |   |               | (15.3  | ) |   |   | 15.3 |   |   |   | (19.0 | ) |   |   | 19.0 |   |
|                                                      |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                      |   |               | 168.7  |   |   |   | (19.7 | ) |   |   | 166.4 |   |   |   | (17.6 | ) |
| Less      net current deferred tax asset (liability)      |   |               | -      |   |   |   | (3.3 | ) |   |   | - |   |   |   | (4.6 | ) |
|                                                      |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      noncurrent deferred tax asset (liability)        |   | $                  | 168.7  |   |   | $ | (16.4 | ) |   | $ | 166.4 |   |   | $ | (13.0 | ) |

| Years ending December 31, |   | Amount             |   |
|---------------------------|--------|--------------------|--------|
|                      |   | (In      millions) |   |
|                      |   |               |   |
| 2009                      |   | $                  | 17.5   |   |
| 2010                      |   |               | 17.4   |   |
| 2011                      |   |               | 17.4   |   |
| 2012                      |   |               | 19.1   |   |
| 2013                      |   |               | 17.0   |   |
| Next      5 years         |   |               | 89.7   |   |

----

|                                                              |   | Years ended December 31, |        |
|-------------------------------------------------------------------|--------|--------------------------|-------------|
|                                                              |   | 2007                     |        |   | 2008 |   |
|                                                              |   | (In      millions)       |        |
| Change      in projected benefit obligations (“PBO”): |   |                     |        |   |   |   |
| Benefit      obligations at beginning of the year                 |   | $                        | 380.9       |   |   | $ | 358.3 |   |
| Change      in measurement date, net                              |   |                     | 5.6         |   |   |   | - |   |
| Service      cost                                                 |   |                     | 5.6         |   |   |   | 7.0 |   |
| Interest      cost                                                |   |                     | 17.7        |   |   |   | 13.9 |   |
| Participant      contributions                                    |   |                     | 2.0         |   |   |   | 1.8 |   |
| Actuarial      gains                                              |   |                     | (67.5       | ) |   |   | (12.5 | ) |
| Change      in foreign currency exchange rates                    |   |                     | 40.2        |   |   |   | (30.0 | ) |
| Benefits      paid                                                |   |                     |  (26.2 | ) |   |   | (21.4 | ) |
|                                                              |   |                     |        |   |   |   |   |   |
| Benefit      obligations at end of the year                       |   |                     | 358.3       |   |   |   | 317.1 |   |
|                                                              |   |                     |        |   |   |   |   |   |
| Change      in plan assets:                                       |   |                     |        |   |   |   |   |   |
| Fair      value of plan assets at beginning of the year           |   |                     | 208.1       |   |   |   | 230.3 |   |
| Change      in measurement date, net                              |   |                     | (1.0        | ) |   |   | - |   |
| Actual      return on plan assets                                 |   |                     | 5.3         |   |   |   | (1.8 | ) |
| Employer      contributions                                       |   |                     | 17.4        |   |   |   | 15.4 |   |
| Participant      contributions                                    |   |                     | 2.0         |   |   |   | 1.8 |   |
| Change      in foreign currency exchange rates                    |   |                     | 24.7        |   |   |   | (21.2 | ) |
| Benefits      paid                                                |   |                     | (26.2       | ) |   |   | (21.4 | ) |
|                                                              |   |                     |        |   |   |   |   |   |
| Fair      value of plan assets at end of year                     |   |                     | 230.3       |   |   |   | 203.1 |   |
|                                                              |   |                     |        |   |   |   |   |   |
| Funded      status                                                |   | $                        | (128.0      | ) |   | $ | (114.0 | ) |
|                                                              |   |                     |        |   |   |   |   |   |
| Amounts      recognized in the balance sheet:                     |   |                     |        |   |   |   |   |   |
| Accrued      pension costs:                                       |   |                     |        |   |   |   |   |   |
| Current                                                           |   | $                        | -           |   |   | $ | - |   |
| Noncurrent                                                        |   |                     | (128.0      | ) |   |   | (114.0 | ) |
|                                                              |   |                     |        |   |   |   |   |   |
| Total                                                             |   | $                        | (128.0      | ) |   | $ | (114.0 | ) |
|                                                              |   |                     |        |   |   |   |   |   |
| Accumulated      other comprehensive loss:                        |   |                     |        |   |   |   |   |   |
| Actuarial      losses                                             |   | $                        | 94.6        |   |   | $ | 96.8 |   |
| Prior      service cost                                           |   |                     | 5.0         |   |   |   | 4.4 |   |
| Net      transition obligations                                   |   |                     | .5          |   |   |   | .4 |   |
|                                                              |   |                     |        |   |   |   |   |   |
| Total                                                             |   | $                        | 100.1       |   |   | $ | 101.6 |   |
|                                                              |   |                     |        |   |   |   |   |   |
| Accumulated      benefit obligations (“ABO”)          |   | $                        | 296.8       |   |   | $ | 285.8 |   |

----

|                                                                                                           |   | Years Ended December 31, |   |
|----------------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                                           |   | 2007                     |   |   | 2008 |   |
|                                                                                                           |   | (In      millions)       |   |
| Changes      in plan assets and benefit obligations recognized      in other comprehensive income (loss): |   |                     |   |   |   |   |
| Current      year:                                                                                             |   |                     |   |   |   |   |
| Net      actuarial gain (loss)                                                                                 |   | $                        | 66.4   |   |   | $ | (.9 | ) |
| Amortization      of unrecognized:                                                                             |   |                     |   |   |   |   |   |   |
| Prior service cost                                                                                   |   |                     | .5     |   |   |   | .6 |   |
| Net transition obligations                                                                           |   |                     | .2     |   |   |   | .2 |   |
| Net      actuarial losses (gain)                                                                          |   |                     | 7.5    |   |   |   | (1.4 | ) |
| Change      in measurement date:                                                                               |   |                     |   |   |   |   |   |   |
| Prior      service costs                                                                                       |   |                     | .1     |   |   |   | - |   |
| Net      actuarial loss                                                                                        |   |                     | 2.0    |   |   |   | - |   |
|                                                                                                           |   |                     |   |   |   |   |   |   |
|     Total                                                                                  |   | $                        | 76.7   |   |   | $ | (1.5 | ) |

|                                            |   | Years ended December 31, |   |
|-------------------------------------------------|--------|--------------------------|--------|
|                                            |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
|                                            |   | (In      millions)       |   |
| Net      periodic pension cost:                 |   |                     |   |   |   |   |   |   |   |
| Service      cost benefits                      |   | $                        | 5.5    |   |   | $ | 5.6 |   |   | $ | 7.0 |   |
| Interest      cost on PBO                       |   |                     | 15.0   |   |   |   | 17.7 |   |   |   | 13.9 |   |
| Expected      return on plan assets             |   |                     | (11.2  | ) |   |   | (11.5 | ) |   |   | (13.4 | ) |
| Amortization      of prior service cost         |   |                     | .5     |   |   |   | .5 |   |   |   | .6 |   |
| Amortization      of net transition obligations |   |                     | .1     |   |   |   | .2 |   |   |   | .2 |   |
| Recognized      actuarial losses (gain)         |   |                     | 7.8    |   |   |   | 7.5 |   |   |   | (1.4 | ) |
|                                            |   |                     |   |   |   |   |   |   |   |   |   |   |
| Total                                           |   | $                        | 17.7   |   |   | $ | 20.0 |   |   | $ | 6.9 |   |

|                                        |   | December 31, |   |
|---------------------------------------------|--------|--------------|--------|
| Rate                                        |   | 2007         |   |   | 2008 |   |
|                                        |   |         |   |   |   |   |
| Discount      rate                          |   |         | 5.5    | % |   |   | 5.8 | % |
| Increase      in future compensation levels |   |         | 3.0    | % |   |   | 3.2 | % |

----

|                                        |   | Years ended December    31, |   |
|---------------------------------------------|--------|----------------------------------|--------|
| Rate                                        |   | 2006                             |   |   | 2007 |   |   | 2008 |   |
|                                        |   |                             |   |   |   |   |   |   |   |
| Discount      rate                          |   |                             | 4.1    | % |   |   | 4.6 | % |   |   | 5.5 | % |
| Increase      in future compensation levels |   |                             | 2.8    | % |   |   | 3.0 | % |   |   | 3.0 | % |
| Long-term      return on plan assets        |   |                             | 5.5    | % |   |   | 5.7 | % |   |   | 5.7 | % |

| ·   | In      Germany, the composition of our plan assets is established to satisfy the      requirements of the German insurance  commissioner. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In      Norway, we currently have a plan asset target allocation of 14% to equity      securities, 64% to fixed income securities and the remainder      primarily to liquid investments such as money markets.  The      expected long-term rate of return for such investments is approximately      9.0%, 5.0% and 4.0%,respectively. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                 |   | December 31, 2007 |   |   | December 31, 2008 |   |
|------------------------------------------------------|--------|-------------------|--------|--------|-------------------|--------|
|                                                 |   | Germany           |   |   | Norway            |   |   | Germany |   |   | Norway |   |
|                                                 |   |              |   |   |              |   |   |   |   |   |   |   |
| Equity      securities and limited partnerships |   |              | 28     | %      |              |   | 18 | % |   |   | 24 | % |   |   | 14 | % |
| Fixed      income securities                         |   |              | 49     |   |              |   | 68 |   |   |   | 52 |   |   |   | 83 |   |
| Real      estate                                     |   |              | 12     |   |              |   | - |   |   |   | 12 |   |   |   | - |   |
| Cash,      cash equivalents and other                |   |              | 11     |   |              |   | 14 |   |   |   | 12 |   |   |   | 3 |   |
|                                                 |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|     Total                        |   |              | 100    | %      |              |   | 100 | % |   |   | 100 | % |   |   | 100 | % |

|                                     |   | December 31,       |   |
|------------------------------------------|--------|--------------------|--------|
|                                     |   | 2007               |   |   | 2008 |   |
|                                     |   | (In      millions) |   |
|                                     |   |               |   |   |   |   |
| Reserve      for uncertain tax positions |   | $                  | 14.9   |   |   | $ | 13.1 |   |
| Employee      benefits                   |   |               | 8.2    |   |   |   | 8.8 |   |
| Insurance      claims and expenses       |   |               | 1.9    |   |   |   | 1.5 |   |
| Other                                    |   |               | 5.1    |   |   |   | 4.2 |   |
|                                     |   |               |   |   |   |   |   |   |
| Total                                    |   | $                  | 30.1   |   |   | $ | 27.6 |   |

----

----

|                                       |   |   December      31, |   |
|--------------------------------------------|--------|--------------------------|--------|
|                                       |   | 2007                     |   |   | 2008 |   |
|                                       |   | (In      millions)       |   |
| Current      receivables from affiliates:  |   |                     |   |   |   |   |
| Kronos      Canada Inc. (“KC”) |   | $                        | 1.4    |   |   | $ | 1.2 |   |
| Other                                      |   |                     | .1     |   |   |   | - |   |
|                                       |   |                     |   |   |   |   |   |   |
| Total                                      |   | $                        | 1.5    |   |   | $ | 1.2 |   |
|                                       |   |                     |   |   |   |   |   |   |
| Current      payables to affiliate:        |   |                     |   |   |   |   |   |   |
| Kronos      (US), Inc. (“KUS”) |   | $                        | 5.6    |   |   | $ | 13.3 |   |

| Years ending December 31, |   | Amount             |   |
|---------------------------|--------|--------------------|--------|
|                      |   | (In      millions) |   |
|                      |   |               |   |
| 2009                      |   | $                  | 3.9    |   |
| 2010                      |   |               | 2.9    |   |
| 2011                      |   |               | 2.1    |   |
| 2012                      |   |               | 1.7    |   |
| 2013                      |   |               | 1.5    |   |
| 2014      and thereafter  |   |               | 18.9   |   |
|                      |   |               |   |   |
| Total                     |   | $                  | 31.0   |   |

|                            |   | Fair Value Measurements at December 31,      2008 |   |
|---------------------------------|--------|---------------------------------------------------|--------|
|                            |   | Total                                             |   |   | Quoted      Prices in Active Markets (Level      1) |   |   | Significant      Other Observable Inputs (Level      2) |   |   | Significant      Unobservable Inputs (Level      3) |   |
|                            |   | (in      millions)                                |   |
|                            |   |                                              |   |   |   |   |   |   |   |   |   |   |
| Marketable      securities      |   | $                                                 | 3.5    |   |   | $ | 3.5 |   |   | $ | - |   |   | $ | - |   |
|                            |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Currency      forward contracts |   |                                              | (2.6   | ) |   |   | (2.6 | ) |   |   | - |   |   |   | - |   |
|                            |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| ·   | an      aggregate $57 million for an equivalent value of Norwegian kroner at      exchange rates ranging from kroner 6.91 to kroner 7.18.  These      contracts with DnB Nor Bank ASA mature from January 2009 through December      2009 at a rate of $.5 million to $2.5 million per month.  At      December 31, 2008, the actual exchange rate was kroner 7.0 per U.S.      dollar.  |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an      aggregate euro 16.4 million for an equivalent value of Norwegian kroner at      exchange rates ranging from kroner 8.64 to kroner 9.23.  These      contracts with DnB Nor Bank ASA mature from January 2009 through December      2009 at a rate of euro .5 million to euro .7 million per      month.  At December 31, 2008, the actual exchange rate was      kroner 9.7 per euro. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                    |   | December      31,  |        |   | December      31, |    |
|---------------------------------------------------------------------------------------------------------|--------|--------------------|-------------|--------|-------------------|---------|
|                                                                                                    |   | 2007               |        |   | 2008              |    |
|                                                                                                    |   | CarryingAmount     |        |   | FairValue         |    |   | CarryingAmount |   |   | FairValue |   |
|                                                                                                    |   | (In      millions) |        |
|                                                                                                    |   |               |        |   |              |    |   |   |   |   |   |   |
| Cash,      cash equivalents, restricted cash                                                            |   | $                  | 68.8        |   |              | $       | 68.8 |   |   | $ | 12.3 |   |   | $ | 12.3 |   |
|                                                                                                    |   |               |        |   |              |    |   |   |   |   |   |   |   |   |   |   |
| Notes      payable and long-term debt:                                                                  |   |               |        |   |              |    |   |   |   |   |   |   |   |   |   |   |
| Fixed      rate with market quotes -                                                                    |   |               |        |   |              |    |   |   |   |   |   |   |   |   |   |   |
|                   6.5% Senior Secured Notes |   | $                  | 585.5  |   |              | $  | 507.7 |   |   | $  | 560.0 |   |   | $  | 129.4 |   |
| European      credit facility                                                                           |   |               | -           |   |              |    | - |   |   |   | 42.2 |   |   |   | 42.2 |   |

|                                                                                                                                                            |   | Year Ended December 31, |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|--------|
|                                                                                                                                                            |   | 2007                    |   |   | 2008 |   |
|                                                                                                                                                            |   | (In      millions)      |   |
| Changes      in unrecognized tax benefits:                                                                                                                      |   |                    |   |   |   |   |
|   Unrecognized      tax benefits at beginning ofyear                                                                                                  |   | $                       | 10.9   |   |   | $ | 11.9 |   |
|   Net      increase (decrease):                                                                                                                       |   |                    |   |   |   |   |   |   |
|     Tax      positions taken in prior periods                                                                                               |   |                    | (1.9   | ) |   |   | (1.1 | ) |
|     Tax      positions taken in current period                                                                                              |   |                    | 1.9    |   |   |   | 1.8 |   |
|   Settlements      with taxing authorities –                    cash paid |   |                    | -      |   |   |   | (.1 | ) |
|   Lapse      of applicable statute of limitations                                                                                                     |   |                    | -      |   |   |   | (.7 | ) |
|        Change in foreign currency exchange rates                                                                                                           |   |                    | 1.0    |   |   |   | (1.4  | )  |
|   Unrecognized      tax benefits at end of year                                                                                                       |   | $                       | 11.9   |   |   | $ | 10.4 |   |

----

|                              |   | Quarter ended  |   |
|-----------------------------------|--------|---------------------|--------|
|                              |   | March 31            |   |   | June 30 |   |   | Sept. 30 |   |   | Dec. 31 |   |
|                              |   | (In      millions)  |   |
|                              |   |                |   |   |   |   |   |   |   |   |   |   |
| Year      ended December 31, 2007 |   |                |   |   |   |   |   |   |   |   |   |   |
| Net      sales                    |   | $                   | 227.4  |   |   | $ | 241.8 |   |   | $ | 246.0 |   |   | $ | 230.9 |   |
| Gross      margin                 |   |                | 54.6   |   |   |   | 49.8 |   |   |   | 52.2 |   |   |   | 39.8 |   |
| Net      income (loss)            |   |                | 13.5   |   |   |   | 1.7 |   |   |   | (81.0 | ) |   |   | 7.0 |   |
|                              |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Year      ended December 31, 2008 |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      sales                    |   | $                   | 239.6  |   |   | $ | 291.5 |   |   | $ | 249.7 |   |   | $ | 172.1 |   |
| Gross      margin                 |   |                | 45.1   |   |   |   | 50.1 |   |   |   | 37.8 |   |   |   | 37.4 |   |
| Net      income                   |   |                | 3.8    |   |   |   | 12.9 |   |   |   | 1.7 |   |   |   | 2.9 |   |

----

|                                                                  |   | December 31, |   |
|-----------------------------------------------------------------------|--------|--------------|--------|
|                                                                  |   | 2007         |   |   | 2008 |   |
|                                                                  |   |         |   |   |   |   |
| Current      assets:                                                  |   |         |   |   |   |   |
| Cash      and cash equivalents                                        |   | $            | 9.0    |   |   | $ | 4.9 |   |
| Receivable      from affiliates                                       |   |         | 58.7   |   |   |   | 49.4 |   |
| Accounts      and notes receivable                                    |   |         | 10.1   |   |   |   | 11.1 |   |
| Other                                                                 |   |         | .2     |   |   |   | .3 |   |
|                                                                  |   |         |   |   |   |   |   |   |
| Total      current assets                                             |   |         | 78.0   |   |   |   | 65.7 |   |
|                                                                  |   |         |   |   |   |   |   |   |
| Other      assets:                                                    |   |         |   |   |   |   |   |   |
| Investment      in subsidiaries                                       |   |         | 572.9  |   |   |   | 514.8 |   |
| Deferred      income taxes                                            |   |         | 164.9  |   |   |   | 171.6 |   |
| Other                                                                 |   |         | 8.1    |   |   |   | 6.3 |   |
| Property      and equipment, net                                      |   |         | 7.7    |   |   |   | 7.2 |   |
|                                                                  |   |         |   |   |   |   |   |   |
| Total      other assets                                               |   |         | 753.6  |   |   |   | 699.9 |   |
|                                                                  |   |         |   |   |   |   |   |   |
| Total      assets                                                     |   | $            | 831.6  |   |   | $ | 765.6 |   |
|                                                                  |   |         |   |   |   |   |   |   |
| Current      liabilities:                                             |   |         |   |   |   |   |   |   |
| Accounts      payable and accrued liabilities                         |   | $            | 15.4   |   |   | $ | 14.5 |   |
| Payable      to affiliates                                            |   |         | 9.5    |   |   |   | 15.5 |   |
| Income      taxes                                                     |   |         | 24.8   |   |   |   | 22.9 |   |
|              Deferred income taxes |   | -            |   |   | .2 |   |
|                                                                  |   |         |   |   |   |   |   |   |
| Total      current liabilities                                        |   |         | 49.7   |   |   |   | 53.1 |   |
|                                                                  |   |         |   |   |   |   |   |   |
| Noncurrent      liabilities:                                          |   |         |   |   |   |   |   |   |
| Long-term      debt                                                   |   |         | 585.5  |   |   |   | 560.0 |   |
| Other                                                                 |   |         | 15.0   |   |   |   | 15.2 |   |
|                                                                  |   |         |   |   |   |   |   |   |
| Total      noncurrent liabilities                                     |   |         | 600.5  |   |   |   | 575.2 |   |
|                                                                  |   |         |   |   |   |   |   |   |
| Stockholder’s      equity                                       |   |         | 181.4  |   |   |   | 137.3 |   |
|                                                                  |   |         |   |   |   |   |   |   |
| Total      liabilities and stockholder’s equity                 |   | $            | 831.6  |   |   | $ | 765.6 |   |
|                                                                  |   |         |   |   |   |   |   |   |

----

|                                          |   | Years ended December 31, |   |
|-----------------------------------------------|--------|--------------------------|--------|
|                                          |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
| Revenues      and other income:               |   |                     |   |   |   |   |   |   |   |
| Net      sales                                |   | $                        | 50.6   |   |   | $ | 56.4 |   |   | $ | 67.2 |   |
| Equity      in earnings of subsidiaries       |   |                     | 55.0   |   |   |   | 33.3 |   |   |   | 27.7 |   |
| Interest      income from affiliates          |   |                     | 19.6   |   |   |   | 20.6 |   |   |   | 19.1 |   |
| Royalty      income                           |   |                     | 20.1   |   |   |   | 20.7 |   |   |   | 19.9 |   |
| Currency      translation gains (losses), net |   |                     | (.1    | ) |   |   | .2 |   |   |   | (.8 | ) |
| Other      income, net                        |   |                     | .1     |   |   |   | 1.7 |   |   |   | .1 |   |
|                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
|                                          |   |                     | 145.3  |   |   |   | 132.9 |   |   |   | 133.2 |   |
|                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Costs      and expenses:                      |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cost      of sales                            |   |                     | 28.5   |   |   |   | 33.8 |   |   |   | 38.2 |   |
| General      and administrative               |   |                     | 34.2   |   |   |   | 37.5 |   |   |   | 41.4 |   |
| Loss      on prepayment of debt               |   |                     | 22.3   |   |   |   | - |   |   |   | - |   |
| Interest      expense                         |   |                     | 39.7   |   |   |   | 37.5 |   |   |   | 40.4 |   |
| Interest      expense to affiliates           |   |                     | 3.9    |   |   |   | 1.2 |   |   |   | 1.5 |   |
|                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
|                                          |   |                     | 128.6  |   |   |   | 110.0 |   |   |   | 121.5 |   |
|                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Income      before income taxes               |   |                     | 16.7   |   |   |   | 22.9 |   |   |   | 11.7 |   |
|                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Provision      (benefit) for income taxes     |   |                     | (57.0  | ) |   |   | 81.7 |   |   |   | (9.6 | ) |
|                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                        |   | $                        | 73.7   |   |   | $ | (58.8 | ) |   | $ | 21.3 |   |
|                                          |   |                     |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                   |   | Years ended December 31, |   |
|----------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                   |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
| Cash      flows from operating activities:                                             |   |                     |   |   |   |   |   |   |   |
| Net      income (loss)                                                                 |   | $                        | 73.7   |   |   | $ | (58.8 | ) |   | $ | 21.3 |   |
| Cash      distributions from subsidiaries                                              |   |                     | 50.6   |   |   |   | 40.9 |   |   |   | 37.5 |   |
| Loss      on prepayment of debt                                                        |   |                     | 22.3   |   |   |   | - |   |   |   | - |   |
| Call      premium paid                                                                 |   |                     | (20.9  | ) |   |   | - |   |   |   | - |   |
| Noncash      interest expense                                                          |   |                     | 1.6    |   |   |   | 1.9 |   |   |   | 1.5 |   |
| Deferred      income taxes                                                             |   |                     | (28.7  | ) |   |   | 84.2 |   |   |   | (15.6 | ) |
| Equity      in earnings of subsidiaries                                                |   |                     | (55.0  | ) |   |   | (33.3 | ) |   |   | (27.7 | ) |
| Other,      net                                                                        |   |                     | 3.3    |   |   |   | 6.1 |   |   |   | 2.2 |   |
| Net      change in assets and liabilities                                              |   |                     | (20.7  | ) |   |   | .7 |   |   |   | 13.3 |   |
|                                                                                   |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      cash provided by operating activities                                         |   |                     | 26.2   |   |   |   | 41.7 |   |   |   |  32.5 |   |
|                                                                                   |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash      flows used in investing activities -                                         |   |                     |   |   |   |   |   |   |   |   |   |   |
| capital      expenditures                                                              |   |                     | (1.9   | ) |   |   | (1.8 | ) |   |   | (1.8 | ) |
|                                                                                   |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Indebtedness:                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Borrowings                                                                             |   |                     | 498.6  |   |   |   | - |   |   |   | - |   |
| Principal      payments                                                                |   |                     | (470.5 | ) |   |   | - |   |   |   | - |   |
| Loans      to affiliates                                                               |   |                     | (8.9   | ) |   |   | - |   |   |   | - |   |
| Dividends      paid                                                                    |   |                     | (50.2  | ) |   |   | (34.2 | ) |   |   | (34.9 | ) |
|                                                                                   |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      cash used in financing activities                                             |   |                     | (31.0  | ) |   |   | (34.2 | ) |   |   | (34.9 | ) |
|                                                                                   |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      change during the year from operating investing and financing      activities |   |                     | (6.7   | ) |   |   | 5.7 |   |   |   | (4.2 | ) |
| Currency      translation                                                              |   |                     | .4     |   |   |   | - |   |   |   | .1 |   |
| Balance      at beginning of year                                                      |   |                     | 9.6    |   |   |   | 3.3 |   |   |   | 9.0 |   |
|                                                                                   |   |                     |   |   |   |   |   |   |   |   |   |   |
| Balance      at end of year                                                            |   | $                        | 3.3    |   |   | $ | 9.0 |   |   | $ | 4.9 |   |

----

|                                                           |   | December 31,       |   |
|----------------------------------------------------------------|--------|--------------------|--------|
|                                                           |   | 2007               |   |   | 2008 |   |
|                                                           |   | (In      millions) |   |
| Current:                                                       |   |               |   |   |   |   |
| Receivable      from:                                          |   |               |   |   |   |   |
| Kronos      Titan GmbH (“TG”) – income taxes |   | $                  | 52.6   |   |   | $ | 45.0 |   |
| Kronos      Europe S.A./N.V                                    |   |               | 2.0    |   |   |   | 1.6 |   |
| Kronos      Canada                                             |   |               | 1.6    |   |   |   | 1.2 |   |
| Kronos      Titan A/S                                          |   |               | 1.9    |   |   |   | 1.1 |   |
| Titania      A/S                                               |   |               | .6     |   |   |   | .5 |   |
|                                                           |   |               |   |   |   |   |   |   |
|                                                           |   | $                  | 58.7   |   |   | $ | 49.4 |   |
| Payable      to:                                               |   |               |   |   |   |   |   |   |
| TG                                                             |   |               | 2.7    |   |   |   | 15.4 |   |
| KCH                                                            |   |               | 6.5    |   |   |   | - |   |
| Societe      Industrielle du Titane, S.A.                      |   |               | .3     |   |   |   | .1 |   |
|                                                           |   |               |   |   |   |   |   |   |
|                                                           |   | $                  | 9.5    |   |   | $ | 15.5 |   |

|                                        |   | December 31,       |   |
|---------------------------------------------|--------|--------------------|--------|
|                                        |   | 2007               |   |   | 2008 |   |
|                                        |   | (In      millions) |   |
| Investment      in:                         |   |               |   |   |   |   |
| TG                                          |   | $                  | 328.5  |   |   | $ | 308.3 |   |
| Kronos      Denmark ApS (“KDK”) |   |               | 208.1  |   |   |   | 177.2 |   |
| Other                                       |   |               | 36.3   |   |   |   | 29.3 |   |
|                                        |   |               |   |   |   |   |   |   |
|                                        |   | $                  | 572.9  |   |   | $ | 514.8 |   |

|                                                              |   | _Years ended December 31,_ |   |
|-------------------------------------------------------------------|--------|----------------------------|--------|
|                                                              |   | 2006                       |   |   | 2007 |   |   | 2008 |   |
|                                                              |   | (In      millions)         |   |
|                                                              |   |                       |   |   |   |   |   |   |   |
| Equity      in income from continuing operations of subsidiaries: |   |                       |   |   |   |   |   |   |   |
| TG                                                                |   | $                          | 17.2   |   |   | $ | 7.6 |   |   | $ | 8.0 |   |
| KDK                                                               |   |                       | 33.7   |   |   |   | 19.5 |   |   |   | 15.2 |   |
| Other                                                             |   |                       | 4.1    |   |   |   | 6.2 |   |   |   | 4.5 |   |
|                                                              |   |                       |   |   |   |   |   |   |   |   |   |   |
|                                                              |   | $                          | 55.0   |   |   | $ | 33.3 |   |   | $ | 27.7 |   |

----

|                                    |   |  December 31, |   |
|-----------------------------------------|--------|--------------------|--------|
|                                    |   | 2007               |   |   | 2008 |   |
|                                    |   | (In      millions) |   |
|                                    |   |               |   |   |   |   |
| 6.5%      Senior Secured Notes due 2013 |   | $                  | 585.5  |   |   | $ | 560.0 |   |

----

| KRONOS      TITAN GMBH AND SUBSIDIARIES                       |
|---------------------------------------------------------------|
|                                                          |
| Index of Consolidated Financial      Statements               |
|                                                          |   |
|                                                          |   |
| Financial Statements                                          | Pages |
|                                                          |   |
| Report      of Independent Registered Public Accounting Firm  | FA-2 |
|                                                          |   |
| Consolidated      Balance Sheets –                      |   |
| December      31, 2007 and December 31, 2008                  | FA-3 |
|                                                          |   |
| Consolidated      Statements of Income –                |   |
| Year      ended December 31, 2006, 2007 and 2008              | FA-5 |
|                                                          |   |
| Consolidated      Statements of Comprehensive Income (Loss) - |   |
| Year      ended December 31, 2006, 2007 and 2008              | FA-6 |
|                                                          |   |
| Consolidated      Statements of Owner’s Equity –  |   |
| Year      ended December 31, 2006, 2007 and 2008              | FA-7 |
|                                                          |   |
| Consolidated      Statements of Cash Flows –            |   |
| Year      ended December 31, 2006, 2007 and 2008              | FA-8 |
|                                                          |   |
| Notes      to Consolidated Financial Statements               | FA-9 |

----

----

|                                                |   | December 31, |   |
|-----------------------------------------------------|--------|--------------|--------|
| ASSETS                                              |   | 2007         |   |   | 2008 |   |
|                                                |   |         |   |   |   |   |
| Current      assets:                                |   |         |   |   |   |   |
| Cash      and cash equivalents                      |   | $            | 50.6   |   |   | $ | 2.8 |   |
| Accounts      and notes receivable                  |   |         | 114.5  |   |   |   | 86.1 |   |
| Receivable      from affiliates                     |   |         | 10.1   |   |   |   | 23.0 |   |
| Refundable      income taxes                        |   |         | 26.0   |   |   |   | 23.5 |   |
| Inventories                                         |   |         | 136.7  |   |   |   | 199.4 |   |
| Prepaid      expenses                               |   |         | 1.8    |   |   |   | 1.5 |   |
|                                                |   |         |   |   |   |   |   |   |
| Total      current assets                           |   |         | 339.7  |   |   |   | 336.3 |   |
|                                                |   |         |   |   |   |   |   |   |
| Other      assets:                                  |   |         |   |   |   |   |   |   |
| Deferred      income taxes                          |   |         | 4.1    |   |   |   | - |   |
| Other                                               |   |         | .5     |   |   |   | 1.1 |   |
|                                                |   |         |   |   |   |   |   |   |
| Total      other assets                             |   |         | 4.6    |   |   |   | 1.1 |   |
|                                                |   |         |   |   |   |   |   |   |
| Property      and equipment:                        |   |         |   |   |   |   |   |   |
| Land                                                |   |         | 17.1   |   |   |   | 16.4 |   |
| Buildings                                           |   |         | 129.0  |   |   |   | 129.5 |   |
| Machinery      and equipment                        |   |         | 564.7  |   |   |   | 561.4 |   |
| Construction      in progress                       |   |         | 19.1   |   |   |   | 4.8 |   |
|                                                |   |         |   |   |   |   |   |   |
|                                                |   |         | 729.9  |   |   |   | 712.1 |   |
|                                                |   |         |   |   |   |   |   |   |
| Less      accumulated depreciation and amortization |   |         | 450.0  |   |   |   | 447.4 |   |
|                                                |   |         |   |   |   |   |   |   |
| Net      property and equipment                     |   |         | 279.9  |   |   |   | 264.7 |   |
|                                                |   |         |   |   |   |   |   |   |
| Total      assets                                   |   | $            | 624.2  |   |   | $ | 602.1 |   |

----

|                                                   |   | December 31, |   |
|--------------------------------------------------------|--------|--------------|--------|
| LIABILITIES      AND OWNER’S EQUITY              |   | 2007         |   |   | 2008 |   |
|                                                   |   |         |   |   |   |   |
| Current      liabilities:                              |   |         |   |   |   |   |
| Accounts      payable and accrued liabilities          |   | $            | 64.9   |   |   | $ | 71.5 |   |
| Payables      to affiliates                            |   |         | 94.7   |   |   |   | 84.4 |   |
| Deferred      income taxes                             |   |         | 2.8    |   |   |   | 3.9 |   |
|                                                   |   |         |   |   |   |   |   |   |
| Total      current liabilities                         |   |         | 162.4  |   |   |   | 159.8 |   |
|                                                   |   |         |   |   |   |   |   |   |
| Noncurrent      liabilities:                           |   |         |   |   |   |   |   |   |
| Accrued      pension cost                              |   |         | 121.7  |   |   |   | 103.6 |   |
| Long-term      debt                                    |   |         | -      |   |   |   | 16.9 |   |
| Deferred      income taxes                             |   |         | -      |   |   |   | 4.4 |   |
| Other                                                  |   |         | 11.6   |   |   |   | 9.1 |   |
|                                                   |   |         |   |   |   |   |   |   |
| Total      noncurrent liabilities                      |   |         | 133.3  |   |   |   | 134.0 |   |
|                                                   |   |         |   |   |   |   |   |   |
| Owner’s      equity:                             |   |         |   |   |   |   |   |   |
| Subscribed      capital                                |   |         | 12.5   |   |   |   | 12.5 |   |
| Paid      in capital                                   |   |         | 196.0  |   |   |   | 200.1 |   |
| Retained      earnings                                 |   |         | 25.2   |   |   |   | 13.3 |   |
| Accumulated      other comprehensive income (loss):    |   |         |   |   |   |   |   |   |
| Currency      translation                              |   |         | 146.9  |   |   |   | 132.3 |   |
| Defined      benefit pension plans                     |   |         | (52.1  | ) |   |   | (49.9 | ) |
|                                                   |   |         |   |   |   |   |   |   |
| Total      owner’s equity                        |   |         | 328.5  |   |   |   | 308.3 |   |
|                                                   |   |         |   |   |   |   |   |   |
| Total      liabilities and owner’s equity        |   | $            | 624.2  |   |   | $ | 602.1 |   |
|                                                   |   |         |   |   |   |   |   |   |
| Commitments      and contingencies (Notes 5, 6 and 11) |   |         |   |   |   |   |   |   |

----

|                                             |   | Years ended December 31, |   |
|--------------------------------------------------|--------|--------------------------|--------|
|                                             |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
|                                             |   |                     |   |   |   |   |   |   |   |
| Net      sales                                   |   | $                        | 641.2  |   |   | $ | 668.8 |   |   | $ | 662.3 |   |
| Cost      of sales                               |   |                     | 535.4  |   |   |   | 573.6 |   |   |   | 596.5 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Gross      margin                                |   |                     | 105.8  |   |   |   | 95.2 |   |   |   | 65.8 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative expense |   |                     | 52.7   |   |   |   | 54.1 |   |   |   | 56.8 |   |
| Other      operating income (expense):           |   |                     |   |   |   |   |   |   |   |   |   |   |
| Currency      transaction gains (losses), net    |   |                     | (3.7   | ) |   |   | (4.2 | ) |   |   | .5 |   |
| Disposition      of property and equipment       |   |                     | (1.5   | ) |   |   | (.3 | ) |   |   | (.4 | ) |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Income      from operations                      |   |                     | 47.9   |   |   |   | 36.6 |   |   |   | 9.1 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Other      income (expense):                     |   |                     |   |   |   |   |   |   |   |   |   |   |
| Trade      interest income                       |   |                     | 1.9    |   |   |   | 1.7 |   |   |   | .6 |   |
| Interest      and other income from affiliates   |   |                     | 6.7    |   |   |   | 4.2 |   |   |   | 5.4 |   |
| Interest      and other expense to affiliates    |   |                     | (1.4   | ) |   |   | (1.3 | ) |   |   | (3.5 | ) |
| Interest      expense                            |   |                     | (.3    | ) |   |   | (.3 | ) |   |   | (1.0 | ) |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Income      before income taxes                  |   |                     | 54.8   |   |   |   | 40.9 |   |   |   | 10.6 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Provision      for income taxes                  |   |                     | 37.6   |   |   |   | 33.3 |   |   |   | 2.6 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      income                                  |   | $                        | 17.2   |   |   | $ | 7.6 |   |   | $ | 8.0 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                          |   | Years ended December 31, |   |
|-----------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                          |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
|                                                                                          |   |                     |   |   |   |   |   |   |   |
| Net      income                                                                               |   | $                        | 17.2   |   |   | $ | 7.6 |   |   | $ | 8.0 |   |
|                                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Other      comprehensive income (loss), net of tax:                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
| Currency      translation adjustment                                                          |   |                     | 41.4   |   |   |   | 36.4 |   |   |   | (14.6 | ) |
|                                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Pension      plans:                                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
| Amortization      of prior service cost and net losses included in periodic pension      cost |   |                     | -      |   |   |   | 3.8 |   |   |   | (1.1 | ) |
| Net      actuarial gain arising during year                                                   |   |                     | -      |   |   |   | 32.2 |   |   |   | 3.3 |   |
| Minimum      pension liability change                                                         |   |                     | 3.3    |   |   |   | - |   |   |   | - |   |
|                                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
|                                                                                          |   |                     | 3.3    |   |   |   | 36.0 |   |   |   | 2.2 |   |
|                                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Total      other comprehensive income (loss)                                                  |   |                     | 44.7   |   |   |   | 72.4 |   |   |   | (12.4 | ) |
|                                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      income (loss)                                                              |   | $                        | 61.9   |   |   | $ | 80.0 |   |   | $ | (4.4 | ) |

----

|                                                                                              |                                                                                                                                                              |                                                                                                                     |                                                                                            | Accumulated      other                                                               |                                  |
|---------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------|---------------------------------------|
|                                                                                              |                                                                                                                                                              |                                                                                                                     |                                                                                            | comprehensive                                                                        |                                  |
|                                                                                              |      Owner’s      Equity                                                                                  | Retained                                                                                                                 |    income (loss)                                             |                                                                                 |
|                                                                                              | Subscribed                                                                                                                                                        | Paid-in                                                                                                                  | earnings                                                                                        | Currency                                                                             | Pension                               |   |   |
|                                                                                              |  capital                                                                                                                                                |  capital                                                                                                       | (deficit)                                                                                       | translation                                                                          |  plans                      |   Total   |   |
|                                                                                              |                                                                                                                                                              |                                                                                                                     |                                                                                            |                                                                                 |                                  |   |   |
| Balance      at December 31, 2005                                                                 | $ 12.5                                                                                                                                                       | $   227.0                                                                                                 | $   43.0                                                                         | $   69.1                                                              | $ (72.8)                         | $ 278.8 |   |
| Net      income                                                                                   |   -                                                                                                                                                |        -                                                                         |           17.2                                                              | -                                                                                    | -                                     | 17.2 |   |
| Dividends      paid                                                                               |   -                                                                                                                                                |        -                                                                         |            (23.1)                                                      | -                                                                                    | -                                     | (23.1) |   |
| Noncash      capital transaction                                                                  |   -                                                                                                                                                |                1.6                                                          |         -                                          | -                                                                                    | -                                     | 1.6 |   |
| Other      comprehensive income, net of tax                                                       |   -                                                                                                                                                |        -                                                                         |         -                                          |           41.4                                                   |         3.3                 |          44.7 |   |
| Change      in accounting – asset and liability recognition provisions of SFAS No.      158 |     -                                                                                                                                    |        -                                                                         |       -                                                      |      -                                                 |   (19.6)                    |    (19.6) |   |
|                                                                                              |                                                                                                                                                              |                                                                                                                     |                                                                                            |                                                                                 |                                  |   |   |
| Balance      at December 31, 2006                                                                 | 12.5                                                                                                                                                              | 228.6                                                                                                                    |  37.1                                                                                      | 110.5                                                                                | (89.1)                                | 299.6 |   |
|                                                                                              |                                                                                                                                                              |                                                                                                                     |                                                                                            |                                                                                 |                                  |   |   |
| Net      income                                                                                   |   -                                                                                                                                                |        -                                                                         |        7.6                                                                                 |       -                                           | -                                     | 7.6 |   |
| Dividends      paid                                                                               |   -                                                                                                                                                |        -                                                                         | (17.0)                                                                                          |       -                                           | -                                     | (17.0) |   |
| Noncash      capital transaction                                                                  |   -                                                                                                                                                | (32.6)                                                                                                                   |         -                                          |       -                                           | -                                     | (32.6) |   |
| Other      comprehensive income, net of tax                                                       |   -                                                                                                                                                |        -                                                                         |         -                                          | 36.4                                                                                 | 36.0                                  | 72.4 |   |
| Change      in accounting - SFAS No. 158                                                          |                                                                                                                                                              |                                                                                                                     |                                                                                            |                                                                                 |                                  |   |   |
| measurement      date provisions                                                                  |     -                                                                                                                                    |        -                                                                         |     (2.5)                                                                   |       -                                           |     1.0           |    (1.5) |   |
|                                                                                              |                                                                                                                                                              |                                                                                                                     |                                                                                            |                                                                                 |                                  |   |   |
| Balance      at December 31, 2007                                                                 | 12.5                                                                                                                                                              | 196.0                                                                                                                    | 25.2                                                                                            | 146.9                                                                                | (52.1)                                | 328.5 |   |
|                                                                                              |                                                                                                                                                              |                                                                                                                     |                                                                                            |                                                                                 |                                  |   |   |
| Net      income                                                                                   |   -                                                                                                                                                |        -                                                                                                            | 8.0                                                                                             |       -                                           | -                                     | 8.0 |   |
| Dividends      paid                                                                               |   -                                                                                                                                                | -                                                                                                                        | (19.9)                                                                                          |       -                                           | -                                     | (19.9) |   |
| Other      comprehensive income (loss), net of tax                                                |   -                                                                                                                                                |  -                                                                                                                  |         -                                               | (14.6)                                                                               | 2.2                                   | (12.4) |   |
| Noncash      capital transaction                                                                  |   -                                                                                                                                                     |  4.1                                                                                                           | -                                                                                               |      -                                                 |     -   |     4.1  |   |
|                                                                                              |                                                                                                                                                              |                                                                                                                     |                                                                                            |                                                                                 |                                  |   |   |
| Balance      at December 31, 2008                                                                 |                               $ 12.5 |                       $  200.1 |                  $   13.3 |                  $ 132.3 | $ (49.9)                         |               $ 308.3 |   |
|                                                                                              |                                                                                                                                                              |                                                                                                                     |                                                                                            |                                                                                 |                                  |   |   |

----

|                                                                          |   | Years ended December 31, |   |
|-------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                          |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
|                                                                          |   |                     |   |   |   |   |   |   |   |
| Cash      flows from operating activities:                                    |   |                     |   |   |   |   |   |   |   |
| Net      income                                                               |   | $                        | 17.2   |   |   | $ | 7.6 |   |   | $ | 8.0 |   |
| Depreciation,      depletion and amortization                                 |   |                     | 20.6   |   |   |   | 22.4 |   |   |   | 24.7 |   |
| Deferred      income taxes                                                    |   |                     | 5.1    |   |   |   | 29.6 |   |   |   | 8.0 |   |
| Pension,      net                                                             |   |                     | (.3    | ) |   |   | .3 |   |   |   | (8.2 | ) |
| Other,      net                                                               |   |                     | 1.2    |   |   |   | (.4 | ) |   |   | .8 |   |
| Change      in assets and liabilities:                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
| Accounts      and notes receivable                                            |   |                     | (8.1   | ) |   |   | (7.3 | ) |   |   | 17.8 |   |
| Inventories                                                                   |   |                     | 7.9    |   |   |   | (5.3 | ) |   |   | (65.5 | ) |
| Prepaid      expenses                                                         |   |                     | (.1    | ) |   |   | .7 |   |   |   | (.1 | ) |
| Accounts      payable and accrued liabilities                                 |   |                     | (7.8   | ) |   |   | (2.3 | ) |   |   | 10.4 |   |
| Income      taxes                                                             |   |                     | (11.3  | ) |   |   | (.1 | ) |   |   | 1.4 |   |
| Accounts      with affiliates                                                 |   |                     | 24.7   |   |   |   | (5.3 | ) |   |   | (19.0 | ) |
| Other      noncurrent assets                                                  |   |                     | -      |   |   |   | .2 |   |   |   | (.7 | ) |
| Other      noncurrent liabilities                                             |   |                     | (4.3   | ) |   |   | (1.2 | ) |   |   | (1.4 | ) |
|                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      cash (used in) provided by operating activities                      |   |                     | 44.8   |   |   |   | 38.9 |   |   |   | (23.8 | ) |
|                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash      flows used by investing activities –capital      expenditures |   |                     | (22.2  | ) |   |   | (20.1 | ) |   |   | (20.4 | ) |
|                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                                    |   |                     |   |   |   |   |   |   |   |   |   |   |
| Loans      from affiliates:                                                   |   |                     |   |   |   |   |   |   |   |   |   |   |
| Loans                                                                         |   |                     | -      |   |   |   | - |   |   |   | 27.2 |   |
| Repayments                                                                    |   |                     | (10.9  | ) |   |   | - |   |   |   | (8.6 | ) |
| Dividends      paid                                                           |   |                     | (23.1  | ) |   |   | (17.0 | ) |   |   | (19.9 | ) |
| Deferred      financing fees                                                  |   |  -_                 |   |   |  -_ |   |   |   | (.3 | ) |
|                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      cash (used in) provided by financing activities                      |   |                     | (34.0  | ) |   |   | (17.0 | ) |   |   | (1.6 | )  |
|                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents - net change from:                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Operating,      investing and financing activities                            |   |                     | (11.4  | ) |   |   | 1.8 |   |   |   | (45.8 | ) |
| Currency      translation                                                     |   |                     | 4.4    |   |   |   | 5.0 |   |   |   | (2.0 | ) |
| Balance      at beginning of year                                             |   |                     | 50.8   |   |   |   | 43.8 |   |   |   | 50.6 |   |
|                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Balance      at end of year                                                   |   | $                        | 43.8   |   |   | $ | 50.6 |   |   | $ | 2.8 |   |
|                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Supplemental      disclosures-                                                |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash      paid for:                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
| Interest                                                                      |   | $                        | .1     |   |   | $ | .1 |   |   | $ | .9 |   |
| Income      taxes                                                             |   |                     | 25.4   |   |   |   | 4.8 |   |   |   | - |   |
| Accrual      for capital expenditures                                         |   |                     | -      |   |   |   | 2.5 |   |   |   | 2.5 |   |

----

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

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

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

----

|                                       |   | December 31,       |   |
|--------------------------------------------|--------|--------------------|--------|
|                                       |   | 2007               |   |   | 2008 |   |
|                                       |   | (In      millions) |   |
|                                       |   |               |   |   |   |   |
| Trade      receivables                     |   | $                  | 97.7   |   |   | $ | 75.0 |   |
| Recoverable      VAT and other receivables |   |               | 18.3   |   |   |   | 12.5 |   |
| Allowance      for doubtful accounts       |   |               | (1.5   | ) |   |   | (1.4 | ) |
|                                       |   |               |   |   |   |   |   |   |
| Total                                      |   | $                  | 114.5  |   |   | $ | 86.1 |   |

|                   |   | December 31,       |   |
|------------------------|--------|--------------------|--------|
|                   |   | 2007               |   |   | 2008 |   |
|                   |   | (In      millions) |   |
|                   |   |               |   |   |   |   |
| Raw      materials     |   | $                  | 22.8   |   |   | $ | 30.7 |   |
| Work      in process   |   |               | 11.6   |   |   |   | 11.5 |   |
| Finished      products |   |               | 80.8   |   |   |   | 135.8 |   |
| Supplies               |   |               | 21.5   |   |   |   | 21.4 |   |
|                   |   |               |   |   |   |   |   |   |
| Total                  |   | $                  | 136.7  |   |   | $ | 199.4 |   |

|                             |   | December 31,       |   |
|----------------------------------|--------|--------------------|--------|
|                             |   | 2007               |   |   | 2008 |   |
|                             |   | (In      millions) |   |
|                             |   |               |   |   |   |   |
| Accounts      payable            |   | $                  | 43.9   |   |   | $ | 50.8 |   |
| Accrued      liabilities:        |   |               |   |   |   |   |   |   |
| Employee      benefits           |   |               | 4.6    |   |   |   | 4.4 |   |
| Sales      discounts and rebates |   |               | 5.1    |   |   |   | 7.7 |   |
| Waste      acid recovery         |   |               | 8.1    |   |   |   | 5.1 |   |
| Other                            |   |               | 3.2    |   |   |   | 3.5 |   |
|                             |   |               |   |   |   |   |   |   |
| Total                            |   | $                  | 64.9   |   |   | $ | 71.5 |   |

----

|                                                                  |   | Years ended December 31, |   |
|-----------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                  |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
|                                                                  |   | (In      millions)       |   |
|                                                                  |   |                     |   |   |   |   |   |   |   |
| Pretax      income                                                    |   | $                        | 54.8   |   |   | $ | 40.9 |   |   | $ | 10.6 |   |
|                                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |
| Expected      tax expense                                             |   | $                        | 14.5   |   |   | $ | 10.8 |   |   | $ | 1.7 |   |
| Trade      income tax                                                 |   |                     | 7.0    |   |   |   | 5.3 |   |   |   | 1.6 |   |
| Impact      of rate change                                            |   |                     | -      |   |   |   | 15.8 |   |   |   | - |   |
| Assessment      of prior year income taxes                            |   |                     | 15.5   |   |   |   | - |   |   |   | .3 |   |
| Tax      contingency reserve adjustment, net                          |   |                     | .1     |   |   |   | (.2 | ) |   |   | (1.1 | ) |
| Other,      net                                                       |   |                     | .5     |   |   |   | 1.6 |   |   |   | .1 |   |
|                                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |
| Income      tax expense                                               |   | $                        | 37.6   |   |   | $ | 33.3 |   |   | $ | 2.6 |   |
|                                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |
| Provision      for income taxes:                                      |   |                     |   |   |   |   |   |   |   |   |   |   |
| Current      income tax expense (benefit)                             |   | $                        | 32.5   |   |   | $ | 3.8 |   |   | $ | (4.2 | ) |
| Deferred      income tax expense                                      |   |                     | 5.1    |   |   |   | 29.5 |   |   |   | 6.8 |   |
|                                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   | $                        | 37.6   |   |   | $ | 33.3 |   |   | $ | 2.6 |   |
|                                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      provision (benefit) for income taxes allocable to: |   |                     |   |   |   |   |   |   |   |   |   |   |
| Pretax      income                                                    |   | $                        | 37.6   |   |   | $ | 33.3 |   |   | $ | 2.6 |   |
| Other      comprehensive loss –Pension      plans               |   |                     | 4.2    |   |   |   | 22.4 |   |   |   | 1.0 |   |
| Adoption      of SFAS No. 158 –Pension      plans               |   |                     | (12.7  | ) |   |   | (.1 | ) |   |   |  - |   |
|                                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   | $                        | 29.1   |   |   | $ | 55.6 |   |   | $ | 3.6 |   |

|                                                            |   | December 31,       |   |
|-----------------------------------------------------------------|--------|--------------------|--------|
|                                                            |   | 2007               |   |   |   2008 |   |
|                                                            |   | Assets             |   |   | Liabilities |   |   | Assets |   |   | Liabilities |   |
|                                                            |   | (In      millions) |   |
|                                                            |   |               |   |   |   |   |   |   |   |   |   |   |
| Tax      effect of temporary differences relating      to: |   |               |   |   |   |   |   |   |   |   |   |   |
| Inventories                                                     |   | $                  | -      |   |   | $ | (2.6 | ) |   | $ | - |   |   | $ | (3.2 | ) |
| Property      and equipment                                     |   |               | -      |   |   |   | (4.5 | ) |   |   | - |   |   |   | (9.3 | ) |
| Accrued      pension cost                                       |   |               | 9.3    |   |   |   | - |   |   |   | 5.3 |   |   |   | - |   |
| Other      taxable differences                                  |   |               | -      |   |   | (.9 | )  |   |   | - |   |   |   | (1.1 | ) |
|                                                            |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross      deferred tax assets (liabilities)                    |   |               | 9.3    |   |   |   | (8.0 | ) |   |   | 5.3 |   |   |   | (13.6 | ) |
|                                                            |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reclassification,      principally netting by tax jurisdiction  |   |               | (5.2   | ) |   |   | 5.2 |   |   |   | (5.3 | ) |   |   | 5.3 |   |
|                                                            |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      total deferred tax liabilities                         |   |               | 4.1    |   |   |   | (2.8 | ) |   |   | - |   |   |   | (8.3 | ) |
| Net      current deferred tax liabilities                       |   |               | -      |   |   |   | (2.8 | ) |   |   | - |   |   |   | (3.9 | ) |
|                                                            |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      noncurrent deferred tax liability                      |   | $                  | 4.1    |   |   | $ | - |   |   | $ | - |   |   | $ | (4.4 | ) |

| Years ending December 31, |   | Amount             |   |
|---------------------------|--------|--------------------|--------|
|                      |   | (In      millions) |   |
|                      |   |               |   |
| 2009                      |   | $                  | 14.5   |   |
| 2010                      |   |               | 14.3   |   |
| 2011                      |   |               | 14.1   |   |
| 2012                      |   |               | 13.9   |   |
| 2013                      |   |               | 14.0   |   |
| Next      5 years         |   |               | 71.9   |   |

|                                                              |   | December 31,       |   |
|-------------------------------------------------------------------|--------|--------------------|--------|
|                                                              |   | 2007               |   |   | 2008 |   |
|                                                              |   | (In      millions) |   |
| Change      in projected benefit obligations (“PBO”): |   |               |   |   |   |   |
| Benefit      obligations at beginning of year                     |   | $                  | 302.9  |   |   | $ | 283.5 |   |
| Change      in measurement date, net                              |   |               | 4.1    |   |   |   | - |   |
| Service      cost                                                 |   |               | 3.3    |   |   |   | 5.2 |   |
| Interest      cost                                                |   |               | 14.0   |   |   |   | 9.9 |   |
| Participant      contributions                                    |   |               | 1.8    |   |   |   | 1.6 |   |
| Actuarial      gains                                              |   |               | (53.2  | ) |   |   | (15.6 | ) |
| Benefits      paid                                                |   |               | (20.3  | ) |   |   | (16.1 | ) |
| Change      in currency exchange rates                            |   | 30.9               |   |   | (14.5) |   |
|                                                              |   |               |   |   |   |   |   |   |
| Benefit      obligations at end of year                           |   |               | 283.5  |   |   |   | 254.0 |   |
|                                                              |   |               |   |   |   |   |   |   |
| Change      in fair value of plan assets:                         |   |               |   |   |   |   |   |   |
| Fair      value of plan assets at beginning of year               |   |               | 145.3  |   |   |   | 161.8 |   |
| Change      in measurement date, net                              |   |               | (1.2   | ) |   |   | - |   |
| Actual      return on plan assets                                 |   |               | 4.4    |   |   |   | (2.1 | ) |
| Employer      contributions                                       |   |               | 15.0   |   |   |   | 12.6 |   |
| Participant      contributions                                    |   |               | 1.8    |   |   |   | 1.6 |   |
| Change      in currency exchange rates                            |   |               | 16.8   |   |   |   | (7.4 | ) |
| Benefits      paid                                                |   | (20.3)             |   |   |   | (16.1 | ) |
|                                                              |   |               |   |   |   |   |   |   |
| Fair      value of plan assets at end of year                     |   | $                  | 161.8  |   |   | $ | 150.4 |   |
|                                                              |   |               |   |   |   |   |   |   |
| Funded      status                                                |   | $                  | (121.7 | ) |   | $ | (103.6 | ) |
|                                                              |   |               |   |   |   |   |   |   |

----

|                                                     |   | December 31,       |   |
|----------------------------------------------------------|--------|--------------------|--------|
|                                                     |   | 2007               |   |   | 2008 |   |
|                                                     |   | (In      millions) |   |
| Amounts      recognized in the balance sheet:            |   |               |   |   |   |   |
| Accrued      pension cost:                               |   |               |   |   |   |   |
| Current                                                  |   | $                  | -      |   |   | $ | - |   |
| Noncurrent                                               |   |               | (121.7 | ) |   |   | (103.6 | ) |
|                                                     |   |               |   |   |   |   |   |   |
| Total                                                    |   | $                  | (121.7 | ) |   | $ | (103.6 | ) |
|                                                     |   |               |   |   |   |   |   |   |
| Accumulated      other comprehensive loss:               |   |               |   |   |   |   |   |   |
| Actuarial      losses                                    |   | $                  | 83.4   |   |   | $ | 80.2 |   |
| Prior      service cost                                  |   |               | 2.9    |   |   |   | 2.6 |   |
|                                                     |   |               |   |   |   |   |   |   |
| Total                                                    |   | $                  | 86.3   |   |   | $ | 82.8 |   |
|                                                     |   |               |   |   |   |   |   |   |
| Accumulated      benefit obligations (“ABO”) |   | $                  | 236.7  |   |   | $ | 235.6 |   |

|                                                                                                           |   | Years Ended December 31, |      |
|----------------------------------------------------------------------------------------------------------------|--------|--------------------------|-----------|
|                                                                                                           |   | 2007                     |      |   | 2008 |   |
|                                                                                                           |   | (In      millions)       |      |
| Changes      in plan assets and benefit obligations recognized      in other comprehensive income (loss): |   |                     |      |   |   |   |
| Current      year:                                                                                             |   |                     |      |   |   |   |
| Net      actuarial gain                                                                                        |   | $                        | 53.6      |   |   | $ | 5.2 |   |
| Amortization      of unrecognized:                                                                             |   |                     |      |   |   |   |   |   |
|                  Prior service cost           |   |                     | .2        |   |   |   | .2 |   |
|                  Net actuarial losses (gain)       |   |                     | 6.1       |   |   |   | (1.9 | ) |
| Change      in measurement date:                                                                               |   |                     |      |   |   |   |   |   |
|                  Prior service cost           |   |                     | .1        |   |   |   | - |   |
|                  Net actuarial losses              |   |                     |  1.6 |   |   |   |  - |   |
|                                                                                                           |   |                     |      |   |   |   |   |   |
|     Total                                                                                  |   | $                        | 61.6      |   |   | $ | 3.5 |   |

----

|                                              |   | Years ended December 31, |   |
|---------------------------------------------------|--------|--------------------------|--------|
|                                              |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
|                                              |   | (In      millions)       |   |
|                                              |   |                     |   |   |   |   |   |   |   |
| Net      periodic pension cost:                   |   |                     |   |   |   |   |   |   |   |
| Service      cost benefits                        |   | $                        | 3.1    |   |   | $ | 3.4 |   |   | $ | 5.2 |   |
|     Interest      cost on PBO |   |                     | 11.7   |   |   |   | 14.0 |   |   |   | 9.9 |   |
| Expected      return on plan assets               |   |                     | (8.0   | ) |   |   | (8.3 | ) |   |   | (9.7 | ) |
| Amortization      of prior service cost           |   |                     | .2     |   |   |   | .2 |   |   |   | .2 |   |
| Recognized      actuarial losses (gain)           |   |                     | 6.2    |   |   |   | 6.1 |   |   |   | (1.9 | ) |
|                                              |   |                     |   |   |   |   |   |   |   |   |   |   |
| Total                                             |   | $                        | 13.2   |   |   | $ | 15.4 |   |   | $ | 3.7 |   |

|                                        |   | December 31, |   |
|---------------------------------------------|--------|--------------|--------|
| Rate                                        |   | 2007         |   |   | 2008 |   |
|                                        |   |         |   |   |   |   |
| Discount      rate                          |   |         | 5.5    | % |   |   | 5.8 | % |
| Increase      in future compensation levels |   |         | 3.0    | % |   |   | 3.0 | % |

|                                        |   | Years ended December 31, |   |
|---------------------------------------------|--------|--------------------------|--------|
| Rate                                        |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
|                                        |   |                     |   |   |   |   |   |   |   |
| Discount      rate                          |   |                     | 4.0    | % |   |   | 4.5 | % |   |   | 5.5 | % |
| Increase      in future compensation levels |   |                     | 2.8    | % |   |   | 3.0 | % |   |   | 3.0 | % |
| Long-term      return on plan assets        |   |                     | 5.5    | % |   |   | 5.3 | % |   |   | 5.8 | % |

|                                     |   | December 31,       |   |
|------------------------------------------|--------|--------------------|--------|
|                                     |   | 2007               |   |   | 2008 |   |
|                                     |   | (In      millions) |   |
|                                     |   |               |   |   |   |   |
| Reserve      for uncertain tax positions |   | $                  | 1.3    |   |   | $ | - |   |
| Employee      benefits                   |   |               | 4.6    |   |   |   | 4.7 |   |
| Insurance      claims expense            |   |               | 1.9    |   |   |   | 1.3 |   |
| Other                                    |   |               | 3.8    |   |   |   | 3.1 |   |
|                                     |   |               |   |   |   |   |   |   |
| Total                                    |   | $                  | 11.6   |   |   | $ | 9.1 |   |

----

|                          |   | December 31,       |   |
|-------------------------------|--------|--------------------|--------|
|                          |   | 2007               |   |   | 2008 |   |
|                          |   | (In      millions) |   |
|                          |   |               |   |   |   |   |
| Current      receivable from: |   |               |   |   |   |   |
| KII                           |   | $                  | 2.7    |   |   | $ | 15.4 |   |
| TAS                           |   |               | -      |   |   |   | 7.2 |   |
| Other      affiliates         |   |               | 7.4    |   |   |   | .4 |   |
|                          |   |               |   |   |   |   |   |   |
| Total                         |   | $                  | 10.1   |   |   | $ | 23.0 |   |
|                          |   |               |   |   |   |   |   |   |
| Current      payable to:      |   |               |   |   |   |   |   |   |
| KII      – income taxes |   | $                  | 50.6   |   |   | $ | 45.0 |   |
| TIA                           |   |               | 23.1   |   |   |   | - |   |
| Other      affiliates         |   |               | 21.0   |   |   |   | 39.4 |   |
|                          |   |               |   |   |   |   |   |   |
| Total                         |   | $                  | 94.7   |   |   | $ | 84.4 |   |

----

----

|                      |   | Amount             |   |
|---------------------------|--------|--------------------|--------|
|                      |   | (in      millions) |   |
| Years ending December 31, |   |               |   |
| 2009                      |   | $                  | 2.6    |   |
| 2010                      |   |               | 1.8    |   |
| 2011                      |   |               | 1.2    |   |
| 2012                      |   |               | 1.1    |   |
| 2013                      |   |               | 1.1    |   |
| 2014      and thereafter  |   |               | 18.8   |   |
|                      |   |               |   |   |
| Total                     |   | $                  | 26.6   |   |

|                                                                             |   | December 31,       |   |
|----------------------------------------------------------------------------------|--------|--------------------|--------|
|                                                                             |   | 2007               |   |   | 2008 |   |
|                                                                             |   | Carrying           |   |   | Fair |   |   | Carrying |   |   | Fair |   |
|                                                                             |   | amount             |   |   | value |   |   | amount |   |   | value |   |
|                                                                             |   | (In      millions) |   |
|                                                                             |   |               |   |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents                                                   |   | $                  | 50.6   |   |   | $ | 50.6 |   |   | $ | 2.8 |   |   | $ | 2.8 |   |
|  Long-term      debt:    Revolving      credit facility |   |               | -      |   |   |   | - |   |   |   | 16.9 |   |   |   | 16.9 |   |

|                                                                                                                                                            |   | Year Ended December 31, |      |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|-----------|
|                                                                                                                                                            |   | 2007                    |      |   | 2008 |   |
|                                                                                                                                                            |   | (In      millions)      |      |
| Changes      in unrecognized tax benefits:                                                                                                                      |   |                    |      |   |   |   |
|   Unrecognized      tax benefits at beginning ofyear                                                                                                  |   | $                       | 1.3       |   |   | $ | 1.3 |   |
|   Net      increase (decrease):                                                                                                                       |   |                    |      |   |   |   |   |   |
|     Tax      positions taken in prior periods                                                                                               |   |                    | .2        |   |   |   | (1.1 | ) |
|     Tax      positions taken in current period                                                                                              |   |                    | -         |   |   |   | .1 |   |
|   Settlements      with taxing authorities –                    cash paid |   |                    | -         |   |   |   | (.1 | ) |
|   Lapse      of applicable statute of limitations                                                                                                     |   |                    | -         |   |   |   | - |   |
|        Change in foreign currency exchange rates                                                                                                           |   |                    |  (.2 | ) |   |   | (.2 | ) |
|                                                                                                                                                            |   |                    |      |   |   |   |   |   |
|   Unrecognized      tax benefits at end of year                                                                                                       |   | $                       | 1.3       |   |   | $ | - |   |

----

| KRONOS      DENMARK APS AND SUBSIDIARIES                           |
|--------------------------------------------------------------------|
|                                                               |
| Index of Consolidated Financial      Statements                    |
|                                                               |   |
|                                                               |   |
| Financial Statements                                               |   |
|                                                               |   |
| Report      of Independent Registered Public Accounting Firm       | FB-2 |
|                                                               |   |
| Consolidated      Balance Sheets –                           |   |
| December      31, 2007 and 2008                                    | FB-3 |
|                                                               |   |
| Consolidated      Statements of Income –                     |   |
| Year      ended December 31, 2006, 2007 and 2008                   | FB-5 |
|                                                               |   |
| Consolidated      Statements of Comprehensive Income (Loss) -      |   |
| Year      ended December 31, 2006, 2007 and 2008                   | FB-6 |
|                                                               |   |
| Consolidated      Statements of Stockholder’s Equity – |   |
| Year      ended December 31, 2006, 2007 and 2008                   | FB-7 |
|                                                               |   |
| Consolidated      Statements of Cash Flows –                 |   |
| Year      ended December 31, 2006, 2007 and 2008                   | FB-8 |
|                                                               |   |
| Notes      to Consolidated Financial Statements                    | FB-9 |

----

----

|                                                |   | December 31, |   |
|-----------------------------------------------------|--------|--------------|--------|
| ASSETS                                              |   | 2007         |   |   | 2008 |   |
|                                                |   |         |   |   |   |   |
| Current      assets:                                |   |         |   |   |   |   |
| Cash      and cash equivalents                      |   | $            | 4.7    |   |   | $ | 1.1 |   |
| Restricted      cash                                |   |         | 1.8    |   |   |   | 1.5 |   |
| Accounts      and notes receivable                  |   |         | 16.1   |   |   |   | 14.7 |   |
| Receivable      from affiliates                     |   |         | 35.0   |   |   |   | 16.7 |   |
| Refundable      income taxes                        |   |         | 1.1    |   |   |   | - |   |
| Inventories                                         |   |         | 90.7   |   |   |   | 104.7 |   |
| Prepaid      expenses                               |   |         | 1.6    |   |   |   | 1.2 |   |
|                                                |   |         |   |   |   |   |   |   |
| Total      current assets                           |   |         | 151.0  |   |   |   | 139.9 |   |
|                                                |   |         |   |   |   |   |   |   |
| Other      assets                                   |   |         | 3.4    |   |   |   | 3.9 |   |
|                                                |   |         |   |   |   |   |   |   |
| Property      and equipment:                        |   |         |   |   |   |   |   |   |
| Land                                                |   |         | 21.0   |   |   |   | 19.6 |   |
| Buildings                                           |   |         | 47.6   |   |   |   | 42.4 |   |
| Machinery      and equipment                        |   |         | 234.3  |   |   |   | 209.5 |   |
| Mining      properties                              |   |         | 89.6   |   |   |   | 73.9 |   |
| Construction      in progress                       |   |         | 20.1   |   |   |   | 29.9 |   |
|                                                |   |         |   |   |   |   |   |   |
|                                                |   |         | 412.6  |   |   |   | 375.3 |   |
| Less      accumulated depreciation and amortization |   |         | 253.2  |   |   |   | 227.3 |   |
|                                                |   |         |   |   |   |   |   |   |
| Net      property and equipment                     |   |         | 159.4  |   |   |   | 148.0 |   |
|                                                |   |         |   |   |   |   |   |   |
| Total      assets                                   |   | $            | 313.8  |   |   | $ | 291.8 |   |

----

|                                                                                                                       |   | December 31, |   |
|----------------------------------------------------------------------------------------------------------------------------|--------|--------------|--------|
| LIABILITIES AND STOCKHOLDER’S      EQUITY                                                                            |   | 2007         |   |   | 2008 |   |
|                                                                                                                       |   |         |   |   |   |   |
|                                                                                                                       |   |         |   |   |   |   |
| Current      liabilities:                                                                                                  |   |         |   |   |   |   |
| Current      maturities of long-term debt                                                                                  |   | $            | .8     |   |   | $ | .8 |   |
| Accounts      payable and accrued liabilities                                                                              |   |         | 52.9   |   |   |   | 44.9 |   |
| Payable      to affiliates                                                                                                 |   |         | 10.6   |   |   |   | 9.7 |   |
| Income      taxes                                                                                                          |   |         | 9.2    |   |   |   | 3.3 |   |
| Deferred      income taxes                                                                                                 |   |         | 1.8    |   |   |   | 1.8 |   |
|                                                                                                                       |   |         |   |   |   |   |   |   |
| Total      current liabilities                                                                                             |   |         | 75.3   |   |   |   | 60.5 |   |
|                                                                                                                       |   |         |   |   |   |   |   |   |
| Noncurrent      liabilities:                                                                                               |   |         |   |   |   |   |   |   |
| Long-term      debt                                                                                                        |   |         | 4.5    |   |   |   | 27.9 |   |
| Deferred      income taxes                                                                                                 |   |         | 16.4   |   |   |   | 12.9 |   |
| Accrued      pension costs                                                                                                 |   |         | 6.0    |   |   |   | 10.1 |   |
| Other                                                                                                                      |   |         | 3.5    |   |   |   | 3.2 |   |
|                                                                                                                       |   |         |   |   |   |   |   |   |
| Total      noncurrent liabilities                                                                                          |   |         | 30.4   |   |   |   | 54.1 |   |
|                                                                                                                       |   |         |   |   |   |   |   |   |
| Stockholder's      equity:                                                                                                 |   |         |   |   |   |   |   |   |
| Common      stock – 100 Danish kroner par value; 10,000 shares authorized; 10,000      shares issued and outstanding |   |         | .1     |   |   |   | .1 |   |
| Additional      paid-in capital                                                                                            |   |         | 217.0  |   |   |   | 217.0 |   |
| Retained      deficit                                                                                                      |   |         | (31.3  | ) |   |   | (33.1 | ) |
| Accumulated      other comprehensive income (loss):                                                                        |   |         |   |   |   |   |   |   |
| Currency      translation                                                                                                  |   |         | 31.0   |   |   |   | 5.2 |   |
| Defined      benefit pension plans                                                                                         |   |         | (8.7   | ) |   |   | (12.0 | ) |
|                                                                                                                       |   |         |   |   |   |   |   |   |
| Total      stockholder's equity                                                                                            |   |         | 208.1  |   |   |   | 177.2 |   |
|                                                                                                                       |   |         |   |   |   |   |   |   |
| Total      liabilities and stockholder’s equity                                                                      |   | $            | 313.8  |   |   | $ | 291.8 |   |
|                                                                                                                       |   |         |   |   |   |   |   |   |
| Commitments      and contingencies (Notes 6, 7 and 11)                                                                     |   |         |   |   |   |   |   |   |

----

|                                             |   | Years ended December 31, |   |
|--------------------------------------------------|--------|--------------------------|--------|
|                                             |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
|                                             |   |                     |   |   |   |   |   |   |   |
| Net      sales                                   |   | $                        | 384.4  |   |   | $ | 411.7 |   |   | $ | 415.5 |   |
| Cost      of sales                               |   |                     | 312.2  |   |   |   | 355.6 |   |   |   | 361.6 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Gross      margin                                |   |                     | 72.2   |   |   |   | 56.1 |   |   |   | 53.9 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative expense |   |                     | 25.5   |   |   |   | 26.1 |   |   |   | 27.5 |   |
| Other      operating income (expense):           |   |                     |   |   |   |   |   |   |   |   |   |   |
| Currency      transaction losses, net            |   |                     | (.4    | ) |   |   | - |   |   |   | (1.4 | ) |
| Disposition      of property and equipment       |   |                     | (.3    | ) |   |   | (.3 | ) |   |   | (.5 | ) |
| Other,      net                                  |   |                     | .3     |   |   |   | .4 |   |   |   | .2 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Income      from operations                      |   |                     | 46.3   |   |   |   | 30.1 |   |   |   | 24.7 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Other      income (expense):                     |   |                     |   |   |   |   |   |   |   |   |   |   |
| Trade      interest income                       |   |                     | .1     |   |   |   | .1 |   |   |   | .1 |   |
| Other      income from affiliates                |   |                     | .9     |   |   |   | .9 |   |   |   | .7 |   |
| Interest      and other expense to affiliates    |   |                     | (2.5   | ) |   |   | (2.9 | ) |   |   | (3.4 | ) |
| Interest      expense                            |   |                     | (.9    | ) |   |   | (.7 | ) |   |   | (1.3 | ) |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Income      before income taxes                  |   |                     | 43.9   |   |   |   | 27.5 |   |   |   | 20.8 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Provision      for income taxes                  |   |                     | 10.2   |   |   |   | 8.0 |   |   |   | 5.6 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      income                                  |   | $                        | 33.7   |   |   | $ | 19.5 |   |   | $ | 15.2 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                          |   | Years ended December 31, |   |
|-----------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                          |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
|                                                                                          |   |                     |   |   |   |   |   |   |   |
| Net      income                                                                               |   | $                        | 33.7   |   |   | $ | 19.5 |   |   | $ | 15.2 |   |
|                                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Other      comprehensive income (loss), net of tax:                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
| Currency      translation                                                                     |   |                     | 18.7   |   |   |   | 22.8 |   |   |   | (25.8 | ) |
|                                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Pension      plans:                                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
| Amortization      of prior service cost and net losses included in periodic pension      cost |   |                     | -      |   |   |   | 1.3 |   |   |   | .6 |   |
| Net      actuarial gain arising during year                                                   |   |                     | -      |   |   |   | 8.9 |   |   |   | (3.9 | ) |
| Minimum      pension liability change                                                         |   |                     | 5.1    |   |   |   | - |   |   |   | - |   |
|                                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
|                                                                                          |   |                     | 5.1    |   |   |   | 10.2 |   |   |   | (3.3 | ) |
|                                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Total      other comprehensive income (loss)                                                  |   |                     | 23.8   |   |   |   | 33.0 |   |   |   | (29.1 | ) |
|                                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      income (loss)                                                              |   | $                        | 57.5   |   |   | $ | 52.5 |   |   | $ | (13.9 | ) |

----

|                                                                                              |   |   |   |   |       |   |   |     |   |   | Accumulated      other      |   |   |    |   |
|---------------------------------------------------------------------------------------------------|--------|--------|--------|--------|------------|--------|--------|----------|--------|--------|-----------------------------|--------|--------|---------|--------|
|                                                                                              |   |   |   |   |       |   |   |     |   |   | comprehensive income (loss) |   |   |    |   |
|                                                                                              |   |   |   |   | Additional |   |   |     |   |   |                        |   |   |    |   |   |   |   |
|                                                                                              |   | Common |   |   | paid-in    |   |   | Retained |   |   | Currency                    |   |   | Pension |   |   |   |   |
|                                                                                              |   | stock  |   |   | capital    |   |   | deficit  |   |   | translation                 |   |   | plans   |   |   | Total |   |
|                                                                                              |   |   |   |   |       |   |   |     |   |   |                        |   |   |    |   |   |   |   |
| Balance      at December 31, 2005                                                                 |   |   | .1     |   |       |   | 217.0  |     |   |   | (33.5                       | )      |   |    | (10.5  | ) |   |   | (9.9 | ) |   |   | 163.2 |   |
|                                                                                              |   |   |   |   |       |   |   |     |   |   |                        |   |   |    |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                   |   |   | -      |   |       |   | -      |     |   |   | 33.7                        |   |   |    | -      |   |   |   | - |   |   |   | 33.7 |   |
| Other      comprehensive income, net of tax                                                       |   |   | -      |   |       |   | -      |     |   |   | -                           |   |   |    | 18.7   |   |   |   | 5.1 |   |   |   | 23.8 |   |
| Dividends                                                                                         |   |   | -      |   |       |   | -      |     |   |   | (26.9                       | )      |   |    | -      |   |   |   | - |   |   |   | (26.9 | ) |
| Change      in accounting – asset and liability recognition provisions of SFAS No.      158 |   |   | -      |   |       |   | -      |     |   |   | -                           |   |   |    | -      |   |   |   | (14.4 | ) |   |   | (14.4 | ) |
|                                                                                              |   |   |   |   |       |   |   |     |   |   |                        |   |   |    |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2006                                                                 |   |   | .1     |   |       |   | 217.0  |     |   |   | (26.7                       | )      |   |    | 8.2    |   |   |   | (19.2 | ) |   |   | 179.4 |   |
|                                                                                              |   |   |   |   |       |   |   |     |   |   |                        |   |   |    |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                   |   |   | -      |   |       |   | -      |     |   |   | 19.5                        |   |   |    | -      |   |   |   | - |   |   |   | 19.5 |   |
| Other      comprehensive income, net of tax                                                       |   |   | -      |   |       |   | -      |     |   |   |                        |   |   |    | 22.8   |   |   |   | 10.2 |   |   |   | 33.0 |   |
| Dividends                                                                                         |   |   | -      |   |       |   | -      |     |   |   | (23.3                       | )      |   |    | -      |   |   |   | - |   |   |   | (23.3 | ) |
| Change      in accounting - SFAS No. 158 - measurement date provision                             |   |   | -      |   |       |   | -      |     |   |   | (.8                         | )      |   |    | -      |   |   |   | .3 |   |   |   | (.5 | ) |
|                                                                                              |   |   |   |   |       |   |   |     |   |   |                        |   |   |    |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2007                                                                 |   |   | .1     |   |       |   | 217.0  |     |   |   | (31.3                       | )      |   |    | 31.0   |   |   |   | (8.7 | ) |   |   | 208.1 |   |
|                                                                                              |   |   |   |   |       |   |   |     |   |   |                        |   |   |    |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                   |   |   | -      |   |       |   | -      |     |   |   | 15.2                        |   |   |    | -      |   |   |   | - |   |   |   | 15.2 |   |
| Other      comprehensive loss, net of tax                                                         |   |   | -      |   |       |   | -      |     |   |   | -                           |   |   |    | (25.8  | ) |   |   | (3.3 | ) |   |   | (29.1 | ) |
| Dividends                                                                                         |   |   | -      |   |       |   | -      |     |   |   | (17.0                       | )      |   |    | -      |   |   |   | - |   |   |   | (17.0 | ) |
|                                                                                              |   |   |   |   |       |   |   |     |   |   |                        |   |   |    |   |   |   |   |   |   |   |   |   |   |
|                                                                                              |   |   |   |   |       |   |   |     |   |   |                        |   |   |    |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2008                                                                 |   | $      | .1     |   |       | $      | 217.0  |     |   | $      | (33.1                       | )      |   | $       | 5.2    |   |   | $ | (12.0 | ) |   | $ | 177.2 |   |
|                                                                                              |   |   |   |   |       |   |   |     |   |   |                        |   |   |    |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                    |   | Years ended December 31, |   |
|---------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                                    |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
| Cash      flows from operating activities:                                                              |   |                     |   |   |   |   |   |   |   |
| Net      income                                                                                         |   | $                        | 33.7   |   |   | $ | 19.5 |   |   | $ | 15.2 |   |
| Depreciation      and amortization                                                                      |   |                     | 14.2   |   |   |   | 16.5 |   |   |   | 18.8 |   |
| Deferred      income taxes                                                                              |   |                     | (4.5   | ) |   |   | (3.6 | ) |   |   | (.1 | ) |
| Pension,      net                                                                                       |   |                     | 1.3    |   |   |   | 3.0 |   |   |   | (3.0 | ) |
| Other                                                                                                   |   |                     | .5     |   |   |   | 1.3 |   |   |   | .9 |   |
| Change      in assets and liabilities:                                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |
| Accounts      and notes receivable                                                                      |   |                     | (.4    | ) |   |   | 6.6 |   |   |   | (1.1 | ) |
| Inventories                                                                                             |   |                     | 1.9    |   |   |   | (6.0 | ) |   |   | (23.8 | ) |
| Prepaid      expenses                                                                                   |   |                     | (.9    | ) |   |   | .3 |   |   |   | .1 |   |
| Accounts      payable and accrued liabilities                                                           |   |                     | (1.0   | ) |   |   | 2.8 |   |   |   | 2.1 |   |
| Income      taxes                                                                                       |   |                     | .9     |   |   |   | (3.6 | ) |   |   | (3.4 | ) |
| Accounts      with affiliates                                                                           |   |                     | (6.7   | ) |   |   | 8.0 |   |   |   | 20.0 |   |
| Other      noncurrent assets                                                                            |   |                     | -      |   |   |   | - |   |   |   | (1.6 | )  |
| Other      noncurrent liabilities                                                                       |   |                     | 2.4    |   |   |   | (.3 | ) |   |   | 3.2 |   |
|                                                                                                    |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      cash provided by operating activities                                                          |   |                     | 41.4   |   |   |   | 44.5 |   |   |   | 27.3 |   |
|  Cash      flows from investing activities:                                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
| Capital      expenditures                                                                               |   |                     | (22.8  | ) |   |   | (20.7 | ) |   |   | (37.4 | ) |
| Change      in restricted cash equivalents                                                              |   |                     | -      |   |   |   | (.1 | ) |   |   |  - |   |
|                                                                                                    |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Net      cash used in investing activities                                      |   |                     | (22.8  | ) |   |   | (20.8 | ) |   |   | (37.4 | ) |
|                                                                                                    |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash      flows from investing activities:                                                              |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Indebtedness:                                                                               |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Borrowings                                                                      |   |                     | -      |   |   |   | .5 |   |   |   | 30.4 |   |
|     Principal      payments                                                         |   |                     | (.2    | ) |   |   | (.2 | ) |   |   | (6.0 | ) |
|     Deferred      financing fees                                                    |   |                     | -      |   |   |   | - |   |   |   | (.6 | ) |
|   Dividends      paid                                                                         |   |                     | (26.9  | ) |   |   | (23.3 | ) |   |   | (17.0 | ) |
|   Loans      to affiliates – repayments                                                 |   |                     | 10.9   |   |   |   | - |   |   |   | - |   |
|                                                                                                    |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      cash provided by (used in) financing activities                                           |   |                     | (16.2  | ) |   |   | (23.0 | ) |   |   | 6.8 |   |
|                                                                                                    |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents:                                                                         |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Net      change during the year from:                                                       |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Operating,      investing and financing     activities |   |                     | 2.4    |   |   |   | .7 |   |   |   | (3.3 | ) |
|     Currency      translation                                                       |   |                     | .1     |   |   |   | .5 |   |   |   | (.3 | ) |
|   Balance      at beginning of period                                                         |   |                     | 1.0    |   |   |   | 3.5 |   |   |   | 4.7 |   |
|                                                                                                    |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Balance      at end of period                                                               |   | $                        | 3.5    |   |   | $ | 4.7 |   |   | $ | 1.1 |   |
|                                                                                                    |   |                     |   |   |   |   |   |   |   |   |   |   |
| Supplemental      disclosures -                                                                         |   |                     |   |   |   |   |   |   |   |   |   |   |
|   Cash      paid for:                                                                         |   |                     |   |   |   |   |   |   |   |   |   |   |
|     Interest                                                                        |   | $                        | .4     |   |   | $ | .7 |   |   | $ | 1.2 |   |
|     Income      taxes                                                               |   |                     | 11.8   |   |   |   | 15.3 |   |   |   | 9.1 |   |
|   Accrual      for capital expenditures                                                       |   |                     | -      |   |   |   | 5.8 |   |   |   | 3.4 |   |

----

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

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

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

|                                       |   | December 31,       |   |
|--------------------------------------------|--------|--------------------|--------|
|                                       |   | 2007               |   |   | 2008 |   |
|                                       |   | (In      millions) |   |
|                                       |   |               |   |   |   |   |
| Trade      receivables                     |   | $                  | 12.6   |   |   | $ | 10.9 |   |
| Recoverable      VAT and other receivables |   |               | 3.5    |   |   |   | 3.8 |   |
| Allowance      for doubtful accounts       |   |  -            |   |   |  - |   |
|                                       |   |               |   |   |   |   |   |   |
| Total                                      |   | $                  | 16.1   |   |   | $ | 14.7 |   |

|                   |   | December 31,       |   |
|------------------------|--------|--------------------|--------|
|                   |   | 2007               |   |   | 2008 |   |
|                   |   | (In      millions) |   |
|                   |   |               |   |   |   |   |
| Raw      materials     |   | $                  | 28.6   |   |   | $ | 28.0 |   |
| Work      in process   |   |               | 4.6    |   |   |   | 4.6 |   |
| Finished      products |   |               | 34.1   |   |   |   | 47.6 |   |
| Supplies               |   | 23.4               |   |   | 24.5 |   |
|                   |   |               |   |   |   |   |   |   |
| Total                  |   | $                  | 90.7   |   |   | $ | 104.7 |   |

|                                       |   | December 31,       |   |
|--------------------------------------------|--------|--------------------|--------|
|                                       |   | 2007               |   |   | 2008 |   |
|                                       |   | (In      millions) |   |
|                                       |   |               |   |   |   |   |
| Restricted      marketable debt securities |   | $                  | 3.2    |   |   | $ | 3.5 |   |
| Deferred      financing costs, net         |   |               | .1     |   |   |   | .4 |   |
| Other                                      |   |               | .1     |   |   |   | - |   |
|                                       |   |               |   |   |   |   |   |   |
| Total                                      |   | $                  | 3.4    |   |   | $ | 3.9 |   |

----

|                      |   | December 31,       |   |
|---------------------------|--------|--------------------|--------|
|                      |   | 2007               |   |   | 2008 |   |
|                      |   | (In      millions) |   |
|                      |   |               |   |   |   |   |
| Accounts      payable     |   | $                  | 28.2   |   |   | $ | 27.1 |   |
| Accrued      liabilities: |   |               |   |   |   |   |   |   |
| Employee      benefits    |   |               | 10.0   |   |   |   | 9.2 |   |
| Other                     |   |               | 14.7   |   |   |   | 8.6 |   |
|                      |   |               |   |   |   |   |   |   |
| Total                     |   | $                  | 52.9   |   |   | $ | 44.9 |   |

|                                        |   | December 31,       |   |
|---------------------------------------------|--------|--------------------|--------|
|                                        |   | 2007               |   | 2008 |   |
|                                        |   | (In      millions) |   |
|                                        |   |               |   |   |   |   |
| Revolving      credit facility              |   | $                  | -      |   |   | $ | 25.3 |   |
| Other                                       |   |               | 5.3    |   |   |   | 3.4 |   |
|                                        |   |               |   |   |   |   |   |   |
| Total      debt                             |   |               | 5.3    |   |   |   | 28.7 |   |
| Less      current maturities                |   |               | .8     |   |   |   | .8 |   |
|                                        |   |               |   |   |   |   |   |   |
|    Total      long-term debt |   | $                  | 4.5    |   |   | $ | 27.9 |   |

| Years ending December 31, |   | Amount             |   |
|---------------------------|--------|--------------------|--------|
|                      |   | (In      millions) |   |
|                      |   |               |   |
| 2009                      |   | $                  | .8     |   |
| 2010                      |   |               | .8     |   |
| 2011                      |   |               | 26.2   |   |
| 2012                      |   |               | .9     |   |
|                      |   |               |   |   |
| Total                     |   | $                  | 28.7   |   |

----

|                                                        |   | Years ended December 31, |    |
|-------------------------------------------------------------|--------|--------------------------|---------|
|                                                        |   | 2006                     |    |   | 2007 |   |   | 2008 |   |
|                                                        |   | (In      millions)       |    |
| Pretax      income:                                         |   |                     |    |   |   |   |   |   |   |
| Denmark                                                     |   | $                        | .6      |   |   | $ | .4 |   |   | $ | (.1 | ) |
| Non-Denmark                                                 |   | 43.3                     |    |   | 27.1 |   |   | 20.9 |   |
|                                                        |   |                     |    |   |   |   |   |   |   |   |   |   |
| Total                                                       |   | $                        | 43.9    |   |   | $ | 27.5 |   |   | $ | 20.8 |   |
|                                                        |   |                     |    |   |   |   |   |   |   |   |   |   |
| Expected      tax expense                                   |   | $                        | 12.3    |   |   | $ | 6.9 |   |   | $ | 5.2 |   |
| Non-Denmark      tax rates                                  |   |                     | .9      |   |   |   | 1.1 |   |   |   | .9 |   |
| Nondeductible      expenses                                 |   |                     | .3      |   |   |   | .3 |   |   |   | .4 |   |
| Tax      contingency reserve adjustment, net                |   |                     | (2.4    | ) |   |   | - |   |   |   | - |   |
| Nontaxable      income                                      |   |                     | (.5     | ) |   |   | (.5 | ) |   |   | (.9 | ) |
| Other,      net                                             |   |                     | (.4     | ) |   |   | .2 |   |   |   | - |   |
|                                                        |   |                     |    |   |   |   |   |   |   |   |   |   |
| Total      income tax expense                               |   | $                        | 10.2    |   |   | $ | 8.0 |   |   | $ | 5.6 |   |
|                                                        |   |                     |    |   |   |   |   |   |   |   |   |   |
|                                                        |   |                     |    |   |   |   |   |   |   |   |   |   |
| Provision      for income taxes:                            |   |                     |    |   |   |   |   |   |   |   |   |   |
| Current      income tax expense:                            |   |                     |    |   |   |   |   |   |   |   |   |   |
| Denmark                                                     |   | $                        | .2      |   |   | $ | .1 |   |   | $ | - |   |
| Non-Denmark                                                 |   | 14.5                     |    |   | 11.5 |   |   |  5.7 |   |
|                                                        |   |                     |    |   |   |   |   |   |   |   |   |   |
|                                                        |   | 14.7                     |    |   | 11.6 |   |   | 5.7 |   |
|                                                        |   |                     |    |   |   |   |   |   |   |   |   |   |
| Deferred      income tax expense (benefit):                 |   |                     |    |   |   |   |   |   |   |   |   |   |
| Denmark                                                     |   |                     | (2.4    | )  |   |   | (.3 | )  |   |   | - |   |
| Non-Denmark                                                 |   | (2.1                     | )       |   | (3.3 | )  |   |   | (.1 | ) |
|                                                        |   |                     |    |   |   |   |   |   |   |   |   |   |
|                                                        |   | (4.5                     | )  |   |  (3.6 | )  |   |   | (.1 | ) |
|                                                        |   |                     |    |   |   |   |   |   |   |   |   |   |
| Total      income tax expense                               |   | $                        | 10.2    |   |   | $ | 8.0 |   |   | $ | 5.6 |   |
|                                                        |   |                     |    |   |   |   |   |   |   |   |   |   |
| Comprehensive      provision for income taxes allocable to: |   |                     |    |   |   |   |   |   |   |   |   |   |
| Pretax      income                                          |   | $                        | 10.2    |   |   | $ | 8.0 |   |   | $ | 5.6 |   |
| Other      comprehensive loss –Pension      plans     |   |                     | 2.5     |   |   |   | 3.9 |   |   |   | (1.3 | ) |
| Adoption      of SFAS No. 158 –Pension      plans     |   | (5.9                     | )  |   | - |   |   | - |   |
|                                                        |   |                     |    |   |   |   |   |   |   |   |   |   |
| Total                                                       |   | $                        | 6.8     |   |   | $ | 11.9 |   |   | $ | 4.3 |   |

----

|                                                           |   | December 31,  |   |
|----------------------------------------------------------------|--------|--------------------|--------|
|                                                           |   | 2007               |   |   | 2008 |   |
|                                                           |   | Assets             |   |   | Liabilities |   |   | Assets |   |   | Liabilities |   |
|                                                           |   | (In      millions) |   |
|                                                           |   |               |   |   |   |   |   |   |   |   |   |   |
| Tax      effect of temporary differences relating to:          |   |               |   |   |   |   |   |   |   |   |   |   |
| Inventories                                                    |   | $                  | .1     |   |   | $ | (1.9 | ) |   | $ | - |   |   | $ | (2.1 | ) |
| Property      and equipment                                    |   |               | -      |   |   |   | (20.4 | ) |   |   | - |   |   |   | (17.2 | ) |
| Accrued      pension cost                                      |   |               | 1.4    |   |   |   | - |   |   |   | 2.5 |   |   |   | - |   |
| Accrued      liabilities and other deductible differences      |   |               | 3.0    |   |   |   | - |   |   |   | 2.1 |   |   |   | - |   |
| Other      taxable differences                                 |   |               | -      |   |   |   | (.4 | ) |   |   | - |   |   |   | - |   |
|                                                           |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross      deferred tax assets (liabilities)                   |   |               | 4.5    |   |   |   | (22.7 | ) |   |   | 4.6 |   |   |   | (19.3 | ) |
|                                                           |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reclassification,      principally netting by tax jurisdiction |   |               | (4.5   | ) |   |   | 4.5 |   |   |   | (4.6 | ) |   |   | 4.6 |   |
|                                                           |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      total deferred tax liabilities                        |   |               | -      |   |   |   | (18.2 | ) |   |   | - |   |   |   | (14.7 | ) |
| Net      current deferred tax liabilities                      |   |               | -      |   |   |   | (1.8 | ) |   |   | - |   |   |   | (1.8 | ) |
|                                                           |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      noncurrent deferred tax liabilities                   |   | $                  | -      |   |   | $ | (16.4 | ) |   | $ | - |   |   | $ | (12.9 | ) |

| Years ending December 31, |   | Amount             |   |
|---------------------------|--------|--------------------|--------|
|                      |   | (In      millions) |   |
| 2009                      |   | $                  | 2.9    |   |
| 2010                      |   |               | 3.0    |   |
| 2011                      |   |               | 3.2    |   |
| 2012                      |   |               | 5.0    |   |
| 2013                      |   |               | 2.9    |   |
| Next      five years      |   |               | 17.1   |   |

----

|                                                              |   | December 31,       |   |
|-------------------------------------------------------------------|--------|--------------------|--------|
|                                                              |   | 2007               |   |   | 2008 |   |
|                                                              |   | (In      millions) |   |
|                                                              |   |               |   |   |   |   |
| Change      in projected benefit obligations (“PBO”): |   |               |   |   |   |   |
| Benefit      obligations at beginning of year                     |   | $                  | 74.8   |   |   | $ | 71.7 |   |
| Change      in measurement date, net                              |   |               | 1.3    |   |   |   | - |   |
| Service      cost                                                 |   |               | 2.2    |   |   |   | 1.7 |   |
| Interest      cost                                                |   |               | 3.6    |   |   |   | 3.8 |   |
| Participant      contributions                                    |   |               | .2     |   |   |   | .1 |   |
| Actuarial      (gains) losses                                     |   |               | (13.9  | ) |   |   | 3.1 |   |
| Change      in currency exchange rates                            |   |               | 9.3    |   |   |   | (14.4 | ) |
| Benefits      paid                                                |   |               | (5.8   | ) |   |   | (5.1 | ) |
|                                                              |   |               |   |   |   |   |   |   |
| Benefit      obligations at end of year                           |   |               | 71.7   |   |   |   | 60.9 |   |
|                                                              |   |               |   |   |   |   |   |   |
| Change      in fair value of plan assets:                         |   |               |   |   |   |   |   |   |
| Fair      value of plan assets at beginning of year               |   |               | 60.2   |   |   |   | 65.7 |   |
| Actual      return on plan assets                                 |   |               | .9     |   |   |   | .5 |   |
| Employer      contributions                                       |   |               | 2.1    |   |   |   | 2.7 |   |
| Participant      contributions                                    |   |               | .2     |   |   |   | .1 |   |
| Change      in currency exchange rates                            |   |               | 8.1    |   |   |   | (13.1 | ) |
| Benefits      paid                                                |   |               | (5.8   | ) |   |   | (5.1 | ) |
|                                                              |   |               |   |   |   |   |   |   |
| Fair      value of plan assets at end of year                     |   | $                  | 65.7   |   |   | $ | 50.8 |   |
|                                                              |   |               |   |   |   |   |   |   |
| Funded      status                                                |   | $                  | (6.0   | ) |   | $ | (10.1 | ) |
|                                                              |   |               |   |   |   |   |   |   |
| Amounts      recognized in the balance sheet:                     |   |               |   |   |   |   |   |   |
| Accrued      pension cost:                                        |   |               |   |   |   |   |   |   |
| Current                                                           |   | $                  | -      |   |   | $ | - |   |
| Non      current                                                  |   |               | (6.0   | ) |   |   | (10.1 | ) |
|                                                              |   |               |   |   |   |   |   |   |
| Total                                                             |   | $                  | (6.0   | ) |   | $ | (10.1 | ) |
|                                                              |   |               |   |   |   |   |   |   |
| Accumulated      other comprehensive loss:                        |   |               |   |   |   |   |   |   |
| Actuarial      loss                                               |   | $                  | 10.1   |   |   | $ | 15.2 |   |
| Prior      service cost                                           |   |               | 2.1    |   |   |   | 1.8 |   |
| Net      transition obligation                                    |   |               | .5     |   |   |   | .4 |   |
|                                                              |   |               |   |   |   |   |   |   |
| Total                                                             |   | $                  | 12.7   |   |   | $ | 17.4 |   |
|                                                              |   |               |   |   |   |   |   |   |
| Accumulated      benefit obligations (“ABO”)          |   | $                  | 57.1   |   |   | $ | 48.0 |   |

|                                                                                                           |   | Years Ended December      31, 2008 |     |
|----------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|----------|
|                                                                                                           |   | 2007                                    |     |   | 2008 |   |
|                                                                                                           |   | (In      millions)                      |     |
| Changes      in plan assets and benefit obligations recognized      in other comprehensive income (loss): |   |                                    |     |   |   |   |
| Current      year:                                                                                             |   |                                    |     |   |   |   |
| Net      actuarial gain (loss)                                                                                 |   | $                                       | 12.4     |   |   | $ | (5.6 | ) |
| Amortization      of unrecognized:                                                                             |   |                                    |     |   |   |   |   |   |
|                  Prior service cost           |   |                                    | .3       |   |   |   | .3 |   |
|                  Net transition obligations   |   |                                    | .2       |   |   |   | .1 |   |
|                  Net actuarial losses              |   |                                    | 1.3      |   |   |   | .5 |   |
| Change      in measurement date:                                                                               |   |                                    |     |   |   |   |   |   |
|                 Prior service cost                 |   |                                    | .1       |   |   |   | - |   |
|                 Net actuarial losses                    |   |                                    |  .3 |   |   |   | - |   |
|                                                                                                           |   |                                    |     |   |   |   |   |   |
|     Total                                                                                  |   | $                                       | 14.6     |   |   | $ | (4.7 | ) |

|                                            |   | Years ended December 31, |   |
|-------------------------------------------------|--------|--------------------------|--------|
|                                            |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
|                                            |   | (In      millions)       |   |
|                                            |   |                     |   |   |   |   |   |   |   |
| Net      periodic pension cost:                 |   |                     |   |   |   |   |   |   |   |
| Service      cost benefits                      |   | $                        | 2.3    |   |   | $ | 2.2 |   |   | $ | 1.7 |   |
| Interest      cost on PBO                       |   |                     | 3.2    |   |   |   | 3.6 |   |   |   | 3.8 |   |
| Expected      return on plan assets             |   |                     | (3.1   | ) |   |   | (3.1 | ) |   |   | (3.6 | ) |
| Amortization      of prior service cost         |   |                     | .3     |   |   |   | .3 |   |   |   | .3 |   |
| Amortization      of net transition obligations |   |                     | .1     |   |   |   | .1 |   |   |   | .1 |   |
| Recognized      actuarial losses                |   |                     | 1.5    |   |   |   | 1.3 |   |   |   | .5 |   |
|                                            |   |                     |   |   |   |   |   |   |   |   |   |   |
| Total                                           |   | $                        | 4.3    |   |   | $ | 4.4 |   |   | $ | 2.8 |   |

|                                        |   | December 31, |   |
|---------------------------------------------|--------|--------------|--------|
| Rate                                        |   | 2007         |   |   | 2008 |   |
|                                        |   |         |   |   |   |   |
| Discount      rate                          |   |         | 5.5    | % |   |   | 5.8 | % |
| Increase      in future compensation levels |   |         | 3.0    | % |   |   | 3.0 | % |

----

|                                        |   | Years ended December 31, |   |
|---------------------------------------------|--------|--------------------------|--------|
| Rate                                        |   | 2006                     |   |   | 2007 |   |   | 2008 |   |
|                                        |   |                     |   |   |   |   |   |   |   |
| Discount      rate                          |   |                     | 4.4    | % |   |   | 4.7 | % |   |   | 5.5 | % |
| Increase      in future compensation levels |   |                     | 3.0    | % |   |   | 3.0 | % |   |   | 3.0 | % |
| Long-term      return on plan assets        |   |                     | 5.5    | % |   |   | 6.4 | % |   |   | 5.5 | % |

----

| Years ending December 31, |   | Amount             |   |
|---------------------------|--------|--------------------|--------|
|                      |   | (in      millions) |   |
|                      |   |               |   |
| 2009                      |   | $                  | .8     |   |
| 2010                      |   |               | .7     |   |
| 2011                      |   |               | .6     |   |
| 2012                      |   |               | .6     |   |
| 2013                      |   |               | .4     |   |
|                      |   |               |   |   |
| Total                     |   | $                  | 3.1    |   |

|                            |   | Fair Value Measurements at December 31,      2008 |   |
|---------------------------------|--------|---------------------------------------------------|--------|
|                            |   | Total                                             |   |   | Quoted      Prices in Active Markets (Level      1) |   |   | Significant      Other Observable Inputs (Level      2) |   |   | Significant      Unobservable Inputs (Level      3) |   |
|                            |   | (in      millions)                                |   |
|                            |   |                                              |   |   |   |   |   |   |   |   |   |   |
| Marketable      securities      |   | $                                                 | 3.5    |   |   | $ | 3.5 |   |   | $ | - |   |   | $ | - |   |
|                            |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Currency      forward contracts |   |                                              | (2.6   | ) |   |   | (2.6 | ) |   |   | - |   |   |   | - |   |
|                            |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| ·   | an      aggregate $57 million for an equivalent value of Norwegian kroner at      exchange rates ranging from kroner 6.91 to kroner 7.18.  These      contracts with DnB Nor Bank ASA mature from January 2009 through December      2009 at a rate of $.5 million to $2.5 million per month.  At      December 31, 2008, the actual exchange rate was kroner 7.0 per U.S.      dollar.  |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an      aggregate euro 16.4 million for an equivalent value of Norwegian kroner at      exchange rates ranging from kroner 8.64 to kroner 9.23.  These      contracts with DnB Nor Bank ASA mature from January 2009 through December      2009 at a rate of euro .5 million to euro .7 million per      month.  At December 31, 2008, the actual exchange rate was      kroner 9.7 per euro. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                  |   | December 31,       |   |
|-------------------------------------------------------|--------|--------------------|--------|
|                                                  |   | 2007               |   |   | 2008 |   |
|                                                  |   | Carrying           |   |   | Fair |   |   | Carrying |   |   | Fair |   |
|                                                  |   | Amount             |   |   | Value |   |   | Amount |   |   | Value |   |
|                                                  |   | (In      millions) |   |
|                                                  |   |               |   |   |   |   |   |   |   |   |   |   |
| Cash,      cash equivalents and restricted cash       |   | $                  | 6.5    |   |   | $ | 6.5 |   |   | $ | 2.6 |   |   | $ | 2.6 |   |
|                                                  |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term      debt:                                  |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    Revolving      credit facility      |   | $                  | -      |   |   | $ | - |   |   | $ | 25.3 |   |   | $ | 25.3 |   |
|    Other-primarily      capital leases |   |               | 5.3    |   |   |   | 5.3 |   |   |   | 3.4 |   |   |   | 3.4 |   |