| 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,      2007                                                                                        |
| 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                                                                                    | 9      |
| Item      1B.                                                                                                                                      | Unresolved      Staff Comments                                                                       | 11     |
| Item      2.                                                                                                                                       | Properties                                                                                           | 12     |
| Item      3.                                                                                                                                       | Legal      Proceedings                                                                               | 12     |
| Item      4.                                                                                                                                       | Submission      of Matters to a Vote of Security Holders*                                            | 12     |
|                                                                                                                                               |                                                                                                 |   |
|                                                                                                                                               |                                                                                                 |   |
| Part      II                                                                                                                                       |                                                                                                 |   |
|                                                                                                                                               |                                                                                                 |   |
| Item      5.                                                                                                                                       | Market      for our Common Equity and Related Stockholder Matters                                    | 12     |
| Item      6.                                                                                                                                       | Selected      Financial Data                                                                         | 13     |
| Item      7.                                                                                                                                       | Management’s      Discussion and Analysis of Financial Condition and Results of      Operation | 14     |
| Item      7A.                                                                                                                                      | Quantitative      and Qualitative Disclosures about Market Risk                                      | 29     |
| Item      8.                                                                                                                                       | Financial      Statements and Supplementary Data                                                     | 30     |
| Item      9.                                                                                                                                       | Changes      in and Disagreements with Accountants on Accounting and Financial      Disclosures      | 30     |
| Item      9A.                                                                                                                                      | Controls      and Procedures                                                                         | 31     |
| Item      9B.                                                                                                                                      | Other      Information                                                                               | 32     |
|                                                                                                                                               |                                                                                                 |   |
| Part      III                                                                                                                                      |                                                                                                 |   |
|                                                                                                                                               |                                                                                                 |   |
| Item      10.                                                                                                                                      | Directors,      Executive Officers and Corporate Governance                                          | 32     |
| Item      11.                                                                                                                                      | Executive      Compensation*                                                                         | 32     |
| Item      12.                                                                                                                                      | Security      Ownership of Certain Beneficial Owners and Management*                                 | 32     |
| Item      13.                                                                                                                                      | Certain      Relationships and related transactions*                                                 | 33     |
| Item      14.                                                                                                                                      | Principal      Accounting Fees and Services                                                          | 33     |
|                                                                                                                                               |                                                                                                 |   |
| Part      IV                                                                                                                                       |                                                                                                 |   |
|                                                                                                                                               |                                                                                                 |   |
| Item      15.                                                                                                                                      | Exhibits      and Financial Statement Schedules                                                      | 33     |
|                                                                                                                                               |                                                                                                 |   |
| 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) |
|--------------------|------------------------------------------------------------------------------------|

| ·   | The      possibility of labor disruptions |
|--------------------|-------------------------------------------|

| ·   | 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 of our competitors |
|--------------------|-------------------------------------------------|

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

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

| ·   | 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 |
|--------------------|---------------------------------------------------------|

| ·   | 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      also manufacture and sell iron-based chemicals, which are co-products and      processed co-products of the TiO2      pigment production process.  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      also manufacture and sell titanium oxychloride, which is a side-stream      product 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 electronicdevices. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 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 | 284                                                                                                                            |
|                                      |                                                                                                                           |
| Sulfate      process plants -             |                                                                                                                           |
| raw      ilmenite ore mined internally    | 311                                                                                                                            |

| ·   | 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 and general corporaterequirements; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | limiting      our ability to obtain additional financing to fund future working capital,      capital expenditures, acquisitions and 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. |
|--------------------|--------------------------------------------------------------------------------------------------|

| ITEM      2. | PROPERTIES |
|--------------|------------|

| Location                        | Description                                        |
|---------------------------------|----------------------------------------------------|
| Leverkusen,      Germany        | TiO2      production, Chloride and sulfate process |
| Nordenham,      Germany         | TiO2      production, Sulfate process              |
| Langerbrugge,      Belgium      | TiO2      production, Chloride process             |
| Fredrikstad,      Norway        | TiO2      production, Sulfate process              |
| Hauge      i Dalane, Norway (1) | Ilmenite      mine                                 |

|   | (1)      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,          |   |
|-------------------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                                    |   | 2003                              |   |   | 2004 |   |   | 2005 |   |   | 2006(2) |   |   | 2007 |   |
|                                                                    |   | (In      millions, except ratios) |   |
| STATEMENTS      OF OPERATIONS DATA:                                     |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      sales                                                          |   | $                                 | 715.9  |   |   | $ | 808.0 |   |   | $ | 850.9 |   |   | $ | 914.2 |   |   | $ | 946.1 |   |
| Gross      margin                                                       |   |                              | 199.5  |   |   |   | 197.8 |   |   |   | 238.4 |   |   |   | 223.0 |   |   |   | 196.4 |   |
| Income      from operations                                             |   |                              | 114.8  |   |   |   | 96.9 |   |   |   | 138.2 |   |   |   | 107.4 |   |   |   | 78.7 |   |
| Net      income                                                         |   |                              | 82.1   |   |   |   | 325.6 |   |   |   | 60.3 |   |   |   | 73.7 |   |   |   | (58.8 | ) |
|                                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| BALANCE      SHEET DATA (at year end):                                  |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      assets                                                       |   | $                                 | 750.5  |   |   | $ | 985.2 |   |   | $ | 955.3 |   |   | $ | 1,080.6 |   |   | $ | 1,103.1 |   |
| Long-term      debt including current maturities                        |   |                              | 356.7  |   |   |   | 533.2 |   |   |   | 453.8 |   |   |   | 529.8 |   |   |   | 590.8 |   |
| Stockholder’s      equity                                         |   |                              | 113.1  |   |   |   | 207.7 |   |   |   | 183.3 |   |   |   | 211.5 |   |   |   | 181.4 |   |
|                                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| STATEMENTS      OF CASH FLOW DATA:                                      |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      cash provided (used) by:                                       |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      activities                                               |   | $                                 | 104.8  |   |   | $ | 142.3 |   |   | $ | 92.7 |   |   | $ | 62.5 |   |   | $ | 84.9 |   |
| Investing      activities                                               |   |                              | (31.7  | ) |   |   | (34.2 | ) |   |   | (35.8 | ) |   |   | (47.1 | ) |   |   | (42.5 | ) |
| Financing      activities                                               |   |                              | (54.9  | ) |   |   | (129.9 | ) |   |   | (8.5 | ) |   |   | (31.1 | ) |   |   | (34.0 | ) |
|                                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TiO2 OPERATING      STATISTICS:                                         |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sales      volume*                                                      |   |                              | 310    |   |   |   | 336 |   |   |   | 326 |   |   |   | 353 |   |   |   | 348 |   |
| Production      volume*                                                 |   |                              | 320    |   |   |   | 328 |   |   |   | 335 |   |   |   | 348 |   |   |   | 350 |   |
| Production      rate as a percentage of capacity                        |   | Full                              |   |   | Full |   |   | Full |   |   | Full |   |   |   | 98 | % |
|                                                                    |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER FINANCIAL      DATA:                                              |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio      of earnings to  fixed      charges (unaudited) (1) |   |                              | 3.3    |   |   |   | 2.6 |   |   |   | 3.6 |   |   |   | 2.0 |   |   |   | 2.6 |   |

| *   | 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 15 to our Consolidated Financial      Statements. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

| ·   | foreign      currency exchange rates (particularly the exchange rate for the U.S.      dollar relative to the euro) and the Norweigian Kroner 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 associated with the long-lived asset, 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, as defined, are      present. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Pension      plans.  We maintain various defined benefit pension      plans.  The amounts recognized as defined benefit pension      expenses, and the reported amounts of prepaid 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 $780 million for German      corporate purposes and $215 million for German trade tax purposes at      December 31, 2007).  Prior to the complete utilization of such      carryforwards, 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,    |   |
|-----------------------------------------------|--------|----------------------------|--------|
|                                          |   | 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 related 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 reserves 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 related to the favorable resolution of      certain income tax audit issues in Germany and  Belgium. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

|                                          |   | Year ended December 31,    |        |
|-----------------------------------------------|--------|----------------------------|-------------|
|                                          |   | 2005                       |        |   | 2006 |   |
|                                          |   | (Dollars      in millions) |        |
|                                          |   |                       |        |   |   |   |   |   |   |   |   |   |
| Net      sales                                |   | $                          | 850.9       |   |   |   | 100 | % |   | $ | 914.2 |   |   |   | 100 | % |
| Cost      of sales                            |   |                       |  612.5 |   |   |   | 72 | % |   |   | 691.2 |   |   |   | 76 | % |
| Gross      margin                             |   |                       | 238.4       |   |   |   | 28 | % |   |   | 223.0 |   |   |   | 24 | % |
| Other      operating income and expenses, net |   |                       | 100.2       |   |   |   | 12 | % |   |   | 115.6 |   |   |   | 13 | % |
| Income      from operations                   |   | $                          | 138.2       |   |   |   | 16 | % |   | $ | 107.4 |   |   |   | 11 | % |
|                                          |   |                       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          |   |                       |        |   |   |   |   |   |   |   |   |   |   | Percent |   |
|                                          |   |                       |        |   |   |   |   |   |   |   |   |   |   | Change |   |
| TiO2      operating statistics:               |   |                       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sales      volumes*                           |   |                       | 326         |   |   |   |   |   |   |   | 353 |   |   |   | 8 | % |
| Production      volumes*                      |   |                       | 335         |   |   |   |   |   |   |   | 348 |   |   |   | 4 | % |
|                                          |   |                       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Percent      change in net sales: |   |                       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| TiO2      product pricing                     |   |                       |        |   |   |   |   |   |   |   |   |   |   |   | (1 | )% |
| TiO2      sales volumes                       |   |                       |        |   |   |   |   |   |   |   |   |   |   |   | 8 | % |
| TiO2      product mix                         |   |                       |        |   |   |   |   |   |   |   |   |   |   |   | - |   |
| Changes      in currency exchange rates       |   |                       |        |   |   |   |   |   |   |   |   |   |   |   | - |   |
|                                          |   |                       |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Total                 |   |                       |        |   |   |   |   |   |   |   |   |   |   |   |  7 | % |

| ·   | 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 related to the favorable resolution of      certain income tax audit issues in Germany and  Belgium. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | an      income tax benefit of $7.7 million for the aggregate effect of favorable      developments with respect to income tax audits in Belgium;    and |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      charge of $17.5 million for the unfavorable effect related to the loss of      certain of our German income taxattributes. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------|

|                                    |   | Year      ended December 31,          |   |
|-----------------------------------------|--------|---------------------------------------|--------|
|                                    |   | 2006 vs.      2005               |   |   | 2007 vs.      2006 |   |
|                                    |   | Increase      (decrease), in millions |   |
| Impact      on:                         |   |                                  |   |   |   |   |
|   Net      sales              |   | $                                     | (2     | ) |   | $ | 63 |   |
|   Income      from operations |   |                                  | (12    | ) |   |   | - |   |

| ·   | 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. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------|

| ·   | lower      income from operations in 2006 of $30.9million; |
|--------------------|------------------------------------------------------------|

| ·   | 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; |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | higher      cash paid for income taxes in 2006 of $14.5 million, in part due to the      net payment of $19.2 million in 2006 associated with the settlement of      prior year income tax audits; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | lower      cash paid for interest in 2006 of $9.0 million, primarily as a result of      the May 2006 redemption of our 8.875% Senior Secured Notes (on which paid      interest semi-annually in June and December) and the April 2006 issuance      of our lower interest 6.5% Senior Secured Notes (on which we pay interest      semi-annually in April and October);and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | a      lower amount of net cash used from relative changes in our inventories,      receivables, payables and accruals of $16.7 million in 2006 due primarily      to relative changes in our inventory levels, as discussed      below. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 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. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | repaid      the outstanding balance of euro 10 million ($12.9 million when repaid)      under our three-year euro 80 million secured revolving credit facility      (“European Credit Facility”); and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | entered      into additional capital lease agreements for certain mining equipment for      the equivalent of approximately $4.4million. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | euro      400 million principal amount of our 6.5% Senior Secured Notes ($585.5      million at December 31, 2007) due in 2013;and |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------|

| ·   | approximately      $5.3 million of other indebtedness. |
|--------------------|--------------------------------------------------------|

|                           |   | Payment due date |   |
|--------------------------------|--------|------------------|--------|
|  Contractual commitment   |   | 2008             |   |   |   | 2009/2010 |   |   |   | 2011/2012 |   |   | 2013      and after |   |   | Total |   |
|                           |   |             |   |
| Indebtedness      (1)          |   | $                | .8     |   |   | $ | 2.1 |   |   | $ | 2.3 |   |   | $ | 585.6 |   |   | $ | 590.8 |   |
|                           |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      on indebtedness  |   |             | 38.5   |   |   |   | 77.0 |   |   |   | 76.7 |   |   |   | 12.8 |   |   |   | 205.0 |   |
|                           |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      leases          |   |             | 4.2    |   |   |   | 5.1 |   |   |   | 2.6 |   |   |   | 21.0 |   |   |   | 32.9 |   |
|                           |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed      asset acquisitions  |   |             | 29.6   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 29.6 |   |
|                           |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Estimated      tax obligations |   |             | 9.3    |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 9.3 |   |
|                           |   |             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                           |   | $                | 82.4   |   |   | $ | 84.2 |   |   | $ | 81.6 |   |   | $ | 619.4 |   |   | $ | 867.6 |   |

|   | (1)      Primarily relates to our Senior Secured Notes.  See Item 7A,      “Quantitative and Qualitative Disclosures about Market Risk” and Note 6 to      our Consolidated FinancialStatements. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|    |   | Discount      rates used for:                                 |   |
|---------|--------|---------------------------------------------------------------|--------|
|    |   | Obligations      atDecember      31, 2005 and expense in 2006 |   |   | Obligations      atDecember      31, 2006 and expense in 2007 |   |   | Obligations      atDecember      31, 2007 and expense in 2008 |   |
|    |   |                                                          |   |   |   |   |   |   |   |
| Germany |   |                                                          | 4.0    | % |   |   | 4.5 | % |   |   | 5.5 | % |
| Norway  |   |                                                          | 4.5    | % |   |   | 4.8 | % |   |   | 5.5 | % |

| ·   | 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, 65% 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      8.5%, 5.0% and 4.5%,respectively. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                 |   | December 31, 2006 |   |   | December 31, 2007 |   |
|------------------------------------------------------|--------|-------------------|--------|--------|-------------------|--------|
|                                                 |   | Germany           |   |   | Norway            |   |   | Germany |   |   | Norway |   |
|                                                 |   |              |   |   |              |   |   |   |   |   |   |   |
| Equity      securities and limited partnerships |   |              | 23     | %      |              |   | 13 | % |   |   | 28 | % |   |   | 18 | % |
| Fixed      income securities                         |   |              | 48     |   |              |   | 64 |   |   |   | 49 |   |   |   | 68 |   |
| Real      estate                                     |   |              | 14     |   |              |   | - |   |   |   | 12 |   |   |   | - |   |
| Cash,      cash equivalents and other                |   |              | 15     |   |              |   | 23 |   |   |   | 11 |   |   |   | 14 |   |
|                                                 |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|     Total                        |   |              | 100    | %      |              |   | 100 | % |   |   | 100 | % |   |   | 100 | % |

|                |   | 2005   |   |   | 2006   |   |   | 2007   |   |
|---------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                |   |   |   |   |   |   |   |   |   |
|   Germany |   |   | 5.5    | %      |   |   | 5.3    | %      |   |   | 5.8 | % |
|   Norway  |   |   | 5.5    | %      |   |   | 6.5    | %      |   |   | 5.5 | % |

|                                                                          |   | Amount              |   |   |            |   |   |
|-------------------------------------------------------------------------------|--------|---------------------|--------|--------|-----------------|--------|--------|
|  Indebtedness                                                            |   | Carrying value |   |   | Fair value |   |   | Interest rate |   | Maturity  date   |
|                                                                          |   | (In      millions)  |   |   |            |   |   |
|                                                                          |   |                |   |   |            |   |   |   |   |   |
| Fixed-rate      indebtedness –euro-denominatedSenior      Secured Notes |   | $                   | 585.5  |   |            | $      | 507.7  |   |   |   | 6.5% |   | 2013 |

| 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,        |   |
|-----------------------|--------|---------------------|--------|
|                  |   | 2006                |   |   | 2007 |   |
|                  |   | (In      thousands) |   |
|                  |   |                |   |   |   |   |
| Audit(1)              |   | $                   | 1,699  |   |   | $ | 1,386 |   |
| Audit      related(2) |   |                | 18     |   |   |   | 10 |   |
| Tax(3)                |   |                | 5      |   |   |   | 19 |   |
|                  |   |                |   |   |   |   |   |   |
| Total                 |   | $                   | 1,722  |   |   | $ | 1,415 |   |

| 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 10.8 to the      Registration Statement on Form S-1 of Kronos Worldwide, Inc. (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 | 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. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.5 | 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. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.6 | Intercorporate      Services Agreement, dated as of January 1, 2005, among Kronos Worldwide,      Inc., Kronos (US), Inc., Kronos International, Inc. and Kronos Canada,      Inc. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.7 | 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). |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.8 | 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. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.9 | 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). |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.10 | 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). |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.11* | 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. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.12* | 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). |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.13* | 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). |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.14* | 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. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.15 | 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. |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.16 | 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. |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.17 | 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. |
|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.18 | Promissory      note in the amount of euro 65,000,000, dated as of October 12, 2004      between the Registrant and Kronos Worldwide,  Inc. |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------|

| 10.19 | 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 |
|---|-----------------------------------------------------------|

|        | Kronos      International, Inc.                                                      |
|--------|--------------------------------------------------------------------------------------|
|   |                  (Registrant) |

|   |  By:/s/ Harold C.      Simmons |
|--------|-------------------------------------|
|   |  Harold      C. Simmons        |
|   |  March      12, 2008           |

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

| s/ Andrew      Kasprowiak                      |   | /s/ Gregory M. Swalwell                                                                                              |
|--------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------|
| Andrew      Kasprowiak, March 12, 2008                                                                                         |   | Gregory      M. Swalwell, March 12, 2008                                                                             |
| (Director)                                                                                                                     |   | (Vice      President, Finance; Principal Financial Officer)                                                          |
|                                                                                                                           |   |                                                                                                                 |
|                                                                                                                           |   |                                                                                                                 |
| s/ Dr. Ulfert      Fiand                  |   | /s/ Volker      Roth                 |
| Dr.      Ulfert Fiand, March 12, 2008                                                                                          |   | Volker      Roth, March 12, 2008                                                                                     |
| (Director)                                                                                                                     |   | (Director)                                                                                                           |
|                                                                                                                           |   |                                                                                                                 |
|                                                                                                                           |   |                                                                                                                 |
|                                                                                                                           |   | /s/ Tim C.      Hafer                                                                                 |
|                                                                                                                           |   | Tim      C. Hafer, March 12, 2008                                                                                    |
|                                                                                                                           |   | (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, 2006 and 2007                                                                                                                                                                                     | F-3    |
|                                                                                                                                                                                                                |   |
| Consolidated      Statements of Operations -                                                                                                                                                                        |   |
| Year      ended December 31, 2005, 2006 and 2007                                                                                                                                                                    | F-5    |
|                                                                                                                                                                                                                |   |
| Consolidated      Statements of Comprehensive Income (Loss) -                                                                                                                                                       |   |
| Year      ended December 31, 2005, 2006 and 2007                                                                                                                                                                    | F-6    |
|                                                                                                                                                                                                                |   |
| Consolidated      Statements of Stockholder’s Equity -                                                                                                                                                        |   |
| Year      ended December 31, 2005, 2006 and 2007                                                                                                                                                                    | F-7    |
|                                                                                                                                                                                                                |   |
| Consolidated      Statements of Cash Flows -                                                                                                                                                                        |   |
| Year      ended December 31, 2005, 2006 and 2007                                                                                                                                                                    | 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, |    |
|--------------------------------------------------------------------------------------------|--------|--------------|---------|
|                                                                                       |   | 2006         |    |   | 2007 |   |
|                                                                                       |   |         |    |   |   |   |
|                                                                                       |   |         |    |   |   |   |
| Current      assets:                                                                       |   |         |    |   |   |   |
| Cash      and cash equivalents                                                             |   | $            | 52.8    |   |   | $ | 67.0 |   |
| Restricted      cash                                                                       |   |         | 1.5     |   |   |   | 1.8 |   |
| Accounts      and other receivables                                                        |   |         | 153.0   |   |   |   | 168.2 |   |
| Receivable      from affiliates                                                            |   |         | 1.6     |   |   |   | 1.5 |   |
| Inventories                                                                                |   |         | 195.1   |   |   |   | 228.9 |   |
| Prepaid      expenses                                                                      |   |         | 3.9     |   |   |   | 3.6 |   |
|                                                                                       |   |         |    |   |   |   |   |   |
| Total      current assets                                                                  |   |         | 407.9   |   |   |   | 471.0 |   |
|                                                                                       |   |         |    |   |   |   |   |   |
| Other      assets:                                                                         |   |         |    |   |   |   |   |   |
| Deferred      financing costs, net                                                         |   |         | 8.8     |   |   |   | 8.1 |   |
| Restricted      marketable debt securities                                                 |   |         | 2.8     |   |   |   | 3.2 |   |
| Deferred      income taxes                                                                 |   |         | 264.4   |   |   |   | 168.7 |   |
| Other                                                                                      |   |         | 1.1     |   |   |   | .8 |   |
|                                                                                       |   |         |    |   |   |   |   |   |
| Total      other assets                                                                    |   |         | 277.1   |   |   |   | 180.8 |   |
|                                                                                       |   |         |    |   |   |   |   |   |
| Property      and equipment:                                                               |   |         |    |   |   |   |   |   |
| Land                                                                                       |   |         | 34.3    |   |   |   | 38.1 |   |
| Buildings                                                                                  |   |         | 156.8   |   |   |   | 177.6 |   |
| Equipment                                                                                  |   |         | 740.7   |   |   |   | 839.5 |   |
| Mining      properties                                                                     |   |         | 82.1    |   |   |   | 89.7 |   |
| Construction      in progress                                                              |   |         | 15.6    |   |   |   | 40.2 |   |
|                                                                                       |   |         |    |   |   |   |   |   |
| Total      property and equipment                                                          |   |         | 1,029.5 |   |   |   | 1,185.1 |   |
|                                                                                       |   |         |    |   |   |   |   |   |
| Less      accumulated depreciation and amortization                                        |   |         | 633.9   |   |   |   | 733.8 |   |
|                                                                                       |   |         |    |   |   |   |   |   |
| Net      property and equipment                                                            |   |         | 395.6   |   |   |   | 451.3 |   |
|                                                                                       |   |         |    |   |   |   |   |   |
| Total      assets                                                                          |   | $            | 1,080.6 |   |   | $ | 1,103.1 |   |
|                                                                                       |   |         |    |   |   |   |   |   |

----

|    LIABILITIES AND STOCKHOLDER’S      EQUITY                      |   | December 31, |     |
|----------------------------------------------------------------------------------------|--------|--------------|----------|
|                                                                                   |   | 2006         |     |   | 2007 |   |
|                                                                                   |   |         |     |   |   |   |
| Current      liabilities:                                                              |   |         |     |   |   |   |
| Current      maturities of long-term debt                                              |   | $            | .9       |   |   | $ | .8 |   |
| Accounts      payable and accrued liabilities                                          |   |         | 115.3    |   |   |   | 138.2 |   |
| Payable      to affiliates                                                             |   |         | 10.2     |   |   |   | 5.6 |   |
| Income      taxes                                                                      |   |         | 10.1     |   |   |   | 9.3 |   |
| Deferred      income taxes                                                             |   |         | 1.8      |   |   |   | 3.3 |   |
|                                                                                   |   |         |     |   |   |   |   |   |
| Total      current liabilities                                                         |   |         | 138.3    |   |   |   | 157.2 |   |
|                                                                                   |   |         |     |   |   |   |   |   |
| Noncurrent      liabilities:                                                           |   |         |     |   |   |   |   |   |
| Long-term      debt                                                                    |   |         | 528.9    |   |   |   | 590.0 |   |
| Deferred      income taxes                                                             |   |         | 14.4     |   |   |   | 16.4 |   |
| Accrued      pension cost                                                              |   |         | 172.8    |   |   |   | 128.0 |   |
| Other                                                                                  |   |         | 14.7     |   |   |   | 30.1 |   |
|                                                                                   |   |         |     |   |   |   |   |   |
|       Total      noncurrent liabilities                  |   |         | 730.8    |   |   |   | 764.5 |   |
|                                                                                   |   |         |     |   |   |   |   |   |
| 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  |   |   |   | 1,944.2 |   |
| Retained      deficit                                                                  |   |         | (1,314.6 | ) |   |   | (1,411.5 | ) |
| Notes      receivable from affiliate                                                   |   |         | (209.5   | ) |   |   | (209.5 | ) |
| Accumulated      other comprehensive loss:                                             |   |         |     |   |   |   |   |   |
| Currency      translation                                                              |   |         | (99.3    | ) |   |   | (80.3 | ) |
| Defined      benefit pension plans                                                     |   |         | (109.6   | ) |   |   | (61.8 | ) |
|                                                                                   |   |         |     |   |   |   |   |   |
| Total      stockholder’s equity                                                  |   |         | 211.5    |   |   |   | 181.4 |   |
|                                                                                   |   |         |     |   |   |   |   |   |
| Total      liabilities and stockholder’s equity                                  |   | $            | 1,080.6  |   |   | $ | 1,103.1 |   |
|                                                                                   |   |         |     |   |   |   |   |   |

----

|                                                                       |   | Years ended December 31, |   |
|----------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                       |   | 2005                     |   |   | 2006 |   |   | 2007 |   |
|                                                                       |   |                     |   |   |   |   |   |   |   |
| Net      sales                                                             |   | $                        | 850.9  |   |   | $ | 914.2 |   |   | $ | 946.1 |   |
| Cost      of sales                                                         |   |                     | 612.5  |   |   |   | 691.2 |   |   |   | 749.7 |   |
|                                                                       |   |                     |   |   |   |   |   |   |   |   |   |   |
| Gross      margin                                                          |   |                     | 238.4  |   |   |   | 223.0 |   |   |   | 196.4 |   |
|                                                                       |   |                     |   |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative expense                           |   |                     | 110.2  |   |   |   | 116.8 |   |   |   | 123.3 |   |
| Other      operating income (expense):                                     |   |                     |   |   |   |   |   |   |   |   |   |   |
| Currency      transaction gains (losses), net                              |   |                     | 4.1    |   |   |   | (4.5 | ) |   |   | (3.9 | ) |
| Disposition      of property and equipment                                 |   |                     | (1.4   | ) |   |   | (1.8 | ) |   |   | (.6 | ) |
| Royalty      income                                                        |   |                     | 6.8    |   |   |   | 7.2 |   |   |   | 7.2 |   |
| Other      income                                                          |   |                     | .6     |   |   |   | .4 |   |   |   | 3.0 |   |
| Other      expense                                                         |   |                     | (.1    | ) |   |   | (.1 | ) |   |   | (.1 | ) |
|                                                                       |   |                     |   |   |   |   |   |   |   |   |   |   |
| Income      from operations                                                |   |                     | 138.2  |   |   |   | 107.4 |   |   |   | 78.7 |   |
|                                                                       |   |                     |   |   |   |   |   |   |   |   |   |   |
| Other      income (expense):                                               |   |                     |   |   |   |   |   |   |   |   |   |   |
| Interest      income from affiliates                                       |   |                     | 18.9   |   |   |   | 18.8 |   |   |   | 20.6 |   |
| Trade      interest income                                                 |   |                     | 1.1    |   |   |   | 2.2 |   |   |   | 2.1 |   |
| Other      interest income                                                 |   |                     | -      |   |   |   | .8 |   |   |   | - |   |
| Securities      transaction gain                                           |   |                     | 5.4    |   |   |   | - |   |   |   | - |   |
| Loss      on prepayment of debt                                            |   |                     | -      |   |   |   | (22.3 | ) |   |   | - |   |
| Interest      expense                                                      |   |                     | (43.9  | ) |   |   | (40.9 | ) |   |   | (37.8 | ) |
|                                                                       |   |                     |   |   |   |   |   |   |   |   |   |   |
|              Income before income taxes |   |                     | 119.7  |   |   |   | 66.0 |   |   |   | 63.6 |   |
|                                                                       |   |                     |   |   |   |   |   |   |   |   |   |   |
| Provision      (benefit) for income taxes                                  |   |                     | 59.4   |   |   |   | (7.7 | ) |   |   | 122.4 |   |
|                                                                       |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                                                     |   | $                        | 60.3   |   |   | $ | 73.7 |   |   | $ | (58.8 | ) |
|                                                                       |   |                     |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                          |   | Years ended December    31, |   |
|-----------------------------------------------------------------------------------------------|--------|----------------------------------|--------|
|                                                                                          |   | 2005                             |   |   | 2006 |   |   | 2007 |   |
|                                                                                          |   |                             |   |   |   |   |   |   |   |
| Net      income (loss)                                                                        |   | $                                | 60.3   |   |   | $ | 73.7 |   |   | $ | (58.8 | ) |
|                                                                                          |   |                             |   |   |   |   |   |   |   |   |   |   |
| Other      comprehensive (loss) income, net of tax:                                           |   |                             |   |   |   |   |   |   |   |   |   |   |
|                                                                                          |   |                             |   |   |   |   |   |   |   |   |   |   |
| Currency      translation                                                                     |   |                             | (30.5  | ) |   |   | 30.5 |   |   |   | 19.0 |   |
|                                                                                          |   |                             |   |   |   |   |   |   |   |   |   |   |
| Pension      plans:                                                                           |   |                             |   |   |   |   |   |   |   |   |   |   |
| Amortization      of prior service cost and net losses included in periodic pension      cost |   |                             | -      |   |   |   | - |   |   |   | 5.1 |   |
| Net      actuarial gain arising during year                                                   |   |                             | -      |   |   |   | - |   |   |   | 41.3 |   |
| Minimum      pension liability change                                                         |   |                             | (54.1  | ) |   |   | 8.2 |   |   |   | - |   |
|                                                                                          |   |                             |   |   |   |   |   |   |   |   |   |   |
|                                                                                          |   |                             | (54.1  | ) |   |   | 8.2 |   |   |   | 46.4 |   |
|                                                                                          |   |                             |   |   |   |   |   |   |   |   |   |   |
| Total      other comprehensive income (loss)                                                  |   |                             | (84.6  | ) |   |   | 38.7 |   |   |   | 65.4 |   |
|                                                                                          |   |                             |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      income (loss)                                                              |   | $                                | (24.3  | ) |   | $ | 112.4 |   |   | $ | 6.6 |   |
|                                                                                          |   |                             |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                              |   |   |   |   |       |   |    |      |   |   |       |   |   | Accumulated      other |   |   |    |   |
|---------------------------------------------------------------------------------------------------|--------|--------|--------|--------|------------|--------|---------|-----------|--------|--------|------------|--------|--------|------------------------|--------|--------|---------|--------|
|                                                                                              |   |   |   |   |       |   |    |      |   |   | Notes      |   |   | comprehensive          |   |   | Total   |   |
|                                                                                              |   |   |   |   | Additional |   |    |      |   |   | receivable |   |   | income (loss)          |   |   | common  |   |
|                                                                                              |   | Common |   |   | paid-in    |   |    | Retained  |   |   | from       |   |   | Currency               |   |   | Pension |   |   | stockholder’s |   |
|                                                                                              |   | stock  |   |   | capital    |   |    | (deficit) |   |   | affiliates |   |   | translation            |   |   | plans   |   |   | equity |   |
|                                                                                              |   |   |   |   |       |   |    |      |   |   |       |   |   |                   |   |   |    |   |   |   |   |
| Balance      at December 31, 2004                                                                 |   | $      | .3     |   |       | $      | 1,944.2 |      |   | $      | (1,398.4   | )      |   | $                      | (209.5 | )      |    | $      | (99.3 | ) |   | $ | (29.6 | ) |   | $ | 207.7 |   |
|                                                                                              |   |   |   |   |       |   |    |      |   |   |       |   |   |                   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                   |   |   | -      |   |       |   | -       |      |   |   | 60.3       |   |   |                   | -      |   |    |   | - |   |   |   | - |   |   |   | 60.3 |   |
| Other      comprehensive loss,    net of tax                                       |   |   | -      |   |       |   | -       |      |   |   | -          |   |   |                   | -      |   |    |   | (30.5 | ) |   |   | (54.1 | ) |   |   | (84.6 | ) |
|                                                                                              |   |   |   |   |       |   |    |      |   |   |       |   |   |                   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |
| 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 |   |

----

|                                                                          |   | Years ended December 31, |   |
|-------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                          |   | 2005                     |   |   | 2006 |   |   | 2007 |   |
| Cash      flows from operating activities:                                    |   |                     |   |   |   |   |   |   |   |
| Net      income (loss)                                                        |   | $                        | 60.3   |   |   | $ | 73.7 |   |   | $ | (58.8 | ) |
| Depreciation      and amortization                                            |   |                     | 36.5   |   |   |   | 36.7 |   |   |   | 41.0 |   |
| Loss      on prepayment of debt                                               |   |                     | -      |   |   |   | 22.3 |   |   |   | - |   |
| Call      premium paid                                                        |   |                     | -      |   |   |   | (20.9 | ) |   |   | - |   |
| Deferred      income taxes                                                    |   |                     | 30.9   |   |   |   | (27.9 | ) |   |   | 107.9 |   |
| Defined      benefit pension plan expense greater (less) than cash    funding |   |                     | (2.3   | ) |   |   | 3.2 |   |   |   | 6.9 |   |
| Other,      net                                                               |   |                     | (3.3   | ) |   |   | 2.7 |   |   |   | 3.8 |   |
| Change      in assets and liabilities:                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
| Accounts      and other receivables                                           |   |                     | (9.6   | ) |   |   | (14.3 | ) |   |   | 5.4 |   |
| Inventories                                                                   |   |                     | (38.9  | ) |   |   | 11.4 |   |   |   | (11.1 | ) |
| Prepaid      expenses                                                         |   |                     | (.2    | ) |   |   | (1.1 | ) |   |   | .8 |   |
| Accounts      payable and accrued liabilities                                 |   |                     | 10.1   |   |   |   | (.1 | ) |   |   | (.4 | ) |
| Income      taxes                                                             |   |                     | 7.9    |   |   |   | (15.7 | ) |   |   | (3.6 | ) |
| Accounts      with affiliates                                                 |   |                     | 4.6    |   |   |   | (5.8 | ) |   |   | (4.3 | ) |
| Other      noncurrent assets                                                  |   |                     | (.7    | ) |   |   | .2 |   |   |   | .3 |   |
| Other      noncurrent liabilities                                             |   |                     | (2.6   | ) |   |   | (1.9 | ) |   |   | (3.0 | ) |
|                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      cash provided by operating activities                                |   |                     | 92.7   |   |   |   | 62.5 |   |   |   | 84.9 |   |
|                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash      flows from investing activities:                                    |   |                     |   |   |   |   |   |   |   |   |   |   |
| Capital      expenditures                                                     |   |                     | (39.5  | ) |   |   | (47.1 | ) |   |   | (42.4 | ) |
| Change      in restricted cash equivalents                                    |   |                     | .1     |   |   |   | - |   |   |   | (.1 | ) |
| Proceeds      from disposal of interest in Norwegian smelting operation       |   |                     | 3.6    |   |   |   | - |   |   |   | - |   |
|                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      cash used by investing activities                                    |   |                     | (35.8  | ) |   |   | (47.1 | ) |   |   | (42.5 | ) |

----

|                                                                                                             |   | Years ended December 31, |   |
|------------------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                                             |   | 2005                     |   |   | 2006 |   |   | 2007 |   |
| Cash      flows from financing activities:                                                                       |   |                     |   |   |   |   |   |   |   |
| Indebtedness:                                                                                                    |   |                     |   |   |   |   |   |   |   |
| Borrowings                                                                                                       |   | $                        | 4.6    |   |   | $ | 498.6 |   |   | $ | .6 |   |
| Principal      payments                                                                                          |   |                     | (13.1  | ) |   |   | (470.6 | ) |   |   | (.4 | ) |
| Deferred      financing fees                                                                                     |   |                     | -      |   |   |   | (8.9 | ) |   |   | - |   |
| Dividends      paid                                                                                              |   |                     | -      |   |   |   | (50.2 | ) |   |   | (34.2 | ) |
|                                                                                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      cash used by financing activities                                                                       |   |                     | (8.5   | ) |   |   | (31.1 | ) |   |   | (34.0 | ) |
|                                                                                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents - net change from:                                                                |   |                     |   |   |   |   |   |   |   |   |   |   |
| Operating,      investing and financing activities                                                               |   |                     | 48.4   |   |   |   | (15.7 | ) |   |   | 8.4 |   |
| Currency      translation                                                                                        |   |                     | (2.6   | ) |   |   | 5.2 |   |   |   | 5.8 |   |
|                                                                                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
|                                                                                                             |   |                     | 45.8   |   |   |   | (10.5 | ) |   |   | 14.2 |   |
|                                                                                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Balance      at beginning of year                                                                                |   |                     | 17.5   |   |   |   | 63.3 |   |   |   | 52.8 |   |
|                                                                                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Balance      at end of year                                                                                      |   | $                        | 63.3   |   |   | $ | 52.8 |   |   | $ | 67.0 |   |
|                                                                                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Supplemental      disclosures –Cash      paid for:                                                         |   |                     |   |   |   |   |   |   |   |   |   |   |
| Interest                                                                                                         |   | $                        | 40.9   |   |   | $ | 32.0 |   |   | $ | 36.7 |   |
| Income      taxes                                                                                                |   |                     | 20.0   |   |   |   | 34.5 |   |   |   | 18.9 |   |
| Accrual      for capital expenditures                                                                            |   |                     | -      |   |   |   | - |   |   |   | 8.6 |   |
|                                                                                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Inventories      received as partial consideration for disposal of interest in Norwegian      smelting operation |   | $                        | 1.9    |   |   | $ | - |   |   | $ | - |   |

----

|                                                            |   | Years ended December    31,  |   |
|-----------------------------------------------------------------|--------|-----------------------------------|--------|
|                                                            |   | 2005                              |   |   | 2006 |   |   | 2007 |   |
|                                                            |   | (In      millions)                |   |
|        Geographic      areas |   |                              |   |   |   |   |   |   |   |
| Net      sales – point of origin:                         |   |                              |   |   |   |   |   |   |   |
| Germany                                                         |   | $                                 | 613.1  |   |   | $ | 672.0 |   |   | $ | 700.6 |   |
| Belgium                                                         |   |                              | 187.0  |   |   |   | 192.8 |   |   |   | 209.8 |   |
| Norway                                                          |   |                              | 160.5  |   |   |   | 173.5 |   |   |   | 184.3 |   |
| Eliminations                                                    |   |                              | (109.7 | ) |   |   | (124.1 | ) |   |   | (148.6 | ) |
|                                                            |   |                              |   |   |   |   |   |   |   |   |   |   |
| Total                                                           |   | $                                 | 850.9  |   |   | $ | 914.2 |   |   | $ | 946.1 |   |

|                                         |   | Years ended December 31, |   |
|----------------------------------------------|--------|--------------------------|--------|
|                                         |   | 2005                     |   |   | 2006 |   |   | 2007 |   |
|                                         |   | (In      millions)       |   |
| Net      sales – point of destination: |   |                     |   |   |   |   |   |   |   |
|                                         |   |                     |   |   |   |   |   |   |   |
| Europe                                       |   | $                        | 689.5  |   |   | $ | 728.6 |   |   | $ | 807.4 |   |
| North      America                           |   |                     | 52.0   |   |   |   | 54.4 |   |   |   | 20.9 |   |
| Other                                        |   |                     | 109.4  |   |   |   | 131.2 |   |   |   | 117.8 |   |
|                                         |   |                     |   |   |   |   |   |   |   |   |   |   |
| Total                                        |   | $                        | 850.9  |   |   | $ | 914.2 |   |   | $ | 946.1 |   |

|                                                   |   | December 31,       |   |
|--------------------------------------------------------|--------|--------------------|--------|
|                                                   |   | 2006               |   |   | 2007 |   |
|                                                   |   | (In      millions) |   |
|                                                   |   |               |   |   |   |   |
| Identifiable      assets - net property and equipment: |   |               |   |   |   |   |
|                                                   |   |               |   |   |   |   |
| Germany                                                |   | $                  | 262.5  |   |   | $ | 291.0 |   |
| Belgium                                                |   |               | 64.0   |   |   |   | 70.5 |   |
| Norway                                                 |   |               | 68.8   |   |   |   | 89.0 |   |
| Other                                                  |   |               | .3     |   |   |   | .8 |   |
|                                                   |   |               |   |   |   |   |   |   |
| Total                                                  |   | $                  | 395.6  |   |   | $ | 451.3 |   |

|                                       |   | December 31,       |   |
|--------------------------------------------|--------|--------------------|--------|
|                                       |   | 2006               |   |   | 2007 |   |
|                                       |   | (In      millions) |   |
|                                       |   |               |   |   |   |   |
| Trade      receivables                     |   | $                  | 137.3  |   |   | $ | 144.0 |   |
| Recoverable      VAT and other receivables |   |               | 15.7   |   |   |   | 23.5 |   |
| Refundable      income taxes               |   |               | 1.4    |   |   |   | 2.4 |   |
| Allowance      for doubtful accounts       |   |               | (1.4   | ) |   |   | (1.7 | ) |
|                                       |   |               |   |   |   |   |   |   |
| Total                                      |   | $                  | 153.0  |   |   | $ | 168.2 |   |

|                   |   | December 31,       |   |
|------------------------|--------|--------------------|--------|
|                   |   | 2006               |   |   | 2007 |   |
|                   |   | (In      millions) |   |
|                   |   |               |   |   |   |   |
| Raw      materials     |   | $                  | 37.2   |   |   | $ | 51.4 |   |
| Work      in process   |   |               | 18.6   |   |   |   | 16.2 |   |
| Finished      products |   |               | 100.7  |   |   |   | 116.3 |   |
| Supplies               |   |               | 38.6   |   |   |   | 45.0 |   |
|                   |   |               |   |   |   |   |   |   |
| Total                  |   | $                  | 195.1  |   |   | $ | 228.9 |   |

|                                     |   | December 31,       |   |
|------------------------------------------|--------|--------------------|--------|
|                                     |   | 2006               |   |   | 2007 |   |
|                                     |   | (In      millions) |   |
|                                     |   |               |   |   |   |   |
| Accounts      payable                    |   | $                  | 65.9   |   |   | $ | 77.8 |   |
| Employee      benefits                   |   |               | 17.1   |   |   |   | 17.3 |   |
| Accrued      sales discounts and rebates |   |               | 5.8    |   |   |   | 12.6 |   |
| Accrued      interest                    |   |               | 7.3    |   |   |   | 8.1 |   |
| Other                                    |   |               | 19.2   |   |   |   | 22.4 |   |
|                                     |   |               |   |   |   |   |   |   |
| Total                                    |   | $                  | 115.3  |   |   | $ | 138.2 |   |

|                           |   | December 31,       |   |
|--------------------------------|--------|--------------------|--------|
|                           |   | 2006               |   |   | 2007 |   |
|                           |   | (In      millions) |   |
|                           |   |               |   |   |   |   |
| Long-term      debt:           |   |               |   |   |   |   |
| 6.5%      Senior Secured Notes |   | $                  | 525.0  |   |   | $ | 585.5 |   |
| Other                          |   |               | 4.8    |   |   |   | 5.3 |   |
|                           |   |               |   |   |   |   |   |   |
| Total      debt                |   |               | 529.8  |   |   |   | 590.8 |   |
| Less      current maturities   |   |               | .9     |   |   |   | .8 |   |
|                           |   |               |   |   |   |   |   |   |
| Total      long-term debt      |   | $                  | 528.9  |   |   | $ | 590.0 |   |

| Years ending December 31, |   | _____Amount____    |   |
|---------------------------|--------|--------------------|--------|
|                      |   | (In      millions) |   |
|                      |   |               |   |
| 2008                      |   | $                  | .8     |   |
| 2009                      |   |               | 1.0    |   |
| 2010                      |   |               | 1.1    |   |
| 2011                      |   |               | 1.1    |   |
| 2012                      |   |               | 1.2    |   |
| 2013      and thereafter  |   |               | 585.6  |   |
|                      |   |               |   |   |
| Total                     |   | $                  | 590.8  |   |

|                                                                                            |   | Years ended December 31, |   |
|-------------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                            |   | 2005                     |   |   | 2006 |   |   | 2007 |   |
|                                                                                            |   | (In      millions)       |   |
| Pre-tax      income:                                                                            |   |                     |   |   |   |   |   |   |   |
| Germany                                                                                         |   | $                        | 65.1   |   |   | $ | 18.5 |   |   | $ | 31.7 |   |
| Other      non-U.S.                                                                             |   |                     | 54.6   |   |   |   |  47.5 |   |   |   |  31.9 |   |
|                                                                                            |   |                     |   |   |   |   |   |   |   |   |   |   |
| Total                                                                                           |   | $                        | 119.7  |   |   | $ | 66.0 |   |   | $ | 63.6 |   |
|                                                                                            |   |                     |   |   |   |   |   |   |   |   |   |   |
| Expected      tax expense (benefit), at U.S. federal statutory income tax rate of      35%      |   | $                        | 41.9   |   |   | $ | 23.1 |   |   | $ | 22.2 |   |
| Non-U.S.      tax rates                                                                         |   |                     | .5     |   |   |   | (1.5 | ) |   |   | (.4 | ) |
| Incremental      tax and rate differences on equity in earnings of non-tax group      companies |   |                     | -      |   |   |   | .5 |   |   |   | .5 |   |
| Adjustment      of German tax attribute                                                         |   |                     | 17.5   |   |   |   | (21.7 | ) |   |   | 8.7 |   |
| Nondeductible      expenses                                                                     |   |                     | 4.6    |   |   |   | 4.2 |   |   |   | 2.8 |   |
| Tax      contingency reserve adjustment, net                                                    |   |                     | (7.7   | ) |   |   | (10.7 | ) |   |   | (.7 | ) |
| Assessment      (refund) of prior year income taxes                                             |   |                     | 2.1    |   |   |   | (1.4 | ) |   |   | (.9 | ) |
| German      tax rate change                                                                     |   |                     | -      |   |   |   | - |   |   |   | 90.8 |   |
| Other,      net                                                                                 |   |                     | .5     |   |   |   |  (.2 | ) |   |   |  (.6 | ) |
|                                                                                            |   |                     |   |   |   |   |   |   |   |   |   |   |
| Provision      (benefit) for income taxes                                                       |   | $                        | 59.4   |   |   | $ | (7.7 | ) |   | $ | 122.4 |   |
|                                                                                            |   |                     |   |   |   |   |   |   |   |   |   |   |
| Components      of income tax expense (benefit):                                                |   |                     |   |   |   |   |   |   |   |   |   |   |
| Currently      payable:                                                                         |   |                     |   |   |   |   |   |   |   |   |   |   |
| Germany                                                                                         |   | $                        | 10.9   |   |   | $ | 5.0 |   |   | $ | 1.4 |   |
| Other      non – U.S.                                                                     |   |                     | 17.6   |   |   |   |  15.2 |   |   |   |  12.8 |   |
|                                                                                            |   |                     |   |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |                     | 28.5   |   |   |   |  20.2 |   |   |   |  14.2 |   |
| Deferred      income taxes (benefit):                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
| Germany                                                                                         |   |                     | 31.4   |   |   |   | (23.5 | ) |   |   | 111.6 |   |
| Other      non - U.S.                                                                           |   |                     | (.5    | ) |   |   |  (4.4 | ) |   |   | (3.4 | ) |
|                                                                                            |   |                     |   |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |                     | 30.9   |   |   |   |  (27.9 | ) |   |   |  108.2 |   |
|                                                                                            |   |                     |   |   |   |   |   |   |   |   |   |   |
| Provision      (benefit) for income taxes                                                       |   | $                        | 59.4   |   |   | $ | (7.7 | ) |   | $ | 122.4 |   |

|                                                                  |   | Years ended December 31, |   |
|-----------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                  |   | 2005                     |   |   | 2006 |   |   | 2007 |   |
|                                                                  |   | (In      millions)       |   |
| Comprehensive      provision for income taxes allocable to (benefit): |   |                     |   |   |   |   |   |   |   |
| Net      income                                                       |   | $                        | 59.4   |   |   | $ | (7.7 | ) |   | $ | 122.4 |   |
| Other      comprehensive income –Pension      plans             |   |                     | (32.4  | ) |   |   | 6.7 |   |   |   | 28.0 |   |
|                                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |
| Adoption      of SFAS No. 158 –Pension      plans               |   |                     | -      |   |   |   |  (18.6 | ) |   |   | (1.2 | ) |
|                                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |
| Total                                                                 |   | $                        | 27.0   |   |   | $ | (19.6 | ) |   | $ | 149.2 |   |

|                                                      |   | December 31,       |   |
|-----------------------------------------------------------|--------|--------------------|--------|
|                                                      |   | 2006               |   |   | 2007 |   |
|                                                      |   | Assets             |   |   | Liabilities |   |   | Assets |   |   | Liabilities |   |
|                                                      |   | (In      millions) |   |
|                                                      |   |               |   |   |   |   |   |   |   |   |   |   |
| Tax      effect of temporary differences related to:      |   |               |   |   |   |   |   |   |   |   |   |   |
| Inventories                                               |   | $                  | 1.5    |   |   | $ | (3.1 | ) |   | $ | 1.5 |   |   | $ | (4.5 | ) |
| Property      and equipment                               |   |               | 20.7   |   |   |   | (22.8 | ) |   |   | - |   |   |   | (26.0 | ) |
| Pension      asset                                        |   |               | -      |   |   |   | (36.7 | ) |   |   | - |   |   |   | (29.8 | ) |
| Accrued      pension cost                                 |   |               | 64.2   |   |   |   | - |   |   |   | 35.1 |   |   |   | - |   |
| Other      accrued liabilities and deductible differences |   |               | 27.8   |   |   |   | - |   |   |   | 21.8 |   |   |   | - |   |
| Other      taxable differences                            |   |               | -      |   |   |   | (20.2 | ) |   |   | - |   |   |   | (4.5 | ) |
| Tax      loss and tax credit carryforwards                |   |               | 216.8  |   |   |   | - |   |   |   | 155.4 |   |   |   | - |   |
| Adjusted      gross deferred tax assets (liabilities)     |   |               | 331.0  |   |   |   | (82.8 | ) |   |   | 213.8 |   |   |   | (64.8 | ) |
| Netting      of items by tax jurisdiction                 |   |               | (66.6  | ) |   |   | 66.6 |   |   |   | (45.1 | ) |   |   | 45.1 |   |
|                                                      |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                      |   |               | 264.4  |   |   |   | (16.2 | ) |   |   | 168.7 |   |   |   | (19.7 | ) |
| Less      net current deferred tax asset (liability)      |   |               | -      |   |   |   | (1.8 | ) |   |   | - |   |   |   | (3.3 | ) |
|                                                      |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      noncurrent deferred tax asset (liability)        |   | $                  | 264.4  |   |   | $ | (14.4 | ) |   | $ | 168.7 |   |   | $ | (16.4 | ) |

| ·   | We      previously received a preliminary tax assessment related to 1993 from the      Belgian tax authorities proposing tax deficiencies, including related      interest, of approximately euro 6 million.  The Belgian tax      authorities filed a lien on the fixed assets of our Belgian TiO2      operations in connection with their assessment.  This lien did      not interfere with on-going operations at the facility.  We      filed a protest to this assessment, and in July 2006 the Belgian tax      authorities withdrew the assessment.  The lien was subsequently      released. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      Norwegian tax authorities previously notified us of their intent to assess      tax deficiencies of approximately kroner 12 million relating to the years      1998 through 2000.  We objected to this proposed assessment, and      in May 2006 the Norwegian tax authorities withdrew the      assessment. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Years ending December 31, |   | Amount             |   |
|---------------------------|--------|--------------------|--------|
|                      |   | (In      millions) |   |
|                      |   |               |   |
| 2008                      |   | $                  | 19.4   |   |
| 2009                      |   |               | 18.3   |   |
| 2010                      |   |               | 16.6   |   |
| 2011                      |   |               | 17.2   |   |
| 2012                      |   |               | 19.4   |   |
| Next      5 years         |   |               | 94.6   |   |

|                                                              |   | Years ended December 31, |        |
|-------------------------------------------------------------------|--------|--------------------------|-------------|
|                                                              |   | 2006                     |        |   | 2007 |   |
|                                                              |   | (In      millions)       |        |
| Change      in projected benefit obligations (“PBO”): |   |                     |        |   |   |   |
| Benefit      obligations at beginning of the year                 |   | $                        | 352.6       |   |   | $ | 380.9 |   |
| Change      in measurement date, net                              |   |                     | -           |   |   |   | 5.6 |   |
| Service      cost                                                 |   |                     | 5.5         |   |   |   | 5.6 |   |
| Interest      cost                                                |   |                     | 15.0        |   |   |   | 17.7 |   |
| Participant      contributions                                    |   |                     | 1.5         |   |   |   | 2.0 |   |
| Actuarial      gains                                              |   |                     | (15.4       | ) |   |   | (67.5 | ) |
| Change      in foreign currency exchange rates                    |   |                     | 39.2        |   |   |   | 40.2 |   |
| Benefits      paid                                                |   |                     |  (17.5 | ) |   |   |  (26.2 | ) |
|                                                              |   |                     |        |   |   |   |   |   |
| Benefit      obligations at end of the year                       |   |                     | 380.9       |   |   |   | 358.3 |   |
|                                                              |   |                     |        |   |   |   |   |   |
| Change      in plan assets:                                       |   |                     |        |   |   |   |   |   |
| Fair      value of plan assets at beginning of the year           |   |                     | 176.9       |   |   |   | 208.1 |   |
| Change      in measurement date, net                              |   |                     | -           |   |   |   | (1.0 | ) |
| Actual      return on plan assets                                 |   |                     | 8.6         |   |   |   | 5.3 |   |
| Employer      contributions                                       |   |                     | 18.5        |   |   |   | 17.4 |   |
| Participant      contributions                                    |   |                     | 1.5         |   |   |   | 2.0 |   |
| Change      in foreign currency exchange rates                    |   |                     | 20.0        |   |   |   | 24.7 |   |
| Benefits      paid                                                |   |                     |  (17.4 | ) |   |   | (26.2 | ) |
|                                                              |   |                     |        |   |   |   |   |   |
| Fair      value of plan assets at end of year                     |   |                     | 208.1       |   |   |   | 230.3 |   |
|                                                              |   |                     |        |   |   |   |   |   |
| Funded      status                                                |   | $                        | (172.8      | ) |   | $ | (128.0 | ) |
|                                                              |   |                     |        |   |   |   |   |   |
| Amounts      recognized in the balance sheet:                     |   |                     |        |   |   |   |   |   |
| Accrued      pension costs:                                       |   |                     |        |   |   |   |   |   |
| Current                                                           |   | $                        | -           |   |   | $ | - |   |
| Noncurrent                                                        |   |                     | (172.8      | ) |   |   | (128.0 | ) |
|                                                              |   |                     |        |   |   |   |   |   |
| Total                                                             |   | $                        | (172.8      | ) |   | $ | (128.0 | ) |
|                                                              |   |                     |        |   |   |   |   |   |
| Accumulated      other comprehensive loss:                        |   |                     |        |   |   |   |   |   |
| Actuarial      losses                                             |   | $                        | 170.5       |   |   | $ | 94.6 |   |
| Prior      service cost                                           |   |                     | 5.6         |   |   |   | 5.0 |   |
| Net      transition obligations                                   |   |                     |  .7    |   |   |   | .5 |   |
|                                                              |   |                     |        |   |   |   |   |   |
| Total                                                             |   | $                        | 176.8       |   |   | $ | 100.1 |   |
|                                                              |   |                     |        |   |   |   |   |   |
| Accumulated      benefit obligations (“ABO”)          |   | $                        | 321.3       |   |   | $ | 296.8 |   |

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

|                                            |   | Years ended December 31, |   |
|-------------------------------------------------|--------|--------------------------|--------|
|                                            |   | 2005                     |   |   | 2006 |   |   | 2007 |   |
|                                            |   | (In      millions)       |   |
| Net      periodic pension cost:                 |   |                     |   |   |   |   |   |   |   |
| Service      cost benefits                      |   | $                        | 5.9    |   |   | $ | 5.5 |   |   | $ | 5.6 |   |
| Interest      cost on PBO                       |   |                     | 14.0   |   |   |   | 15.0 |   |   |   | 17.7 |   |
| Expected      return on plan assets             |   |                     | (12.0  | ) |   |   | (11.2 | ) |   |   | (11.5 | ) |
| Amortization      of prior service cost         |   |                     | .5     |   |   |   | .5 |   |   |   | .5 |   |
| Amortization      of net transition obligations |   |                     | .1     |   |   |   | .1 |   |   |   | .2 |   |
| Recognized      actuarial losses                |   |                     | 3.0    |   |   |   | 7.8 |   |   |   | 7.5 |   |
|                                            |   |                     |   |   |   |   |   |   |   |   |   |   |
| Total                                           |   | $                        | 11.5   |   |   | $ | 17.7 |   |   | $ | 20.0 |   |

|                                        |   | December 31, |   |
|---------------------------------------------|--------|--------------|--------|
| Rate                                        |   | 2006         |   |   | 2007 |   |
|                                        |   |         |   |   |   |   |
| Discount      rate                          |   |         | 4.6    | % |   |   | 5.5 | % |
| Increase      in future compensation levels |   |         | 3.0    | % |   |   | 3.0 | % |

|                                        |   | Years ended December    31, |   |
|---------------------------------------------|--------|----------------------------------|--------|
| Rate                                        |   | 2005                             |   |   | 2006 |   |   | 2007 |   |
|                                        |   |                             |   |   |   |   |   |   |   |
| Discount      rate                          |   |                             | 5.0    | % |   |   | 4.1 | % |   |   | 4.6 | % |
| Increase      in future compensation levels |   |                             | 2.8    | % |   |   | 2.8 | % |   |   | 3.0 | % |
| Long-term      return on plan assets        |   |                             | 6.0    | % |   |   | 5.5 | % |   |   | 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      8.5%, 5.0% and 4.5%,respectively. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                 |   | December 31, 2006 |   |   | December 31, 2007 |   |
|------------------------------------------------------|--------|-------------------|--------|--------|-------------------|--------|
|                                                 |   | Germany           |   |   | Norway            |   |   | Germany |   |   | Norway |   |
|                                                 |   |              |   |   |              |   |   |   |   |   |   |   |
| Equity      securities and limited partnerships |   |              | 23     | %      |              |   | 13 | % |   |   | 28 | % |   |   | 18 | % |
| Fixed      income securities                         |   |              | 48     |   |              |   | 64 |   |   |   | 49 |   |   |   | 68 |   |
| Real      estate                                     |   |              | 14     |   |              |   | - |   |   |   | 12 |   |   |   | - |   |
| Cash,      cash equivalents and other                |   |              | 15     |   |              |   | 23 |   |   |   | 11 |   |   |   | 14 |   |
|                                                 |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|     Total                        |   |              | 100    | %      |              |   | 100 | % |   |   | 100 | % |   |   | 100 | % |

|                                     |   | December 31,       |   |
|------------------------------------------|--------|--------------------|--------|
|                                     |   | 2006               |   |   | 2007 |   |
|                                     |   | (In      millions) |   |
|                                     |   |               |   |   |   |   |
| Reserve      for uncertain tax positions |   | $                  | -      |   |   | $ | 14.9 |   |
| Employee      benefits                   |   |               | 6.9    |   |   |   | 8.2 |   |
| Insurance      claims and expenses       |   |               | 1.5    |   |   |   | 1.9 |   |
| Other                                    |   |               | 6.3    |   |   |   | 5.1 |   |
|                                     |   |               |   |   |   |   |   |   |
| Total                                    |   | $                  | 14.7   |   |   | $ | 30.1 |   |

|                                       |   |   December      31, |   |
|--------------------------------------------|--------|--------------------------|--------|
|                                       |   | 2006                     |   |   | 2007 |   |
|                                       |   | (In      millions)       |   |
| Current      receivables from affiliates:  |   |                     |   |   |   |   |
| Kronos      Canada (“KC”)      |   | $                        | 1.4    |   |   | $ | 1.4 |   |
| Other                                      |   |                     | .2     |   |   |   | .1 |   |
|                                       |   |                     |   |   |   |   |   |   |
| Total                                      |   | $                        | 1.6    |   |   | $ | 1.5 |   |
|                                       |   |                     |   |   |   |   |   |   |
| Current      payables to affiliate:        |   |                     |   |   |   |   |   |   |
| Kronos      (US), Inc. (“KUS”) |   | $                        | 10.2   |   |   | $ | 5.6 |   |

| Years ending December 31, |   | Amount             |   |
|---------------------------|--------|--------------------|--------|
|                      |   | (In      millions) |   |
|                      |   |               |   |
| 2008                      |   | $                  | 4.2    |   |
| 2009                      |   |               | 3.1    |   |
| 2010                      |   |               | 2.0    |   |
| 2011                      |   |               | 1.4    |   |
| 2012                      |   |               | 1.2    |   |
| 2013      and thereafter  |   |               | 21.0   |   |
|                      |   |               |   |   |
| Total                     |   | $                  | 32.9   |   |

|                                                                                                               |   | December      31,  |   |   | December      31, |   |
|--------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                                                                                                               |   | 2006               |   |   | 2007              |   |
|                                                                                                               |   | Carryingamount     |   |   | Fairvalue         |   |   | Carryingamount |   | Fairvalue |   |
|                                                                                                               |   | (In      millions) |   |
| Cash,      cash equivalents, restricted cash and current and noncurrent restricted      marketable debt securities |   | $                  | 57.1   |   |              | $      | 57.1 |   |   | $ | 72.0 |   |   | $ | 72.0 |   |
|                                                                                                               |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Long-term      debt:                                                                                               |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|   Fixed      rate with market quotes -                                                                   |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|     6.5%      Senior Secured Notes                                                             |   | $                  | 525.0  |   |              | $      | 512.5 |   |   | $ | 585.5 |   |   | $ | 507.7 |   |

|                                                                                         |   | Amount             |   |
|----------------------------------------------------------------------------------------------|--------|--------------------|--------|
|                                                                                         |   | (In      millions) |   |
|                                                                                         |   |               |   |
| Unrecognized      tax benefits:                                                              |   |               |   |
|   Amount      at adoption of FIN 48                                                |   | $                  | 10.9   |   |
|   Tax      positions take in prior periods:                                        |   |               |   |   |
|     Gross      increases                                                 |   |               | -      |   |
|     Gross      decreases                                                 |   |               | (1.9   | ) |
|   Tax      positions taken in current period:                                      |   |               |   |   |
|     Gross      increases                                                 |   |               | 1.9    |   |
|     Gross      decreases                                                 |   |               | -      |   |
|   Settlements      with taxing authorities –   cash      paid |   |               | -      |   |
|   Lapse      of applicable statute of limitations                                  |   |               | -      |   |
|   Change      in foreign currency exchange rates                                   |   |               | 1.0    |   |
|                                                                                         |   |               |   |   |
|   Amount      at December 31,2007                                                  |   | $                  | 11.9   |   |

|                              |   | Quarter ended  |   |
|-----------------------------------|--------|---------------------|--------|
|                              |   | March 31            |   |   | June 30 |   |   | Sept. 30 |   |   | Dec. 31 |   |
|                              |   | (In      millions)  |   |
|                              |   |                |   |   |   |   |   |   |   |   |   |   |
| Year      ended December 31, 2006 |   |                |   |   |   |   |   |   |   |   |   |   |
| Net      sales                    |   | $                   | 208.6  |   |   | $ | 248.5 |   |   | $ | 233.7 |   |   | $ | 223.4 |   |
| Gross      margin                 |   |                | 53.5   |   |   |   | 57.8 |   |   |   | 52.6 |   |   |   | 59.1 |   |
| Net      income                   |   |                | 13.4   |   |   |   | 9.6 |   |   |   | 9.3 |   |   |   | 41.4 |   |
|                              |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 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*                  |   |                | 13.5   |   |   |   | 1.7 |   |   |   | (81.0 | ) |   |   | 7.0 |   |

|   | * | In      the fourth quarter of 2007 we determined that a liability established in      1992 was no longer necessary.  Therefore, net income for the      fourth quarter of 2007 includes $.8 million ($.5 million net of income      tax) related to the reversal of this non current    liability). |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                  |   | December 31, |   |
|-------------------------------------------------------|--------|--------------|--------|
|                                                  |   | 2006         |   |   | 2007 |   |
|                                                  |   |         |   |   |   |   |
| Current      assets:                                  |   |         |   |   |   |   |
| Cash      and cash equivalents                        |   | $            | 3.3    |   |   | $ | 9.0 |   |
| Receivable      from affiliates                       |   |         | 51.7   |   |   |   | 58.7 |   |
| Accounts      and notes receivable                    |   |         | 10.2   |   |   |   | 10.1 |   |
| Other                                                 |   |         | .1     |   |   |   | .2 |   |
|                                                  |   |         |   |   |   |   |   |   |
| Total      current assets                             |   |         | 65.3   |   |   |   | 78.0 |   |
|                                                  |   |         |   |   |   |   |   |   |
| Other      assets:                                    |   |         |   |   |   |   |   |   |
| Investment      in subsidiaries                       |   |         | 507.2  |   |   |   | 572.9 |   |
| Deferred      income taxes                            |   |         | 217.2  |   |   |   | 164.9 |   |
| Other                                                 |   |         | 8.8    |   |   |   | 8.1 |   |
| Property      and equipment, net                      |   |         | 6.8    |   |   |   | 7.7 |   |
|                                                  |   |         |   |   |   |   |   |   |
| Total      other assets                               |   |         | 740.0  |   |   |   | 753.6 |   |
|                                                  |   |         |   |   |   |   |   |   |
| Total      assets                                     |   | $            | 805.3  |   |   | $ | 831.6 |   |
|                                                  |   |         |   |   |   |   |   |   |
| Current      liabilities:                             |   |         |   |   |   |   |   |   |
| Accounts      payable and accrued liabilities         |   | $            | 14.4   |   |   | $ | 15.4 |   |
| Payable      to affiliates                            |   |         | 31.1   |   |   |   | 9.5 |   |
| Income      taxes                                     |   |         | 22.2   |   |   |   | 24.8 |   |
|                                                  |   |         |   |   |   |   |   |   |
| Total      current liabilities                        |   |         | 67.7   |   |   |   | 49.7 |   |
|                                                  |   |         |   |   |   |   |   |   |
| Noncurrent      liabilities:                          |   |         |   |   |   |   |   |   |
| Long-term      debt                                   |   |         | 525.0  |   |   |   | 585.5 |   |
| Other                                                 |   |         | 1.1    |   |   |   | 15.0 |   |
|                                                  |   |         |   |   |   |   |   |   |
| Total      noncurrent liabilities                     |   |         | 526.1  |   |   |   | 600.5 |   |
|                                                  |   |         |   |   |   |   |   |   |
| Stockholder’s      equity                       |   |         | 211.5  |   |   |   | 181.4 |   |
|                                                  |   |         |   |   |   |   |   |   |
| Total      liabilities and stockholder’s equity |   | $            | 805.3  |   |   | $ | 831.6 |   |
|                                                  |   |         |   |   |   |   |   |   |

----

|                                          |   | Years ended December 31, |   |
|-----------------------------------------------|--------|--------------------------|--------|
|                                          |   | 2005                     |   |   | 2006 |   |   | 2007 |   |
| Revenues      and other income:               |   |                     |   |   |   |   |   |   |   |
| Net      sales                                |   | $                        | 47.7   |   |   | $ | 50.6 |   |   | $ | 56.4 |   |
| Equity      in earnings of subsidiaries       |   |                     | 91.2   |   |   |   | 55.0 |   |   |   | 33.3 |   |
| Interest      income from affiliates          |   |                     | 18.9   |   |   |   | 19.6 |   |   |   | 20.6 |   |
| Royalty      income                           |   |                     | 19.2   |   |   |   | 20.1 |   |   |   | 20.7 |   |
| Currency      translation gains (losses), net |   |                     | .2     |   |   |   | (.1 | ) |   |   | .2 |   |
| Other      income, net                        |   |                     | -      |   |   |   | .1 |   |   |   | 1.7 |   |
|                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
|                                          |   |                     | 177.2  |   |   |   | 145.3 |   |   |   | 132.9 |   |
|                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Costs      and expenses:                      |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cost      of sales                            |   |                     | 27.0   |   |   |   | 28.5 |   |   |   | 33.8 |   |
| General      and administrative               |   |                     | 30.9   |   |   |   | 34.2 |   |   |   | 37.5 |   |
| Loss      on prepayment of debt               |   |                     | -      |   |   |   | 22.3 |   |   |   | - |   |
| Interest      expense                         |   |                     | 42.2   |   |   |   | 39.7 |   |   |   | 37.5 |   |
| Interest      expense to affiliates           |   |                     | 10.3   |   |   |   | 3.9 |   |   |   | 1.2 |   |
|                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
|                                          |   |                     | 110.4  |   |   |   | 128.6 |   |   |   | 110.0 |   |
|                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Income      before income taxes               |   |                     | 66.8   |   |   |   | 16.7 |   |   |   | 22.9 |   |
|                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Provision      (benefit) for income taxes     |   |                     | 6.5    |   |   |   | (57.0 | ) |   |   | 81.7 |   |
|                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      income (loss)                        |   | $                        | 60.3   |   |   | $ | 73.7 |   |   | $ | (58.8 | ) |
|                                          |   |                     |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                   |   | Years ended December 31, |   |
|----------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                   |   | 2005                     |   |   | 2006 |   |   | 2007 |   |
| Cash      flows from operating activities:                                             |   |                     |   |   |   |   |   |   |   |
| Net      income (loss)                                                                 |   | $                        | 60.3   |   |   | $ | 73.7 |   |   | $ | (58.8 | ) |
| Cash      distributions from subsidiaries                                              |   |                     | -      |   |   |   | 50.6 |   |   |   | 40.9 |   |
| Loss      on prepayment of debt                                                        |   |                     | -      |   |   |   | 22.3 |   |   |   | - |   |
| Call      premium paid                                                                 |   |                     | -      |   |   |   | (20.9 | ) |   |   | - |   |
| Noncash      interest expense                                                          |   |                     | 2.1    |   |   |   | 1.6 |   |   |   | 1.9 |   |
| Deferred      income taxes                                                             |   |                     | 21.8   |   |   |   | (28.7 | ) |   |   | 84.2 |   |
| Equity      in earnings of subsidiaries                                                |   |                     | (91.2  | ) |   |   | (55.0 | ) |   |   | (33.3 | ) |
| Other,      net                                                                        |   |                     | (.7    | ) |   |   | 3.3 |   |   |   | 6.1 |   |
| Net      change in assets and liabilities                                              |   |                     | 11.9   |   |   |   | (20.7 | ) |   |   | .7 |   |
|                                                                                   |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      cash provided by operating activities                                         |   |                     | 4.2    |   |   |   | 26.2 |   |   |   | 41.7 |   |
|                                                                                   |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash      flows used by investing activities -                                         |   |                     |   |   |   |   |   |   |   |   |   |   |
| capital      expenditures                                                              |   |                     | (1.5   | ) |   |   | (1.9 | ) |   |   | (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 | ) |
|                                                                                   |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      cash used by financing activities                                             |   |                     | -      |   |   |   | (31.0 | ) |   |   | (34.2 | ) |
|                                                                                   |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      change during the year from operating investing and financing      activities |   |                     | 2.7    |   |   |   | (6.7 | ) |   |   | 5.7 |   |
| Currency      translation                                                              |   |                     | .6     |   |   |   | .4 |   |   |   | - |   |
| Balance      at beginning of year                                                      |   |                     | 6.3    |   |   |   | 9.6 |   |   |   | 3.3 |   |
|                                                                                   |   |                     |   |   |   |   |   |   |   |   |   |   |
| Balance      at end of year                                                            |   | $                        | 9.6    |   |   | $ | 3.3 |   |   | $ | 9.0 |   |

----

|                                                           |   | December 31,       |   |
|----------------------------------------------------------------|--------|--------------------|--------|
|                                                           |   | 2006               |   |   | 2007 |   |
|                                                           |   | (In      millions) |   |
| Current:                                                       |   |               |   |   |   |   |
| Receivable      from:                                          |   |               |   |   |   |   |
| Kronos      Titan GmbH (“TG”) – income taxes |   | $                  | 44.6   |   |   | $ | 50.6 |   |
| Kronos      Chemie GmbH – income taxes                   |   |               | 1.4    |   |   |   | 2.0 |   |
| Kronos      Titan A/S                                          |   |               | 1.9    |   |   |   | 1.9 |   |
| Kronos      Europe S.A./N.V                                    |   |               | 1.8    |   |   |   | 2.0 |   |
| Kronos      Canada                                             |   |               | 1.4    |   |   |   | 1.6 |   |
| Titania      A/S                                               |   |               | .5     |   |   |   | .6 |   |
| Other                                                          |   |               | .1     |   |   |   | - |   |
|                                                           |   |               |   |   |   |   |   |   |
|                                                           |   | $                  | 51.7   |   |   | $ | 58.7 |   |
| Payable      to:                                               |   |               |   |   |   |   |   |   |
| TG                                                             |   |               | 27.6   |   |   |   | 2.7 |   |
| KCH                                                            |   |               | 3.4    |   |   |   | 6.5 |   |
| Societe      Industrielle du Titane, S.A.                      |   |               | -      |   |   |   | .3 |   |
| Kronos      (US), Inc.                                         |   |               | .1     |   |   |   | - |   |
|                                                           |   |               |   |   |   |   |   |   |
|                                                           |   | $                  | 31.1   |   |   | $ | 9.5 |   |

|                                        |   | December 31,       |   |
|---------------------------------------------|--------|--------------------|--------|
|                                        |   | 2006               |   |   | 2007 |   |
|                                        |   | (In      millions) |   |
| Investment      in:                         |   |               |   |   |   |   |
| TG                                          |   | $                  | 299.6  |   |   | $ | 328.5 |   |
| Kronos      Denmark ApS (“KDK”) |   |               | 179.4  |   |   |   | 208.1 |   |
| Other                                       |   |               | 28.2   |   |   |   | 36.3 |   |
|                                        |   |               |   |   |   |   |   |   |
|                                        |   | $                  | 507.2  |   |   | $ | 572.9 |   |

|                                                              |   | Years ended December 31, |   |
|-------------------------------------------------------------------|--------|--------------------------|--------|
|                                                              |   | 2005                     |   |   | 2006 |   |   | 2007 |   |
|                                                              |   | (In      millions)       |   |
|                                                              |   |                     |   |   |   |   |   |   |   |
| Equity      in income from continuing operations of subsidiaries: |   |                     |   |   |   |   |   |   |   |
| TG                                                                |   | $                        | 52.2   |   |   | $ | 17.2 |   |   | $ | 7.6 |   |
| KDK                                                               |   |                     | 35.8   |   |   |   | 33.7 |   |   |   | 19.5 |   |
| Other                                                             |   |                     | 3.2    |   |   |   | 4.1 |   |   |   | 6.2 |   |
|                                                              |   |                     |   |   |   |   |   |   |   |   |   |   |
|                                                              |   | $                        | 91.2   |   |   | $ | 55.0 |   |   | $ | 33.3 |   |

|                                    |   |  December 31, |   |
|-----------------------------------------|--------|--------------------|--------|
|                                    |   | 2006               |   |   | 2007 |   |
|                                    |   | (In      millions) |   |
|                                    |   |               |   |   |   |   |
| 6.5%      Senior Secured Notes due 2013 |   | $                  | 525.0  |   |   | $ | 585.5 |   |

----

| 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, 2006 and December 31, 2007                  | FA-3 |
|                                                          |   |
| Consolidated      Statements of Income –                |   |
| Year      ended December 31, 2005, 2006 and 2007              | FA-5 |
|                                                          |   |
| Consolidated      Statements of Comprehensive Income (Loss) - |   |
| Year      ended December 31, 2005, 2006 and 2007              | FA-6 |
|                                                          |   |
| Consolidated      Statements of Owner’s Equity –  |   |
| Year      ended December 31, 2005, 2006 and 2007              | FA-7 |
|                                                          |   |
| Consolidated      Statements of Cash Flows –            |   |
| Year      ended December 31, 2005, 2006 and 2007              | FA-8 |
|                                                          |   |
| Notes      to Consolidated Financial Statements               | FA-9 |

----

----

|                                                |   | December 31, |   |
|-----------------------------------------------------|--------|--------------|--------|
| ASSETS                                              |   | 2006         |   |   | 2007 |   |
|                                                |   |         |   |   |   |   |
| Current      assets:                                |   |         |   |   |   |   |
| Cash      and cash equivalents                      |   | $            | 43.8   |   |   | $ | 50.6 |   |
| Accounts      and notes receivable                  |   |         | 92.6   |   |   |   | 114.5 |   |
| Receivable      from affiliates                     |   |         | 30.3   |   |   |   | 10.1 |   |
| Refundable      income taxes                        |   |         | 23.6   |   |   |   | 26.0 |   |
| Inventories                                         |   |         | 118.7  |   |   |   | 136.7 |   |
| Prepaid      expenses                               |   |         | 2.1    |   |   |   | 1.8 |   |
|                                                |   |         |   |   |   |   |   |   |
| Total      current assets                           |   |         | 311.1  |   |   |   | 339.7 |   |
|                                                |   |         |   |   |   |   |   |   |
| Other      assets:                                  |   |         |   |   |   |   |   |   |
| Deferred      income taxes                          |   |         | 49.8   |   |   |   | 4.1 |   |
| Other                                               |   |         | .7     |   |   |   | .5 |   |
|                                                |   |         |   |   |   |   |   |   |
| Total      other assets                             |   |         | 50.5   |   |   |   | 4.6 |   |
|                                                |   |         |   |   |   |   |   |   |
| Property      and equipment:                        |   |         |   |   |   |   |   |   |
| Land                                                |   |         | 15.4   |   |   |   | 17.1 |   |
| Buildings                                           |   |         | 114.4  |   |   |   | 129.0 |   |
| Machinery      and equipment                        |   |         | 502.5  |   |   |   | 564.7 |   |
| Construction      in progress                       |   |         | 7.5    |   |   |   | 19.1 |   |
|                                                |   |         |   |   |   |   |   |   |
|                                                |   |         | 639.8  |   |   |   | 729.9 |   |
|                                                |   |         |   |   |   |   |   |   |
| Less      accumulated depreciation and amortization |   |         | 387.6  |   |   |   | 450.0 |   |
|                                                |   |         |   |   |   |   |   |   |
| Net      property and equipment                     |   |         | 252.2  |   |   |   | 279.9 |   |
|                                                |   |         |   |   |   |   |   |   |
| Total      assets                                   |   | $            | 613.8  |   |   | $ | 624.2 |   |

----

|                                                   |   | December 31, |   |
|--------------------------------------------------------|--------|--------------|--------|
| LIABILITIES      AND OWNER’S EQUITY              |   | 2006         |   |   | 2007 |   |
|                                                   |   |         |   |   |   |   |
| Current      liabilities:                              |   |         |   |   |   |   |
| Accounts      payable and accrued liabilities          |   | $            | 57.6   |   |   | $ | 64.9 |   |
| Payables      to affiliates                            |   |         | 87.2   |   |   |   | 94.7 |   |
| Deferred      income taxes                             |   |         | 1.5    |   |   |   | 2.8 |   |
|                                                   |   |         |   |   |   |   |   |   |
| Total      current liabilities                         |   |         | 146.3  |   |   |   | 162.4 |   |
|                                                   |   |         |   |   |   |   |   |   |
| Noncurrent      liabilities:                           |   |         |   |   |   |   |   |   |
| Accrued      pension cost                              |   |         | 157.6  |   |   |   | 121.7 |   |
| Other                                                  |   |         | 10.3   |   |   |   | 11.6 |   |
|                                                   |   |         |   |   |   |   |   |   |
| Total      noncurrent liabilities                      |   |         | 167.9  |   |   |   | 133.3 |   |
|                                                   |   |         |   |   |   |   |   |   |
| Owner’s      equity:                             |   |         |   |   |   |   |   |   |
| Subscribed      capital                                |   |         | 12.5   |   |   |   | 12.5 |   |
| Paid      in capital                                   |   |         | 228.6  |   |   |   | 196.0 |   |
| Retained      earnings                                 |   |         | 37.1   |   |   |   | 25.2 |   |
| Accumulated      other comprehensive income (loss):    |   |         |   |   |   |   |   |   |
| Currency      translation                              |   |         | 110.5  |   |   |   | 146.9 |   |
| Defined      benefit pension plans                     |   |         | (89.1  | ) |   |   | (52.1 | ) |
|                                                   |   |         |   |   |   |   |   |   |
| Total      owner’s equity                        |   |         | 299.6  |   |   |   | 328.5 |   |
|                                                   |   |         |   |   |   |   |   |   |
| Total      liabilities and owner’s equity        |   | $            | 613.8  |   |   | $ | 624.2 |   |
|                                                   |   |         |   |   |   |   |   |   |
| Commitments      and contingencies (Notes 5, 6 and 11) |   |         |   |   |   |   |   |   |

----

|                                             |   | Years ended December 31, |   |
|--------------------------------------------------|--------|--------------------------|--------|
|                                             |   | 2005                     |   |   | 2006 |   |   | 2007 |   |
|                                             |   |                     |   |   |   |   |   |   |   |
| Net      sales                                   |   | $                        | 584.2  |   |   | $ | 641.2 |   |   | $ | 668.8 |   |
| Cost      of sales                               |   |                     | 462.5  |   |   |   | 535.4 |   |   |   | 573.6 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Gross      margin                                |   |                     | 121.7  |   |   |   | 105.8 |   |   |   | 95.2 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative expense |   |                     | 50.1   |   |   |   | 52.7 |   |   |   | 54.1 |   |
| Other      operating income (expense):           |   |                     |   |   |   |   |   |   |   |   |   |   |
| Currency      transaction gains (losses), net    |   |                     | 3.9    |   |   |   | (3.7 | ) |   |   | (4.2 | ) |
| Disposition      of property and equipment       |   |                     | (1.1   | ) |   |   | (1.5 | ) |   |   | (.3 | ) |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Income      from operations                      |   |                     | 74.4   |   |   |   | 47.9 |   |   |   | 36.6 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Other      income (expense):                     |   |                     |   |   |   |   |   |   |   |   |   |   |
| Trade      interest income                       |   |                     | .7     |   |   |   | 1.9 |   |   |   | 1.7 |   |
| Interest      and other income from affiliates   |   |                     | 13.2   |   |   |   | 6.7 |   |   |   | 4.2 |   |
| Interest      and other expense to affiliates    |   |                     | (.8    | ) |   |   | (1.4 | ) |   |   | (1.3 | ) |
| Interest      expense                            |   |                     | (.6    | ) |   |   | (.3 | ) |   |   | (.3 | ) |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Income      before income taxes                  |   |                     | 86.9   |   |   |   | 54.8 |   |   |   | 40.9 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Provision      for income taxes                  |   |                     | 34.7   |   |   |   | 37.6 |   |   |   | 33.3 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      income                                  |   | $                        | 52.2   |   |   | $ | 17.2 |   |   | $ | 7.6 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                          |   | Years ended December 31, |   |
|-----------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                          |   | 2005                     |   |   | 2006 |   |   | 2007 |   |
|                                                                                          |   |                     |   |   |   |   |   |   |   |
| Net      income                                                                               |   | $                        | 52.2   |   |   | $ | 17.2 |   |   | $ | 7.6 |   |
|                                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Other      comprehensive income (loss), net of tax:                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
| Currency      translation adjustment                                                          |   |                     | (43.2  | ) |   |   | 41.4 |   |   |   | 36.4 |   |
|                                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Pension      plans:                                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
| Amortization      of prior service cost and net losses included in periodic pension      cost |   |                     | -      |   |   |   | - |   |   |   | 3.8 |   |
| Net      actuarial gain arising during year                                                   |   |                     | -      |   |   |   | - |   |   |   | 32.2 |   |
| Minimum      pension liability change                                                         |   |                     | (53.4  | ) |   |   | 3.3 |   |   |   | - |   |
|                                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
|                                                                                          |   |                     | (53.4  | ) |   |   | 3.3 |   |   |   | 36.0 |   |
|                                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Total      other comprehensive income (loss)                                                  |   |                     | (96.6  | ) |   |   | 44.7 |   |   |   | 72.4 |   |
|                                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      income (loss)                                                              |   | $                        | (44.4  | ) |   | $ | 61.9 |   |   | $ | 80.0 |   |

----

|                                                                                              |   |                      |   |   |     |   |   |               |   |   | 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, 2004                                                                 |   | $                         | 12.5   |   |     | $      | 227.0  |               |   | $      | (9.2                   | )      |   | $       | 112.3  |   |   | $ | (19.4 | ) |   | $ | 323.2 |   |
|                                                                                              |   |                      |   |   |     |   |   |               |   |   |                   |   |   |    |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                   |   |                      | -      |   |     |   | -      |               |   |   | 52.2                   |   |   |    | -      |   |   |   | - |   |   |   | 52.2 |   |
| Other      comprehensive loss, net of tax                                                         |   |                      | -      |   |     |   | -      |               |   |   | -                      |   |   |    | (43.2  | ) |   |   | (53.4 | ) |   |   | (96.6 | ) |
|                                                                                              |   |                      |   |   |     |   |   |               |   |   |                   |   |   |    |   |   |   |   |   |   |   |   |   |   |
| 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 |   |

----

|                                                                          |   | Years ended December 31, |   |
|-------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                          |   | 2005                     |   |   | 2006 |   |   | 2007 |   |
|                                                                          |   |                     |   |   |   |   |   |   |   |
| Cash      flows from operating activities:                                    |   |                     |   |   |   |   |   |   |   |
| Net      income                                                               |   | $                        | 52.2   |   |   | $ | 17.2 |   |   | $ | 7.6 |   |
| Depreciation,      depletion and amortization                                 |   |                     | 21.0   |   |   |   | 20.6 |   |   |   | 22.4 |   |
| Deferred      income taxes                                                    |   |                     | 9.5    |   |   |   | 5.1 |   |   |   | 29.6 |   |
| Pension,      net                                                             |   |                     | (3.3   | ) |   |   | (.3 | ) |   |   | .3 |   |
| Other,      net                                                               |   |                     | 1.3    |   |   |   | 1.2 |   |   |   | (.4 | ) |
| Change      in assets and liabilities:                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
| Accounts      and notes receivable                                            |   |                     | (9.3   | ) |   |   | (8.1 | ) |   |   | (7.3 | ) |
| Inventories                                                                   |   |                     | (26.3  | ) |   |   | 7.9 |   |   |   | (5.3 | ) |
| Prepaid      expenses                                                         |   |                     | (.1    | ) |   |   | (.1 | ) |   |   | .7 |   |
| Accounts      payable and accrued liabilities                                 |   |                     | 5.3    |   |   |   | (7.8 | ) |   |   | (2.3 | ) |
| Income      taxes                                                             |   |                     | (13.8  | ) |   |   | (11.3 | ) |   |   | (.1 | ) |
| Accounts      with affiliates                                                 |   |                     | 29.4   |   |   |   | 24.7 |   |   |   | (5.3 | ) |
| Other      noncurrent assets                                                  |   |                     | .1     |   |   |   | - |   |   |   | .2 |   |
| Other      noncurrent liabilities                                             |   |                     | (.7    | ) |   |   | (4.3 | ) |   |   | (1.2 | ) |
|                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      cash provided by operating activities                                |   |                     | 65.3   |   |   |   | 44.8 |   |   |   | 38.9 |   |
|                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash      flows used by investing activities –capital      expenditures |   |                     | (22.9  | ) |   |   | (22.2 | ) |   |   | (20.1 | ) |
|                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                                    |   |                     |   |   |   |   |   |   |   |   |   |   |
| Loans      from affiliates:                                                   |   |                     |   |   |   |   |   |   |   |   |   |   |
| Loans                                                                         |   |                     | 4.9    |   |   |   | - |   |   |   | - |   |
| Repayments                                                                    |   |                     | -      |   |   |   | (10.9 | ) |   |   | - |   |
| Dividends      paid                                                           |   |                     | -      |   |   |   | (23.1 | ) |   |   | (17.0 | ) |
|                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      cash provided (used) by financing activities                         |   |                     | 4.9    |   |   |   | (34.0 | ) |   |   | (17.0 | ) |
|                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents - net change from:                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Operating,      investing and financing activities                            |   |                     | 47.3   |   |   |   | (11.4 | ) |   |   | 1.8 |   |
| Currency      translation                                                     |   |                     | (2.9   | ) |   |   | 4.4 |   |   |   | 5.0 |   |
| Balance      at beginning of year                                             |   |                     | 6.4    |   |   |   | 50.8 |   |   |   | 43.8 |   |
|                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Balance      at end of year                                                   |   | $                        | 50.8   |   |   | $ | 43.8 |   |   | $ | 50.6 |   |
|                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Supplemental      disclosures-                                                |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash      paid for:                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
| Interest                                                                      |   | $                        | .1     |   |   | $ | .1 |   |   | $ | .1 |   |
| Income      taxes                                                             |   |                     | 6.5    |   |   |   | 25.4 |   |   |   | 4.8 |   |
| Accrual      for capital expenditures                                         |   |                     | -      |   |   |   | - |   |   |   | 2.5 |   |

----

|                                       |   | December 31,       |   |
|--------------------------------------------|--------|--------------------|--------|
|                                       |   | 2006               |   |   | 2007 |   |
|                                       |   | (In      millions) |   |
|                                       |   |               |   |   |   |   |
| Trade      receivables                     |   | $                  | 85.0   |   |   | $ | 97.7 |   |
| Recoverable      VAT and other receivables |   |               | 8.8    |   |   |   | 18.3 |   |
| Allowance      for doubtful accounts       |   |               | (1.2   | ) |   |   | (1.5 | ) |
|                                       |   |               |   |   |   |   |   |   |
| Total                                      |   | $                  | 92.6   |   |   | $ | 114.5 |   |

|                   |   | December 31,       |   |
|------------------------|--------|--------------------|--------|
|                   |   | 2006               |   |   | 2007 |   |
|                   |   | (In      millions) |   |
|                   |   |               |   |   |   |   |
| Raw      materials     |   | $                  | 18.1   |   |   | $ | 22.8 |   |
| Work      in process   |   |               | 16.0   |   |   |   | 11.6 |   |
| Finished      products |   |               | 65.5   |   |   |   | 80.8 |   |
| Supplies               |   |               | 19.1   |   |   |   | 21.5 |   |
|                   |   |               |   |   |   |   |   |   |
| Total                  |   | $                  | 118.7  |   |   | $ | 136.7 |   |

|                      |   | December 31,       |   |
|---------------------------|--------|--------------------|--------|
|                      |   | 2006               |   |   | 2007 |   |
|                      |   | (In      millions) |   |
|                      |   |               |   |   |   |   |
| Accounts      payable     |   | $                  | 37.1   |   |   | $ | 43.9 |   |
| Accrued      liabilities: |   |               |   |   |   |   |   |   |
| Employee      benefits    |   |               | 5.3    |   |   |   | 4.6 |   |
| Waste      acid recovery  |   |               | 8.9    |   |   |   | 8.1 |   |
| Other                     |   |               | 6.3    |   |   |   | 8.3 |   |
|                      |   |               |   |   |   |   |   |   |
| Total                     |   | $                  | 57.6   |   |   | $ | 64.9 |   |

|                                                                  |   | Years ended December 31, |      |
|-----------------------------------------------------------------------|--------|--------------------------|-----------|
|                                                                  |   | 2005                     |      |   | 2006 |   |   | 2007 |   |
|                                                                  |   | (In      millions)       |      |
|                                                                  |   |                     |      |   |   |   |   |   |   |
| Pretax      income                                                    |   | $                        | 86.9      |   |   | $ | 54.8 |   |   | $ | 40.9 |   |
|                                                                  |   |                     |      |   |   |   |   |   |   |   |   |   |
| Expected      tax expense                                             |   | $                        | 23.0      |   |   | $ | 14.5 |   |   | $ | 10.8 |   |
| Trade      income tax                                                 |   |                     | 11.2      |   |   |   | 7.0 |   |   |   | 5.3 |   |
| Impact      of rate change                                            |   |                     | -         |   |   |   | - |   |   |   | 15.8 |   |
| Assessment      of prior year income taxes                            |   |                     | -         |   |   |   | 15.5 |   |   |   | - |   |
| Tax      contingency reserve adjustment, net                          |   |                     | 1.4       |   |   |   | .1 |   |   |   | (.2 | ) |
| Other,      net                                                       |   |                     | (.9       | ) |   |   |  .5 |   |   |   | 1.6 |   |
|                                                                  |   |                     |      |   |   |   |   |   |   |   |   |   |
| Income      tax expense                                               |   | $                        | 34.7      |   |   | $ | 37.6 |   |   | $ | 33.3 |   |
|                                                                  |   |                     |      |   |   |   |   |   |   |   |   |   |
| Provision      for income taxes:                                      |   |                     |      |   |   |   |   |   |   |   |   |   |
| Current      income tax expense                                       |   | $                        | 25.3      |   |   | $ | 32.5 |   |   | $ | 3.8 |   |
| Deferred      income tax expense                                      |   |                     |  9.4 |   |   |   |  5.1 |   |   |   | 29.5 |   |
|                                                                  |   |                     |      |   |   |   |   |   |   |   |   |   |
|                                                                  |   | $                        | 34.7      |   |   | $ | 37.6 |   |   | $ | 33.3 |   |
|                                                                  |   |                     |      |   |   |   |   |   |   |   |   |   |
| Comprehensive      provision (benefit) for income taxes allocable to: |   |                     |      |   |   |   |   |   |   |   |   |   |
| Pretax      income                                                    |   | $                        | 34.7      |   |   | $ | 37.6 |   |   | $ | 33.3 |   |
| Other      comprehensive loss –Pension      plans               |   |                     | (32.6     | ) |   |   | 4.2 |   |   |   | 22.4 |   |
| Adoption      of SFAS No. 158 –Pension      plans               |   |                     | -         |   |   |   | (12.7 | ) |   |   | (.1 | ) |
|                                                                  |   |                     |      |   |   |   |   |   |   |   |   |   |
|                                                                  |   | $                        | 2.1       |   |   | $ | 29.1 |   |   | $ | 55.6 |   |

|                                                            |   | December 31,       |   |
|-----------------------------------------------------------------|--------|--------------------|--------|
|                                                            |   | 2006               |   |   |   2007 |   |
|                                                            |   | Assets             |   |   | Liabilities |   |   | Assets |   |   | Liabilities |   |
|                                                            |   | (In      millions) |   |
|                                                            |   |               |   |   |   |   |   |   |   |   |   |   |
| Tax      effect of temporary differences relating      to: |   |               |   |   |   |   |   |   |   |   |   |   |
| Inventories                                                     |   | $                  | -      |   |   | $ | (1.3 | ) |   | $ | - |   |   | $ | (2.6 | ) |
| Property      and equipment                                     |   |               | 20.4   |   |   |   | - |   |   |   | - |   |   |   | (4.5 | ) |
| Pension      asset                                              |   |               | -      |   |   |   | (27.1 | ) |   |   | - |   |   |   | (22.1 | ) |
| Accrued      pension cost                                       |   |               | 57.8   |   |   |   | - |   |   |   | 31.4 |   |   |   | - |   |
| Other      taxable differences                                  |   |               | -      |   |   |   | (1.5 | ) |   |   | - |   |   |  (.9 | )  |
|                                                            |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross      deferred tax assets (liabilities)                    |   |               | 78.2   |   |   |   | (29.9 | ) |   |   | 31.4 |   |   |   | (30.1 | ) |
|                                                            |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reclassification,      principally netting by tax jurisdiction  |   |               | (28.4  | ) |   |  28.4 |   |   |   | (27.3 | ) |   |   | 27.3 |   |
|                                                            |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      total deferred tax liabilities                         |   |               | 49.8   |   |   |   | (1.5 | ) |   |   | 4.1 |   |   |   | (2.8 | ) |
| Net      current deferred tax liabilities                       |   |               | -      |   |   |  (1.5 | )  |   |   | - |   |   |   | (2.8 | ) |
|                                                            |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      noncurrent deferred tax asset                          |   | $                  | 49.8   |   |   | $ | - |   |   | $ | 4.1 |   |   | $ | - |   |

| Years ending December 31, |   | Amount             |   |
|---------------------------|--------|--------------------|--------|
|                      |   | (In      millions) |   |
|                      |   |               |   |
| 2008                      |   | $                  | 14.8   |   |
| 2009                      |   |               | 14.8   |   |
| 2010                      |   |               | 12.9   |   |
| 2011                      |   |               | 13.1   |   |
| 2012                      |   |               | 13.2   |   |
| 2013      to 2017         |   |               | 68.5   |   |

|                                                              |   | December 31,       |   |
|-------------------------------------------------------------------|--------|--------------------|--------|
|                                                              |   | 2006               |   |   | 2007 |   |
|                                                              |   | (In      millions) |   |
| Change      in projected benefit obligations (“PBO”): |   |               |   |   |   |   |
| Benefit      obligations at beginning of year                     |   | $                  | 279.9  |   |   | $ | 302.9 |   |
| Change      in measurement date, net                              |   |               | -      |   |   |   | 4.1 |   |
| Service      cost                                                 |   |               | 3.2    |   |   |   | 3.3 |   |
| Interest      cost                                                |   |               | 11.7   |   |   |   | 14.0 |   |
| Participant      contributions                                    |   |               | 1.3    |   |   |   | 1.8 |   |
| Actuarial      gains                                              |   |               | (11.2  | ) |   |   | (53.2 | ) |
| Benefits      paid                                                |   |               | (14.1  | ) |   |   | (20.3 | ) |
| Change      in currency exchange rates                            |   |  32.1         |   |   | 30.9 |   |
|                                                              |   |               |   |   |   |   |   |   |
| Benefit      obligations at end of year                           |   |               | 302.9  |   |   |   | 283.5 |   |
|                                                              |   |               |   |   |   |   |   |   |
| Change      in fair value of plan assets:                         |   |               |   |   |   |   |   |   |
| Fair      value of plan assets at beginning of year               |   |               | 122.0  |   |   |   | 145.3 |   |
| Change      in measurement date, net                              |   |               | -      |   |   |   | (1.2 | ) |
| Actual      return on plan assets                                 |   |               | 7.1    |   |   |   | 4.4 |   |
| Employer      contributions                                       |   |               | 14.5   |   |   |   | 15.0 |   |
| Participant      contributions                                    |   |               | 1.3    |   |   |   | 1.8 |   |
| Change      in currency exchange rates                            |   |               | 14.5   |   |   |   | 16.8 |   |
| Benefits      paid                                                |   |  (14.1)       |   |   |  (20.3) |   |
|                                                              |   |               |   |   |   |   |   |   |
| Fair      value of plan assets at end of year                     |   | $                  | 145.3  |   |   | $ | 161.8 |   |
|                                                              |   |               |   |   |   |   |   |   |
| Funded      status                                                |   | $                  | (157.6 | ) |   | $ | (121.7 | ) |
|                                                              |   |               |   |   |   |   |   |   |
| Amounts      recognized in the balance sheet:                     |   |               |   |   |   |   |   |   |
| Accrued      pension cost:                                        |   |               |   |   |   |   |   |   |
| Current                                                           |   | $                  | -      |   |   | $ | - |   |
| Noncurrent                                                        |   |               | (157.6 | ) |   |   | (121.7 | ) |
|                                                              |   |               |   |   |   |   |   |   |
| Total                                                             |   | $                  | (157.6 | ) |   | $ | (121.7 | ) |
|                                                              |   |               |   |   |   |   |   |   |
| Accumulated      other comprehensive loss:                        |   |               |   |   |   |   |   |   |
| Actuarial      losses                                             |   | $                  | 144.8  |   |   | $ | 83.4 |   |
| Prior      service cost                                           |   |               | 3.1    |   |   |   | 2.9 |   |
|                                                              |   |               |   |   |   |   |   |   |
| Total                                                             |   | $                  | 147.9  |   |   | $ | 86.3 |   |
|                                                              |   |               |   |   |   |   |   |   |
| Accumulated      benefit obligations (“ABO”)          |   | $                  | 258.7  |   |   | $ | 236.7 |   |

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

|                                    |   | Years ended December 31, |   |
|-----------------------------------------|--------|--------------------------|--------|
|                                    |   | 2005                     |   |   | 2006 |   |   | 2007 |   |
|                                    |   | (In      millions)       |   |
|                                    |   |                     |   |   |   |   |   |   |   |
| Net      periodic pension cost:         |   |                     |   |   |   |   |   |   |   |
| Service      cost benefits              |   | $                        | 3.8    |   |   | $ | 3.1 |   |   | $ | 3.4 |   |
| Interest      cost on PBO               |   |                     | 10.5   |   |   |   | 11.7 |   |   |   | 14.0 |   |
| Expected      return on plan assets     |   |                     | (8.8   | ) |   |   | (8.0 | ) |   |   | (8.3 | ) |
| Amortization      of prior service cost |   |                     | .2     |   |   |   | .2 |   |   |   | .2 |   |
| Recognized      actuarial losses        |   |                     | 1.6    |   |   |   | 6.2 |   |   |   | 6.1 |   |
|                                    |   |                     |   |   |   |   |   |   |   |   |   |   |
| Total                                   |   | $                        | 7.3    |   |   | $ | 13.2 |   |   | $ | 15.4 |   |

|                                        |   | December 31, |   |
|---------------------------------------------|--------|--------------|--------|
| Rate                                        |   | 2006         |   |   | 2007 |   |
|                                        |   |         |   |   |   |   |
| Discount      rate                          |   |         | 4.5    | % |   |   | 5.5 | % |
| Increase      in future compensation levels |   |         | 3.0    | % |   |   | 3.0 | % |

|                                        |   | Years ended December 31, |   |
|---------------------------------------------|--------|--------------------------|--------|
| Rate                                        |   | 2005                     |   |   | 2006 |   |   | 2007 |   |
|                                        |   |                     |   |   |   |   |   |   |   |
| Discount      rate                          |   |                     | 5.0    | % |   |   | 4.0 | % |   |   | 4.5 | % |
| Increase      in future compensation levels |   |                     | 2.8    | % |   |   | 2.8 | % |   |   | 3.0 | % |
| Long-term      return on plan assets        |   |                     | 6.0    | % |   |   | 5.5 | % |   |   | 5.3 | % |

|                                     |   | December 31,       |   |
|------------------------------------------|--------|--------------------|--------|
|                                     |   | 2006               |   |   | 2007 |   |
|                                     |   | (In      millions) |   |
|                                     |   |               |   |   |   |   |
| Reserve      for uncertain tax positions |   | $                  | -      |   |   | $ | 1.3 |   |
| Employee      benefits                   |   |               | 4.1    |   |   |   | 4.6 |   |
| Insurance      claims expense            |   |               | 1.3    |   |   |   | 1.9 |   |
| Other                                    |   |               | 4.9    |   |   |   | 3.8 |   |
|                                     |   |               |   |   |   |   |   |   |
| Total                                    |   | $                  | 10.3   |   |   | $ | 11.6 |   |

|                          |   | December 31,       |   |
|-------------------------------|--------|--------------------|--------|
|                          |   | 2006               |   |   | 2007 |   |
|                          |   | (In      millions) |   |
|                          |   |               |   |   |   |   |
| Current      receivable from: |   |               |   |   |   |   |
| KII                           |   | $                  | 27.6   |   |   | $ | 2.7 |   |
| Other      affiliates         |   |               | 2.7    |   |   |   | 7.4 |   |
|                          |   |               |   |   |   |   |   |   |
| Total                         |   | $                  | 30.3   |   |   | $ | 10.1 |   |
|                          |   |               |   |   |   |   |   |   |
| Current      payable to:      |   |               |   |   |   |   |   |   |
| KII      – income taxes |   | $                  | 44.6   |   |   | $ | 50.6 |   |
| TIA                           |   |               | 25.4   |   |   |   | 23.1 |   |
| Other      affiliates         |   |               | 17.2   |   |   |   | 21.0 |   |
|                          |   |               |   |   |   |   |   |   |
| Total                         |   | $                  | 87.2   |   |   | $ | 94.7 |   |

|  Years ending December      31, |   | Amount             |   |
|--------------------------------------|--------|--------------------|--------|
|                                 |   | (in      millions) |   |
|                                 |   |               |   |
| 2008                                 |   | $                  | 2.9    |   |
| 2009                                 |   |               | 2.5    |   |
| 2010                                 |   |               | 1.7    |   |
| 2011                                 |   |               | 1.2    |   |
| 2012                                 |   |               | 1.2    |   |
| 2013      and thereafter             |   |               | 21.0   |   |
|                                 |   |               |   |   |
| Total                                |   | $                  | 30.5   |   |

|                           |               December      31,                     |
|--------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                           |       2006                                                                                                                     |   |       2007        |
|                           | Carrying                                                                                                                                                                                        |   | Fair |   | Carrying |   | Fair |
|                           | amount                                                                                                                                                                                          |   | value |   | amount |   | value |
|                           | (In      millions)                                                                                                                                                                              |
|                           |                                                                                                                                                                                            |   |   |   |   |   |   |
| Cash      and cash equivalents | $      43.8                                                                                                                                                                                     |   | $      43.8 |   | $      50.6 |   | $      50.6 |

|                                                       |   | Amount             |   |
|------------------------------------------------------------|--------|--------------------|--------|
|                                                       |   | (In      millions) |   |
|                                                       |   |               |   |
| Unrecognized      tax benefits:                            |   |               |   |
| Amount      at adoption of FIN 48                          |   | $                  | 1.3    |   |
| Tax      positions taken in prior periods:                 |   |               |   |   |
| Gross      increases                                       |   |               | -      |   |
| Gross      decreases                                       |   |               | .2     |   |
| Tax      positions taken in current period:                |   |               |   |   |
| Gross      increases                                       |   |               | -      |   |
| Gross      decreases                                       |   |               | -      |   |
| Settlements      with taxing authorities – cash paid |   |               | -      |   |
| Lapse      of applicable statute of limitations            |   |               | -      |   |
| Change      in foreign currency rates                      |   |               | (.2    | ) |
|                                                       |   |               |   |   |
|   Amount      at December 31, 2007               |   | $                  | 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, 2006 and December 31, 2007                       | FB-3 |
|                                                               |   |
| Consolidated      Statements of Income –                     |   |
| Year      ended December 31, 2005, 2006 and 2007                   | FB-5 |
|                                                               |   |
| Consolidated      Statements of Comprehensive Income (Loss) -      |   |
| Year      ended December 31, 2005, 2006 and 2007                   | FB-6 |
|                                                               |   |
| Consolidated      Statements of Stockholder’s Equity – |   |
| Year      ended December 31, 2005, 2006 and 2007                   | FB-7 |
|                                                               |   |
| Consolidated      Statements of Cash Flows –                 |   |
| Year      ended December 31, 2005, 2006 and 2007                   | FB-8 |
|                                                               |   |
| Notes      to Consolidated Financial Statements                    | FB-10 |

----

----

|                                                |   | December 31, |   |
|-----------------------------------------------------|--------|--------------|--------|
| ASSETS                                              |   | 2006         |   |   | 2007 |   |
|                                                |   |         |   |   |   |   |
| Current      assets:                                |   |         |   |   |   |   |
| Cash      and cash equivalents                      |   | $            | 3.5    |   |   | $ | 4.7 |   |
| Restricted      cash                                |   |         | 1.5    |   |   |   | 1.8 |   |
| Accounts      and notes receivable                  |   |         | 20.1   |   |   |   | 16.1 |   |
| Receivable      from affiliates                     |   |         | 39.7   |   |   |   | 35.0 |   |
| Refundable      income taxes                        |   |         | -      |   |   |   | 1.1 |   |
| Inventories                                         |   |         | 75.0   |   |   |   | 90.7 |   |
| Prepaid      expenses                               |   |         | 1.6    |   |   |   | 1.6 |   |
|                                                |   |         |   |   |   |   |   |   |
| Total      current assets                           |   |         | 141.4  |   |   |   | 151.0 |   |
|                                                |   |         |   |   |   |   |   |   |
| Other      assets                                   |   |         | 3.1    |   |   |   | 3.4 |   |
|                                                |   |         |   |   |   |   |   |   |
| Property      and equipment:                        |   |         |   |   |   |   |   |   |
| Land                                                |   |         | 18.9   |   |   |   | 21.0 |   |
| Buildings                                           |   |         | 41.6   |   |   |   | 47.6 |   |
| Machinery      and equipment                        |   |         | 201.7  |   |   |   | 234.3 |   |
| Mining      properties                              |   |         | 82.1   |   |   |   | 89.6 |   |
| Construction      in progress                       |   |         | 7.8    |   |   |   | 20.1 |   |
|                                                |   |         |   |   |   |   |   |   |
|                                                |   |         | 352.1  |   |   |   | 412.6 |   |
| Less      accumulated depreciation and amortization |   |         | 219.3  |   |   |   | 253.2 |   |
|                                                |   |         |   |   |   |   |   |   |
| Net      property and equipment                     |   |         | 132.8  |   |   |   | 159.4 |   |
|                                                |   |         |   |   |   |   |   |   |
| Total      assets                                   |   | $            | 277.3  |   |   | $ | 313.8 |   |

----

|                                                                                                                       |   | December 31, |   |
|----------------------------------------------------------------------------------------------------------------------------|--------|--------------|--------|
| LIABILITIES AND STOCKHOLDER’S      EQUITY                                                                            |   | 2006         |   |   | 2007 |   |
|                                                                                                                       |   |         |   |   |   |   |
|                                                                                                                       |   |         |   |   |   |   |
| Current      liabilities:                                                                                                  |   |         |   |   |   |   |
| Current      maturities of long-term debt                                                                                  |   | $            | .9     |   |   | $ | .8 |   |
| Accounts      payable and accrued liabilities                                                                              |   |         | 38.6   |   |   |   | 52.9 |   |
| Payable      to affiliates                                                                                                 |   |         | 10.7   |   |   |   | 10.6 |   |
| Income      taxes                                                                                                          |   |         | 10.0   |   |   |   | 9.2 |   |
| Deferred      income taxes                                                                                                 |   |         | 1.6    |   |   |   | 1.8 |   |
|                                                                                                                       |   |         |   |   |   |   |   |   |
| Total      current liabilities                                                                                             |   |         | 61.8   |   |   |   | 75.3 |   |
|                                                                                                                       |   |         |   |   |   |   |   |   |
| Noncurrent      liabilities:                                                                                               |   |         |   |   |   |   |   |   |
| Long-term      debt                                                                                                        |   |         | 3.9    |   |   |   | 4.5 |   |
| Deferred      income taxes                                                                                                 |   |         | 14.4   |   |   |   | 16.4 |   |
| Accrued      pension costs                                                                                                 |   |         | 14.6   |   |   |   | 6.0 |   |
| Other                                                                                                                      |   |         | 3.2    |   |   |   | 3.5 |   |
|                                                                                                                       |   |         |   |   |   |   |   |   |
| Total      noncurrent liabilities                                                                                          |   |         | 36.1   |   |   |   | 30.4 |   |
|                                                                                                                       |   |         |   |   |   |   |   |   |
| 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                                                                                                      |   |         | (26.7  | ) |   |   | (31.3 | ) |
| Accumulated      other comprehensive income (loss):                                                                        |   |         |   |   |   |   |   |   |
| Currency      translation                                                                                                  |   |         | 8.2    |   |   |   | 31.0 |   |
| Defined      benefit pension plans                                                                                         |   |         | (19.2  | ) |   |   | (8.7 | ) |
|                                                                                                                       |   |         |   |   |   |   |   |   |
| Total      stockholder's equity                                                                                            |   |         | 179.4  |   |   |   | 208.1 |   |
|                                                                                                                       |   |         |   |   |   |   |   |   |
| Total      liabilities and stockholder’s equity                                                                      |   | $            | 277.3  |   |   | $ | 313.8 |   |
|                                                                                                                       |   |         |   |   |   |   |   |   |
| Commitments      and contingencies (Notes 6, 7 and 11)                                                                     |   |         |   |   |   |   |   |   |

----

|                                             |   | Years ended December 31, |   |
|--------------------------------------------------|--------|--------------------------|--------|
|                                             |   | 2005                     |   |   | 2006 |   |   | 2007 |   |
|                                             |   |                     |   |   |   |   |   |   |   |
| Net      sales                                   |   | $                        | 364.8  |   |   | $ | 384.4 |   |   | $ | 411.7 |   |
| Cost      of sales                               |   |                     | 290.4  |   |   |   | 312.2 |   |   |   | 355.6 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Gross      margin                                |   |                     | 74.4   |   |   |   | 72.2 |   |   |   | 56.1 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Selling,      general and administrative expense |   |                     | 24.8   |   |   |   | 25.5 |   |   |   | 26.1 |   |
| Other      operating income (expense):           |   |                     |   |   |   |   |   |   |   |   |   |   |
| Currency      transaction gains (losses), net    |   |                     | .1     |   |   |   | (.4 | ) |   |   | - |   |
| Disposition      of property and equipment       |   |                     | (.2    | ) |   |   | (.3 | ) |   |   | (.3 | ) |
| Other,      net                                  |   |                     | .5     |   |   |   | .3 |   |   |   | .4 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Income      from operations                      |   |                     | 50.0   |   |   |   | 46.3 |   |   |   | 30.1 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Other      income (expense):                     |   |                     |   |   |   |   |   |   |   |   |   |   |
| Trade      interest income                       |   |                     | .1     |   |   |   | .1 |   |   |   | .1 |   |
| Securities      transaction gain                 |   |                     | 5.4    |   |   |   | - |   |   |   | - |   |
| Other      income from affiliates                |   |                     | .4     |   |   |   | .9 |   |   |   | .9 |   |
| Interest      and other expense to affiliates    |   |                     | (2.6   | ) |   |   | (2.5 | ) |   |   | (2.9 | ) |
| Interest      expense                            |   |                     | (1.1   | ) |   |   | (.9 | ) |   |   | (.7 | ) |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Income      before income taxes                  |   |                     | 52.2   |   |   |   | 43.9 |   |   |   | 27.5 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Provision      for income taxes                  |   |                     | 16.4   |   |   |   | 10.2 |   |   |   | 8.0 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      income                                  |   | $                        | 35.8   |   |   | $ | 33.7 |   |   | $ | 19.5 |   |
|                                             |   |                     |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                          |   | Years ended December 31, |   |
|-----------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                          |   | 2005                     |   |   | 2006 |   |   | 2007 |   |
|                                                                                          |   |                     |   |   |   |   |   |   |   |
| Net      income                                                                               |   | $                        | 35.8   |   |   | $ | 33.7 |   |   | $ | 19.5 |   |
|                                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Other      comprehensive income (loss), net of tax:                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
| Currency      translation                                                                     |   |                     | (20.3  | ) |   |   | 18.7 |   |   |   | 22.8 |   |
|                                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Pension      plans:                                                                           |   |                     |   |   |   |   |   |   |   |   |   |   |
| Amortization      of prior service cost and net losses included in periodic pension      cost |   |                     | -      |   |   |   | - |   |   |   | 1.3 |   |
| Net      actuarial gain arising during year                                                   |   |                     | -      |   |   |   | - |   |   |   | 8.9 |   |
| Minimum      pension liability change                                                         |   |                     | (.6    | ) |   |   | 5.1 |   |   |   | - |   |
|                                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
|                                                                                          |   |                     | (.6    | ) |   |   | 5.1 |   |   |   | 10.2 |   |
|                                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Total      other comprehensive income (loss)                                                  |   |                     | (20.9  | ) |   |   | 23.8 |   |   |   | 33.0 |   |
|                                                                                          |   |                     |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      income                                                                     |   | $                        | 14.9   |   |   | $ | 57.5 |   |   | $ | 52.5 |   |

----

|                                                                                              |   |   |   |   |       |   |   |     |   |   | Accumulated      other      |   |   |    |   |
|---------------------------------------------------------------------------------------------------|--------|--------|--------|--------|------------|--------|--------|----------|--------|--------|-----------------------------|--------|--------|---------|--------|
|                                                                                              |   |   |   |   |       |   |   |     |   |   | comprehensive income (loss) |   |   |    |   |
|                                                                                              |   |   |   |   | Additional |   |   |     |   |   |                        |   |   |    |   |   |   |   |
|                                                                                              |   | Common |   |   | paid-in    |   |   | Retained |   |   | Currency                    |   |   | Pension |   |   |   |   |
|                                                                                              |   | stock  |   |   | capital    |   |   | deficit  |   |   | translation                 |   |   | plans   |   |   | Total |   |
|                                                                                              |   |   |   |   |       |   |   |     |   |   |                        |   |   |    |   |   |   |   |
| Balance      at December 31, 2004                                                                 |   | $      | .1     |   |       | $      | 217.0  |     |   | $      | (69.3                       | )      |   | $       | 9.8    |   |   | $ | (9.3 | ) |   | $ | 148.3 |   |
|                                                                                              |   |   |   |   |       |   |   |     |   |   |                        |   |   |    |   |   |   |   |   |   |   |   |   |   |
| Net      income                                                                                   |   |   | -      |   |       |   | -      |     |   |   | 35.8                        |   |   |    | -      |   |   |   | - |   |   |   | 35.8 |   |
| Other      comprehensive loss, net of tax                                                         |   |   | -      |   |       |   | -      |     |   |   | -                           |   |   |    | (20.3  | ) |   |   | (.6 | ) |   |   | (20.9 | ) |
|                                                                                              |   |   |   |   |       |   |   |     |   |   |                        |   |   |    |   |   |   |   |   |   |   |   |   |   |
| 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 |   |

----

|                                                                    |   | Years ended December 31, |   |
|-------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                    |   | 2005                     |   |   | 2006 |   |   | 2007 |   |
|                                                                    |   |                     |   |   |   |   |   |   |   |
| Cash      flows from operating activities:                              |   |                     |   |   |   |   |   |   |   |
| Net      income                                                         |   | $                        | 35.8   |   |   | $ | 33.7 |   |   | $ | 19.5 |   |
| Depreciation      and amortization                                      |   |                     | 13.3   |   |   |   | 14.2 |   |   |   | 16.5 |   |
| Deferred      income taxes                                              |   |                     | -      |   |   |   | (4.5 | ) |   |   | (3.6 | ) |
| Securities      transaction gain                                        |   |                     | (5.4   | ) |   |   | - |   |   |   | - |   |
| Pension,      net                                                       |   |                     | 1.5    |   |   |   | 1.3 |   |   |   | 3.0 |   |
| Other                                                                   |   |                     | .5     |   |   |   | .5 |   |   |   | 1.3 |   |
| Change      in assets and liabilities:                                  |   |                     |   |   |   |   |   |   |   |   |   |   |
| Accounts      and notes receivable                                      |   |                     | (1.7   | ) |   |   | (.4 | ) |   |   | 6.6 |   |
| Inventories                                                             |   |                     | (12.7  | ) |   |   | 1.9 |   |   |   | (6.0 | ) |
| Prepaid      expenses                                                   |   |                     | (.1    | ) |   |   | (.9 | ) |   |   | .3 |   |
| Accounts      payable and accrued liabilities                           |   |                     | 4.6    |   |   |   | (1.0 | ) |   |   | 2.8 |   |
| Income      taxes                                                       |   |                     | 2.4    |   |   |   | .9 |   |   |   | (3.6 | ) |
| Accounts      with affiliates                                           |   |                     | (13.7  | ) |   |   | (6.7 | ) |   |   | 8.0 |   |
| Other      noncurrent assets                                            |   |                     | (.6    | ) |   |   | - |   |   |   | - |   |
| Other      noncurrent liabilities                                       |   |                     | (1.9   | ) |   |   | 2.4 |   |   |   | (.3 | ) |
|                                                                    |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      cash provided by operating activities                          |   |                     | 22.0   |   |   |   | 41.4 |   |   |   | 44.5 |   |
|                                                                    |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash      flows from investing activities:                              |   |                     |   |   |   |   |   |   |   |   |   |   |
| Capital      expenditures                                               |   |                     | (15.0  | ) |   |   | (22.8 | ) |   |   | (20.7 | ) |
| Change      in restricted cash equivalents                              |   |                     | .1     |   |   |   | - |   |   |   | (.1 | ) |
| Proceeds      from disposal of interest in Norwegian smelting operation |   |                     | 3.6    |   |   |   | - |   |   |   | - |   |
|                                                                    |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      cash used by investing activities                              |   |                     | (11.3  | ) |   |   | (22.8 | ) |   |   | (20.8 | ) |
|                                                                    |   |                     |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                                                 |   | Years ended December 31, |   |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                                                                 |   | 2005                     |   |   | 2006 |   |   | 2007 |   |
|                                                                                                                                 |   |                     |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                                                                                           |   |                     |   |   |   |   |   |   |   |
| Indebtedness:                                                                                                                        |   |                     |   |   |   |   |   |   |   |
| Borrowings                                                                                                                           |   | $                        | 4.6    |   |   | $ | - |   |   | $ | .5 |   |
| Principal      payments                                                                                                              |   |                     | (13.1  | ) |   |   | (.2 | ) |   |   | (.2 | ) |
| Dividends      paid                                                                                                                  |   |                     | -      |   |   |   | (26.9 | ) |   |   | (23.3 | ) |
| Loans      to affiliates – repayments                                                                                          |   |                     | -      |   |   |   | 10.9 |   |   |   | - |   |
| Loans      from affiliates - repayments                                                                                              |   |                     | (4.6   | ) |   |   | - |   |   |   | - |   |
|                                                                                                                                 |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      cash used by financing activities                                                                                           |   |                     | (13.1  | ) |   |   | (16.2 | ) |   |   | (23.0 | ) |
|                                                                                                                                 |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash      and cash equivalents:                                                                                                      |   |                     |   |   |   |   |   |   |   |   |   |   |
| Net      change during the year from:                                                                                                |   |                     |   |   |   |   |   |   |   |   |   |   |
| Operating,      investing and financing activities                                                                                   |   |                     | (2.4   | ) |   |   | 2.4 |   |   |   | .7 |   |
| Currency      translation                                                                                                            |   |                     | (.1    | ) |   |   | .1 |   |   |   | .5 |   |
| Balance      at beginning of  period                                                                                       |   |                     | 3.5    |   |   |   | 1.0 |   |   |   | 3.5 |   |
|                                                                                                                                 |   |                     |   |   |   |   |   |   |   |   |   |   |
| Balance      at end of period                                                                                                        |   | $                        | 1.0    |   |   | $ | 3.5 |   |   | $ | 4.7 |   |
|                                                                                                                                 |   |                     |   |   |   |   |   |   |   |   |   |   |
| Supplemental      disclosures -                                                                                                      |   |                     |   |   |   |   |   |   |   |   |   |   |
| Cash      paid for:                                                                                                                  |   |                     |   |   |   |   |   |   |   |   |   |   |
| Interest                                                                                                                             |   | $                        | .4     |   |   | $ | .4 |   |   | $ | .7 |   |
| Income      taxes                                                                                                                    |   |                     | 13.9   |   |   |   | 11.8 |   |   |   | 15.3 |   |
| Accrual      for capital expenditures                                                                                                |   |                     | -      |   |   |   | - |   |   |   | 5.8 |   |
|                                                                                                                                 |   |                     |   |   |   |   |   |   |   |   |   |   |
| Inventories      received as partial consideration for disposal      of   interest in Norwegian smelting    operation |   | $                        | 1.9    |   |   | $ | - |   |   | $ | - |   |

----

|                                       |   | December 31,                    |   |
|--------------------------------------------|--------|---------------------------------|--------|
|                                       |   | 2006                            |   |   | 2007 |   |
|                                       |   | (In      millions)              |   |
|                                       |   |                            |   |   |   |   |
| Trade      receivables                     |   | $                               | 16.1   |   |   | $ | 12.6 |   |
| Recoverable      VAT and other receivables |   |                            | 4.0    |   |   |   | 3.5 |   |
| Allowance      for doubtful accounts       |   |      - |   |   | - |   |
|                                       |   |                            |   |   |   |   |   |   |
| Total                                      |   | $                               | 20.1   |   |   | $ | 16.1 |   |

|                   |   | December 31,       |   |
|------------------------|--------|--------------------|--------|
|                   |   | 2006               |   |   | 2007 |   |
|                   |   | (In      millions) |   |
|                   |   |               |   |   |   |   |
| Raw      materials     |   | $                  | 19.0   |   |   | $ | 28.6 |   |
| Work      in process   |   |               | 2.6    |   |   |   | 4.6 |   |
| Finished      products |   |               | 33.8   |   |   |   | 34.1 |   |
| Supplies               |   | 19.6               |   |   | 23.4 |   |
|                   |   |               |   |   |   |   |   |   |
| Total                  |   | $                  | 75.0   |   |   | $ | 90.7 |   |

|                                       |   | December 31,       |   |
|--------------------------------------------|--------|--------------------|--------|
|                                       |   | 2006               |   |   | 2007 |   |
|                                       |   | (In      millions) |   |
|                                       |   |               |   |   |   |   |
| Restricted      marketable debt securities |   | $                  | 2.8    |   |   | $ | 3.2 |   |
| Deferred      financing costs, net         |   |               | .3     |   |   |   | .1 |   |
| Other                                      |   | -                  |   |   |   | .1 |   |
|                                       |   |               |   |   |   |   |   |   |
| Total                                      |   | $                  | 3.1    |   |   | $ | 3.4 |   |

|                      |   | December 31,       |   |
|---------------------------|--------|--------------------|--------|
|                      |   | 2006               |   |   | 2007 |   |
|                      |   | (In      millions) |   |
|                      |   |               |   |   |   |   |
| Accounts      payable     |   | $                  | 23.4   |   |   | $ | 28.2 |   |
| Accrued      liabilities: |   |               |   |   |   |   |   |   |
| Employee      benefits    |   |               | 9.0    |   |   |   | 10.0 |   |
| Other                     |   |               | 6.2    |   |   |   | 14.7 |   |
|                      |   |               |   |   |   |   |   |   |
| Total                     |   | $                  | 38.6   |   |   | $ | 52.9 |   |

|                         |   | December 31,       |   |
|------------------------------|--------|--------------------|--------|
|                         |   | 2006               |   | 2007 |   |
|                         |   | (In      millions) |   |
|                         |   |               |   |   |   |   |
| Long-term      debt          |   | $                  | 4.8    |   |   | $ | 5.3 |   |
| Less      current maturities |   |               | .9     |   |   |   | .8 |   |
|                         |   |               |   |   |   |   |   |   |
| Total                        |   | $                  | 3.9    |   |   | $ | 4.5 |   |

| Years ending December      31, |   | Amount             |   |
|--------------------------------|--------|--------------------|--------|
|                           |   | (In      millions) |   |
|                           |   |               |   |
| 2008                           |   | $                  | .8     |   |
| 2009                           |   |               | 1.0    |   |
| 2010                           |   |               | 1.1    |   |
| 2011                           |   |               | 1.1    |   |
| 2012                           |   |               | 1.1    |   |
| Thereafter                     |   |               | .2     |   |
|                           |   |               |   |   |
| Total                          |   | $                  | 5.3    |   |

|                                                        |   | Years ended December 31, |   |
|-------------------------------------------------------------|--------|--------------------------|--------|
|                                                        |   | 2005                     |   |   | 2006 |   |   | 2007 |   |
|                                                        |   | (In      millions)       |   |
| Pretax      income:                                         |   |                     |   |   |   |   |   |   |   |
| Denmark                                                     |   | $                        | .5     |   |   | $ | .6 |   |   | $ | .4 |   |
| Non-Denmark                                                 |   |                     | 51.7   |   |   |   | 43.3 |   |   |   | 27.1 |   |
|                                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
| Total                                                       |   | $                        | 52.2   |   |   | $ | 43.9 |   |   | $ | 27.5 |   |
|                                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
| Expected      tax expense                                   |   | $                        | 14.6   |   |   | $ | 12.3 |   |   | $ | 6.9 |   |
| Non-Denmark      tax rates                                  |   |                     | 1.4    |   |   |   | .9 |   |   |   | 1.1 |   |
| Nondeductible      expenses                                 |   |                     | .3     |   |   |   | .3 |   |   |   | .3 |   |
| Tax      contingency reserve adjustment, net                |   |                     | (.6    | ) |   |   | (2.4 | ) |   |   | - |   |
| Other,      net                                             |   |                     | .7     |   |   |   | (.9 | ) |   |   | (.3 | ) |
|                                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
| Total      income tax expense                               |   | $                        | 16.4   |   |   | $ | 10.2 |   |   | $ | 8.0 |   |
|                                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
| Provision      for income taxes:                            |   |                     |   |   |   |   |   |   |   |   |   |   |
| Current      income tax expense:                            |   |                     |   |   |   |   |   |   |   |   |   |   |
| Denmark                                                     |   | $                        | .2     |   |   | $ | .2 |   |   | $ | .1 |   |
| Non-Denmark                                                 |   |                     | 16.2   |   |   |   | 14.5 |   |   |   | 11.5 |   |
|                                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |                     | 16.4   |   |   |   | 14.7 |   |   |   | 11.6 |   |
|                                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
| Deferred      income tax expense (benefit):                 |   |                     |   |   |   |   |   |   |   |   |   |   |
| Denmark                                                     |   |                     | (.6    | ) |   |   | (2.4 | ) |   |   | (.3 | ) |
| Non-Denmark                                                 |   |                     | .6     |   |   |   | (2.1 | ) |   |   | (3.3 | ) |
|                                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
|                                                        |   |                     | -      |   |   |   | (4.5 | ) |   |   | (3.6 | ) |
|                                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
| Total      income tax expense                               |   | $                        | 16.4   |   |   | $ | 10.2 |   |   | $ | 8.0 |   |
|                                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
| Comprehensive      provision for income taxes allocable to: |   |                     |   |   |   |   |   |   |   |   |   |   |
| Pretax      income                                          |   | $                        | 16.4   |   |   | $ | 10.2 |   |   | $ | 8.0 |   |
| Other      comprehensive loss –Pension      plans     |   |                     | .2     |   |   |   | 2.5 |   |   |   | 3.9 |   |
| Adoption      of SFAS No. 158 –Pension      plans     |   |                     | -      |   |   |   | (5.9 | ) |   |   | - |   |
|                                                        |   |                     |   |   |   |   |   |   |   |   |   |   |
| Total                                                       |   | $                        | 16.6   |   |   | $ | 6.8 |   |   | $ | 11.9 |   |

|                                                           |   | December 31,       |   |
|----------------------------------------------------------------|--------|--------------------|--------|
|                                                           |   | 2006               |   |   | 2007 |   |
|                                                           |   | Assets             |   |   | Liabilities |   |   | Assets |   |   | Liabilities |   |
|                                                           |   | (In      millions) |   |
|                                                           |   |               |   |   |   |   |   |   |   |   |   |   |
| Tax      effect of temporary differences relating to:          |   |               |   |   |   |   |   |   |   |   |   |   |
| Inventories                                                    |   | $                  | -      |   |   | $ | (1.8 | ) |   | $ | .1 |   |   | $ | (1.9 | ) |
| Property      and equipment                                    |   |               | -      |   |   |   | (19.2 | ) |   |   | - |   |   |   | (20.4 | ) |
| Pension      asset                                             |   |               | -      |   |   |   | (1.9 | ) |   |   | - |   |   |   | (1.4 | ) |
| Accrued      pension cost                                      |   |               | 5.8    |   |   |   | - |   |   |   | 2.8 |   |   |   | - |   |
| Accrued      liabilities and other deductible differences      |   |               | 1.7    |   |   |   | - |   |   |   | 3.0 |   |   |   | - |   |
| Other      taxable differences                                 |   |               | -      |   |   |   | (.6 | ) |   |   | - |   |   |   | (.4 | ) |
|                                                           |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross      deferred tax assets (liabilities)                   |   |               | 7.5    |   |   |   | (23.5 | ) |   |   | 5.9 |   |   |   | (24.1 | ) |
|                                                           |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Reclassification,      principally netting by tax jurisdiction |   |               | (7.5   | ) |   |   | 7.5 |   |   |   | (5.9 | ) |   |   | 5.9 |   |
|                                                           |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      total deferred tax liabilities                        |   |               | -      |   |   |   | (16.0 | ) |   |   | - |   |   |   | (18.2 | ) |
| Net      current deferred tax liabilities                      |   |               | -      |   |   |   | (1.6 | ) |   |   | - |   |   |   | (1.8 | ) |
|                                                           |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      noncurrent deferred tax liabilities                   |   | $                  | -      |   |   | $ | (14.4 | ) |   | $ | - |   |   | $ | (16.4 | ) |

| ·   | We      previously received a preliminary tax assessment related to 1993 from the      Belgian tax authorities proposing tax deficiencies, including related      interest, of approximately euro 6 million.  The Belgian tax      authorities filed a lien on the fixed assets of our Belgian TiO2      operations in connection with their assessment. This lien did not      interfere with on-going operations at the facility.  We filed a      protest to this assessment, and in July 2006 the Belgian tax authorities      withdrew the assessment.  The lien was subsequently      released. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   |  The      Norwegian tax authorities previously notified us of their intent to assess      tax deficiencies of approximately kroner 12 million relating to the years      1998 through 2000.  We objected to this proposed assessment, and      in May 2006 the Norwegian tax authorities withdrew the      assessment. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Years ending December 31, |   | Amount             |   |
|---------------------------|--------|--------------------|--------|
|                      |   | (In      millions) |   |
| 2008                      |   | $                  | 4.6    |   |
| 2009                      |   |               | 3.4    |   |
| 2010                      |   |               | 3.5    |   |
| 2011                      |   |               | 4.0    |   |
| 2012                      |   |               | 6.0    |   |
| 2013      to 2017         |   |               | 25.3   |   |

|                                                              |   | December 31,       |   |
|-------------------------------------------------------------------|--------|--------------------|--------|
|                                                              |   | 2006               |   |   | 2007 |   |
|                                                              |   | (In      millions) |   |
|                                                              |   |               |   |   |   |   |
| Change      in projected benefit obligations (“PBO”): |   |               |   |   |   |   |
| Benefit      obligations at beginning of year                     |   | $                  | 69.8   |   |   | $ | 74.8 |   |
| Change      in measurement date, net                              |   |               | -      |   |   |   | 1.3 |   |
| Service      cost                                                 |   |               | 2.3    |   |   |   | 2.2 |   |
| Interest      cost                                                |   |               | 3.2    |   |   |   | 3.6 |   |
| Participant      contributions                                    |   |               | .1     |   |   |   | .2 |   |
| Actuarial      gains                                              |   |               | (4.2   | ) |   |   | (13.9 | ) |
| Change      in currency exchange rates                            |   |               | 6.8    |   |   |   | 9.3 |   |
| Benefits      paid                                                |   |               | (3.2   | ) |   |   | (5.8 | ) |
|                                                              |   |               |   |   |   |   |   |   |
| Benefit      obligations at end of year                           |   |               | 74.8   |   |   |   | 71.7 |   |
|                                                              |   |               |   |   |   |   |   |   |
| Change      in fair value of plan assets:                         |   |               |   |   |   |   |   |   |
| Fair      value of plan assets at beginning of year               |   |               | 52.8   |   |   |   | 60.2 |   |
| Change      in measurement date, net                              |   |               | -      |   |   |   | - |   |
| Actual      return on plan assets                                 |   |               | 1.4    |   |   |   | .9 |   |
| Employer      contributions                                       |   |               | 3.8    |   |   |   | 2.1 |   |
| Participant      contributions                                    |   |               | .1     |   |   |   | .2 |   |
| Change      in currency exchange rates                            |   |               | 5.3    |   |   |   | 8.1 |   |
| Benefits      paid                                                |   |               | (3.2   | ) |   |   | (5.8 | ) |
|                                                              |   |               |   |   |   |   |   |   |
| Fair      value of plan assets at end of year                     |   |               | 60.2   |   |   | $ | 65.7 |   |
|                                                              |   |               |   |   |   |   |   |   |
| Funded      status                                                |   | $                  | (14.6  | ) |   | $ | (6.0 | ) |
|                                                              |   |               |   |   |   |   |   |   |
| Amounts      recognized in the balance sheet:                     |   |               |   |   |   |   |   |   |
| Accrued      pension cost:                                        |   |               |   |   |   |   |   |   |
| Current                                                           |   | $                  | -      |   |   | $ | - |   |
| Non      current                                                  |   |               | (14.6  | ) |   |   | (6.0 | ) |
|                                                              |   |               |   |   |   |   |   |   |
| Total                                                             |   | $                  | (14.6  | ) |   | $ | (6.0 | ) |
|                                                              |   |               |   |   |   |   |   |   |
| Accumulated      other comprehensive loss:                        |   |               |   |   |   |   |   |   |
| Actuarial      loss                                               |   | $                  | 24.2   |   |   | $ | 10.1 |   |
| Prior      service cost                                           |   |               | 2.5    |   |   |   | 2.1 |   |
| Net      transition obligation                                    |   |               | .7     |   |   |   | .5 |   |
|                                                              |   |               |   |   |   |   |   |   |
| Total                                                             |   | $                  | 27.4   |   |   | $ | 12.7 |   |
|                                                              |   |               |   |   |   |   |   |   |
| Accumulated      benefit obligations (“ABO”)          |   | $                  | 59.6   |   |   | $ | 57.1 |   |

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

|                                            |   | Years ended December 31, |   |
|-------------------------------------------------|--------|--------------------------|--------|
|                                            |   | 2005                     |   |   | 2006 |   |   | 2007 |   |
|                                            |   | (In      millions)       |   |
|                                            |   |                     |   |   |   |   |   |   |   |
| Net      periodic pension cost:                 |   |                     |   |   |   |   |   |   |   |
| Service      cost benefits                      |   | $                        | 2.1    |   |   | $ | 2.3 |   |   | $ | 2.2 |   |
| Interest      cost on PBO                       |   |                     | 3.3    |   |   |   | 3.2 |   |   |   | 3.6 |   |
| Expected      return on plan assets             |   |                     | (3.1   | ) |   |   | (3.1 | ) |   |   | (3.1 | ) |
| Amortization      of prior service cost         |   |                     | .3     |   |   |   | .3 |   |   |   | .3 |   |
| Amortization      of net transition obligations |   |                     | .1     |   |   |   | .1 |   |   |   | .1 |   |
| Recognized      actuarial losses                |   |                     | 1.3    |   |   |   | 1.5 |   |   |   | 1.3 |   |
|                                            |   |                     |   |   |   |   |   |   |   |   |   |   |
| Total                                           |   | $                        | 4.0    |   |   | $ | 4.3 |   |   | $ | 4.4 |   |

|                                        |   | December 31, |   |
|---------------------------------------------|--------|--------------|--------|
| Rate                                        |   | 2006         |   |   | 2007 |   |
|                                        |   |         |   |   |   |   |
| Discount      rate                          |   |         | 4.7    | % |   |   | 5.5 | % |
| Increase      in future compensation levels |   |         | 3.0    | % |   |   | 3.0 | % |

|                                        |   | Years ended December 31, |   |
|---------------------------------------------|--------|--------------------------|--------|
| Rate                                        |   | 2005                     |   |   | 2006 |   |   | 2007 |   |
|                                        |   |                     |   |   |   |   |   |   |   |
| Discount      rate                          |   |                     | 5.0    | % |   |   | 4.4 | % |   |   | 4.7 | % |
| Increase      in future compensation levels |   |                     | 3.0    | % |   |   | 3.0 | % |   |   | 3.0 | % |
| Long-term      return on plan assets        |   |                     | 6.0    | % |   |   | 5.5 | % |   |   | 6.4 | % |

| Years ending December 31,  |   | Amount             |   |
|---------------------------------|--------|--------------------|--------|
|                            |   | (in      millions) |   |
|                            |   |               |   |
| 2008                            |   | $                  | .8     |   |
| 2009                            |   |               | .5     |   |
| 2010                            |   |               | .2     |   |
| 2011                            |   |               | .1     |   |
| 2012                            |   |               | .1     |   |
| 2013      and thereafter        |   |               | .1     |   |
|                            |   |               |   |   |
| Total                           |   | $                  | 1.8    |   |

|                                                                                                               |   | December 31,       |   |
|--------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|
|                                                                                                               |   | 2006               |   |   | 2007 |   |
|                                                                                                               |   | Carrying           |   |   | Fair |   |   | Carrying |   |   | Fair |   |
|                                                                                                               |   | Amount             |   |   | Value |   |   | Amount |   |   | Value |   |
|                                                                                                               |   | (In      millions) |   |
|                                                                                                               |   |               |   |   |   |   |   |   |   |   |   |   |
| Cash,      cash equivalents, restricted cash equivalents and noncurrent restricted      marketable debt securities |   | $                  | 7.8    |   |   | $ | 7.8 |   |   | $ | 9.7 |   |   | $ | 9.7 |   |
|                                                                                                               |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Long-term      debt (primarily capital leases)                                                                     |   | $                  | 4.8    |   |   | $ | 4.8 |   |   | $ | 5.3 |   |   | $ | 5.3 |   |