| For      the quarter ended June 30,      2008 | Commission      file number 1-5467 |
|-----------------------------------------------|------------------------------------|

| VALHI,      INC.                                           |
|------------------------------------------------------------|
| (Exact      name of Registrant as specified in itscharter) |

| Delaware                                                                |   | 87-0110150                                 |
|-------------------------------------------------------------------------|--------|--------------------------------------------|
| (State      or other jurisdiction ofincorporation      or organization) |   | (IRS      EmployerIdentification      No.) |

| 5430      LBJ Freeway, Suite 1700, Dallas,    Texas  75240-2697                  |
|--------------------------------------------------------------------------------------------|
| (Address      of principal executive offices)     (Zip      Code) |

----

|                                                                                                                                                                                                                                      | Pagenumber    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|
| Part      I.                           FINANCIAL      INFORMATION                                  |          |
|                                                                                                                                                                                                                                      |          |
| Item      1.                   Financial      Statements.                                                                                  |          |
|                                                                                                                                                                                                                                      |          |
| Condensed Consolidated Balance      Sheets – December 31, 2007; and      June 30, 2008 (unaudited)                                                                                                                             |  3       |
|                                                                                                                                                                                                                                      |          |
| Condensed Consolidated      Statements of Operations (unaudited)  – Three and six months ended      June 30, 2007 and 2008                                                                                                     |  5       |
|                                                                                                                                                                                                                                      |          |
| Condensed Consolidated      Statements of Cash Flows (unaudited) – Six months ended June      30, 2007 and 2008                                                                                                                |  6       |
|                                                                                                                                                                                                                                      |          |
| Condensed Consolidated      Statement of Stockholders’ Equity and Comprehensive      Loss –  Six months ended  June 30, 2008      (unaudited)                                                        |   8 |
|                                                                                                                                                                                                                                      |          |
| Notes to Condensed Consolidated      Financial Statements (unaudited)                                                                                                                                                                |  9       |
|                                                                                                                                                                                                                                      |          |
| Item      2.                   Management’s      Discussion and Analysis of Financial Condition and Results of      Operations. | 25            |
|                                                                                                                                                                                                                                      |          |
| Item      3.                   Quantitative      and Qualitative Disclosures About Market Risk                                        | 42            |
|                                                                                                                                                                                                                                      |          |
| Item      4.                   Controls      and Procedures                                                                                | 42            |
|                                                                                                                                                                                                                                      |          |
| Part      II.                      OTHER      INFORMATION                                                                   |          |
|                                                                                                                                                                                                                                      |          |
| Item      1.                   Legal      Proceedings.                                                                                     | 44            |
|                                                                                                                                                                                                                                      |          |
| Item      1A.                              Risk      Factors.                       | 45            |
|                                                                                                                                                                                                                                      |          |
| Item      2.                   Unregistered      Sales of Equity Securities and Use of Proceeds; Share      Repurchases               |  45      |
|                                                                                                                                                                                                                                      |          |
| Item      4.                   Submission      of Matters to a Vote of Security Holders                                                    | 45            |
|                                                                                                                                                                                                                                      |          |
| Item      6.                   Exhibits.                                                                                                   | 45            |
|                                                                                                                                                                                                                                      |          |

----

|               ASSETS |   | December      31, 2007 |    |   | June      30, 2008   |   |
|--------------------------------------------------------------------------------------------|--------|-----------------------------|---------|--------|--------------------------------|--------|
|                                                                                       |   |                        |    |   | (unaudited)                    |   |
|                                                                                       |   |                        |    |   |                           |   |
| Current assets:                                                                       |   |                        |    |   |                           |   |
|   Cash and cash equivalents                                       |   | $                           | 138.3   |   |                           | $      | 55.4 |   |
|   Restricted cash equivalents                                          |   |                        | 7.2     |   |                           |   | 11.9 |   |
|   Marketable securities                                                     |   |                        | 7.2     |   |                           |   | 9.0 |   |
|   Accounts and other receivables, net                        |   |                        | 253.7   |   |                           |   | 333.9 |   |
|   Inventories, net                                                          |   |                        | 337.9   |   |                           |   | 337.2 |   |
|   Prepaid expenses and      other                                      |   |                        | 16.2    |   |                           |   | 15.1 |   |
|   Deferred income taxes                                                |   |                        | 10.4    |   |                           |   | 10.3 |   |
|                                                                                       |   |                        |    |   |                           |   |   |   |
|       Total current assets                         |   |                        | 770.9   |   |                           |   | 772.8 |   |
|                                                                                       |   |                        |    |   |                           |   |   |   |
| Other assets:                                                                         |   |                        |    |   |                           |   |   |   |
|   Marketable      securities                                                     |   |                        | 319.8   |   |                           |   | 290.0 |   |
|   Investment in affiliates                                             |   |                        | 137.9   |   |                           |   | 134.4 |   |
|   Pension asset                                                             |   |                        | 47.6    |   |                           |   | 51.6 |   |
|   Goodwill                                                                       |   |                        | 406.8   |   |                           |   | 406.8 |   |
|   Other intangible assets                                              |   |                        | 2.7     |   |                           |   | 2.4 |   |
|   Deferred income taxes                                                |   |                        | 168.7   |   |                           |   | 186.8 |   |
|   Other assets                                                              |   |                        | 67.3    |   |                           |   | 84.3 |   |
|                                                                                       |   |                        |    |   |                           |   |   |   |
|       Total other assets                           |   |                        | 1,150.8 |   |                           |   | 1,156.3 |   |
|                                                                                       |   |                        |    |   |                           |   |   |   |
| Property and equipment:                                                          |   |                        |    |   |                           |   |   |   |
|   Land                                                                           |   |                        | 48.2    |   |                           |   | 51.5 |   |
|   Buildings                                                                      |   |                        | 277.1   |   |                           |   | 301.0 |   |
|   Equipment                                                                      |   |                        | 1,051.9 |   |                           |   | 1,143.8 |   |
|   Mining properties                                                         |   |                        | 39.8    |   |                           |   | 46.5 |   |
|   Construction in progress                                             |   |                        | 48.9    |   |                           |   | 59.8 |   |
|                                                                                       |   |                        | 1,465.9 |   |                           |   | 1,602.6 |   |
|   Less accumulated depreciation                                        |   |                        | 784.6   |   |                           |   | 885.4 |   |
|                                                                                       |   |                        |    |   |                           |   |   |   |
|       Net property and equipment              |   |                        | 681.3   |   |                           |   | 717.2 |   |
|                                                                                       |   |                        |    |   |                           |   |   |   |
|       Total assets                                      |   | $                           | 2,603.0 |   |                           | $      | 2,646.3 |   |

----

|    LIABILITIES AND STOCKHOLDERS'      EQUITY                                                                                                               |   | December      31, 2007 |    |   | June      30, 2008 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|--------|-------------------------|--------|
|                                                                                                                                                                      |   |                        |    |   | (unaudited)             |   |
|                                                                                                                                                                      |   |                        |    |   |                    |   |
| Current liabilities:                                                                                                                                                 |   |                        |    |   |                    |   |
|   Current maturities of long-term debt                                                                                                      |   | $                           | 16.8    |   |                    | $      | 24.7 |   |
|   Accounts payable      and accrued liabilities                                                                                                            |   |                        | 267.8   |   |                    |   | 282.3 |   |
|   Income taxes                                                                                                                                             |   |                        | 9.8     |   |                    |   | 3.9 |   |
|   Deferred income taxes                                                                                                                               |   |                        | 3.3     |   |                    |   | 3.5 |   |
|                                                                                                                                                                      |   |                        |    |   |                    |   |   |   |
|       Total current liabilities                                                                                                   |   |                        | 297.7   |   |                    |   | 314.4 |   |
|                                                                                                                                                                      |   |                        |    |   |                    |   |   |   |
| Noncurrent liabilities:                                                                                                                                              |   |                        |    |   |                    |   |   |   |
|   Long-term debt                                                                                                                                           |   |                        | 889.8   |   |                    |   | 958.2 |   |
|   Deferred income taxes                                                                                                                               |   |                        | 415.0   |   |                    |   | 406.6 |   |
|   Accrued pension costs                                                                                                                               |   |                        | 140.0   |   |                    |   | 141.9 |   |
|   Accrued postretirement      benefits cost                                                                                                                |   |                        | 33.6    |   |                    |   | 33.1 |   |
|   Accrued environmental costs                                                                                                                         |   |                        | 40.3    |   |                    |   | 38.2 |   |
|   Other liabilities                                                                                                                                        |   |                        | 77.7    |   |                    |   | 79.2 |   |
|                                                                                                                                                                      |   |                        |    |   |                    |   |   |   |
|       Total noncurrent liabilities                                                                                                |   |                        | 1,596.4 |   |                    |   | 1,657.2 |   |
|                                                                                                                                                                      |   |                        |    |   |                    |   |   |   |
| Minority interest      in net assets of subsidiaries                                                                                                                 |   |                        | 90.5    |   |                    |   | 92.3 |   |
|                                                                                                                                                                      |   |                        |    |   |                    |   |   |   |
| Stockholders' equity:                                                                                                                                                |   |                        |    |   |                    |   |   |   |
|   Preferred stock                                                                                                                                          |   |                        | 667.3   |   |                    |   | 667.3 |   |
|   Common stock                                                                                                                                             |   |                        | 1.2     |   |                    |   | 1.2 |   |
|   Additional paid-in capital                                                                                                                          |   |                        | 10.4    |   |                    |   | - |   |
|   Accumulated      deficit                                                                                                                                      |   |                        | (74.1   | )      |                    |   | (92.4 | ) |
|   Accumulated other comprehensive income                                                                                                    |   |                        | 51.5    |   |                    |   | 44.2 |   |
|   Treasury stock                                                                                                                                           |   |                        | (37.9   | )      |                    |   | (37.9 | ) |
|                                                                                                                                                                      |   |                        |    |   |                    |   |   |   |
|       Total stockholders' equity                                                                                                  |   |                        | 618.4   |   |                    |   | 582.4 |   |
|                                                                                                                                                                      |   |                        |    |   |                    |   |   |   |
|       Total liabilities, minority interest and       stockholders’ equity |   | $                           | 2,603.0 |   |                    | $      | 2,646.3 |   |
|                                                                                                                                                                      |   |                        |    |   |                    |   |   |   |

----

|                                                                                            |   | Three      months ended |     |   | Six      months ended |   |
|-------------------------------------------------------------------------------------------------|--------|-------------------------|----------|--------|-----------------------|--------|
|                                                                                            |   | June 30,                |     |   | June 30,              |   |
|                                                                                            |   | 2007                    |     |   | 2008                  |   |   | 2007 |   |   | 2008 |   |
|                                                                                            |   | (unaudited)             |     |
|                                                                                            |   |                    |     |   |                  |   |   |   |   |   |   |   |
| Revenues      and other income:                                                                 |   |                    |     |   |                  |   |   |   |   |   |   |   |
|   Net      sales                                                                      |   | $                       | 389.0    |   |                  | $      | 436.1 |   |   | $ | 748.0 |   |   | $ | 810.1 |   |
|   Other      income, net                                                              |   |                    | 11.4     |   |                  |   | 12.7 |   |   |   | 23.8 |   |   |   | 18.1 |   |
|   Equity      in earnings of:                                                         |   |                    |     |   |                  |   |   |   |   |   |   |   |   |   |   |   |
|     Titanium      Metals Corporation     ("TIMET") |   |                    |  -  |   |                  |   |  - |   |   |   |  26.9 |   |   |   |  - |   |
|     Other                                                                   |   |                    | 1.0      |   |                  |   | (.2 | ) |   |   | .5 |   |   |   | (.6 | ) |
|                                                                                            |   |                    |     |   |                  |   |   |   |   |   |   |   |   |   |   |   |
|     Total      revenues and other income                                    |   |                    | 401.4    |   |                  |   | 448.6 |   |   |   | 799.2 |   |   |   | 827.6 |   |
|                                                                                            |   |                    |     |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Costs      and expenses:                                                                        |   |                    |     |   |                  |   |   |   |   |   |   |   |   |   |   |   |
|   Cost      of sales                                                                  |   |                    | 316.1    |   |                  |   | 369.7 |   |   |   | 595.0 |   |   |   | 680.1 |   |
|   Selling,      general and administrative                                            |   |                    | 60.5     |   |                  |   | 65.7 |   |   |   | 115.4 |   |   |   | 124.0 |   |
|   Interest                                                                            |   |                    | 15.9     |   |                  |   | 17.7 |   |   |   | 31.5 |   |   |   | 35.1 |   |
|                                                                                            |   |                    |     |   |                  |   |   |   |   |   |   |   |   |   |   |   |
|       Total      costs and expenses                               |   |                    | 392.5    |   |                  |   | 453.1 |   |   |   | 741.9 |   |   |   | 839.2 |   |
|                                                                                            |   |                    |     |   |                  |   |   |   |   |   |   |   |   |   |   |   |
|     Income      (loss) before income taxes                                  |   |                    | 8.9      |   |                  |   | (4.5 | ) |   |   | 57.3 |   |   |   | (11.6 | ) |
|                                                                                            |   |                    |     |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Provision      for income taxes (benefit)                                                       |   |                    | 13.3     |   |                  |   | (5.6 | ) |   |   | 33.1 |   |   |   | (6.9 | ) |
|                                                                                            |   |                    |     |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Minority      interest in after-tax earnings                                               |   |                    |  .5 |   |                  |   |  1.3 |   |   |   |  3.0 |   |   |   |   1.4 |   |
|                                                                                            |   |                    |     |   |                  |   |   |   |   |   |   |   |   |   |   |   |
|     Net      income (loss)                                                  |   | $                       | (4.9     | )      |                  | $      | (.2 | ) |   | $ | 21.2 |   |   | $ | (6.1 | ) |
|                                                                                            |   |                    |     |   |                  |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                            |   |                    |     |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Basic      and diluted net income (loss) per      share                                    |   | $                       | (.04     | )      |                  | $      | - |   |   | $ | .18 |   |   | $ | (.05 | ) |
|                                                                                            |   |                    |     |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Cash      dividends per share                                                                   |   | $                       | .10      |   |                  | $      | .10 |   |   | $ | .20 |   |   | $ | .20 |   |
|                                                                                            |   |                    |     |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding:                                                       |   |                    |     |   |                  |   |   |   |   |   |   |   |   |   |   |   |
|   Basic                                                                               |   |                    | 114.9    |   |                  |   | 114.4 |   |   |   | 114.9 |   |   |   | 114.4 |   |
|   Outstanding      stock options impact                                               |   |                    | -        |   |                  |   | - |   |   |   | .2 |   |   |   | - |   |
|                                                                                            |   |                    |     |   |                  |   |   |   |   |   |   |   |   |   |   |   |
|   Diluted                                                                             |   |                    | 114.9    |   |                  |   | 114.4 |   |   |   | 115.1 |   |   |   | 114.4 |   |

----

|                                                                                                                                |   | Six      months ended June 30, |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|
|                                                                                                                                |   | 2007                                |   |   | 2008 |   |
|                                                                                                                                |   | (unaudited)                         |   |
|                                                                                                                                |   |                                |   |   |   |   |
| Cash flows from operating activities:                                                                           |   |                                |   |   |   |   |
|   Net income (loss)                                                                                             |   | $                                   | 21.2   |   |   | $ | (6.1 | ) |
|   Depreciation and amortization                                                                                 |   |                                | 32.6   |   |   |   | 34.1 |   |
|   Benefit plan expense greater      (less)   than cash funding requirements: |   |                                |   |   |   |   |   |   |
|     Defined benefit pension expense                                                              |   |                                | (2.5   | ) |   |   | (7.0 | ) |
|     Other postretirement benefit expense                                                         |   |                                | .3     |   |   |   | .2 |   |
|   Deferred income taxes                                                                                         |   |                                | 28.0   |   |   |   | (13.5 | ) |
|   Minority interest                                                                                                  |   |                                | 3.0    |   |   |   | 1.4 |   |
|   Equity in:                                                                                                         |   |                                |   |   |   |   |   |   |
|     TIMET                                                                                                       |   |                                | (26.9  | ) |   |   | - |   |
|     Other                                                                                                  |   |                                | (.5    | ) |   |   | .6 |   |
|   Net distributions from (contributions      to) Ti02   manufacturing      joint venture    |   |                                | (1.4   | ) |   |   |  2.9 |   |
|   Other, net                                                                                                         |   |                                | 2.2    |   |   |   | 2.6 |   |
|   Change in assets and liabilities:                                                                   |   |                                |   |   |   |   |   |   |
|     Accounts and other receivables, net                                                     |   |                                | (50.2  | ) |   |   | (73.0 | ) |
|     Inventories, net                                                                                       |   |                                | (3.7   | ) |   |   | 14.9 |   |
|     Accounts payable and accrued liabilities                                                |   |                                | (8.7   | ) |   |   | 1.3 |   |
|     Accounts with affiliates                                                                          |   |                                | (10.4  | ) |   |   | 10.4 |   |
|     Income taxes                                                                                           |   |                                | 6.7    |   |   |   | (6.8 | ) |
|     Other, net                                                                                             |   |                                | (1.3   | ) |   |   | (2.0 | ) |
|                                                                                                                                |   |                                |   |   |   |   |   |   |
|         Net cash used      in operating activities                           |   |                                | (11.6  | ) |   |   | (40.0 | ) |
|                                                                                                                                |   |                                |   |   |   |   |   |   |
| Cash flows from investing activities:                                                                           |   |                                |   |   |   |   |   |   |
|   Capital expenditures                                                                                               |   |                                | (22.8  | ) |   |   | (40.6 | ) |
|   Capitalized      permit costs                                                                                           |   |                                | (5.0   | ) |   |   | (7.2 | ) |
|   Purchases of:                                                                                                      |   |                                |   |   |   |   |   |   |
|     CompX common stock                                                                                |   |                                | -      |   |   |   | (1.0 | ) |
|     TIMET      common stock                                                                                     |   |                                | (.7    | ) |   |   | - |   |
|     Marketable securities                                                                                  |   |                                | (17.2  | ) |   |   | (5.6 | ) |
|   Proceeds from disposal of marketable      securities                                                |   |                                | 20.9   |   |   |   | 4.9 |   |
|   Change in restricted cash equivalents, net                                                     |   |                                | 2.4    |   |   |   | (4.5 | ) |
|   Other, net                                                                                                         |   |                                | 2.0    |   |   |   | 1.7 |   |
|                                                                                                                                |   |                                |   |   |   |   |   |   |
|         Net cash used in investing activities                      |   |                                | (20.4  | ) |   |   | (52.3 | ) |
|                                                                                                                                |   |                                |   |   |   |   |   |   |

----

|                                                                                                                                            |   | Six      months ended June 30, |         |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------------|
|                                                                                                                                            |   | 2007                                |         |   | 2008 |   |
|                                                                                                                                            |   | (unaudited)                         |         |
|                                                                                                                                            |   |                                |         |   |   |   |
| Cash      flows from financing activities:                                                                                                      |   |                                |         |   |   |   |
|   Indebtedness:                                                                                                                       |   |                                |         |   |   |   |
|     Borrowings                                                                                                              |   | $                                   | 177.6        |   |   | $ | 216.6 |   |
|     Principal payments                                                                                                 |   |                                | (159.7       | ) |   |   | (181.9 | ) |
|     Deferred      financing costs paid                                                                                      |   |                                | -            |   |   |   | (.9 | ) |
|   Valhi      cash dividends paid                                                                                                 |   |                                | (22.8        | ) |   |   | (22.7 | ) |
|   Distributions to minority interest                                                                                   |   |                                | (4.4         | ) |   |   | (3.7 | ) |
|   Treasury stock acquired                                                                                              |   |                                | (3.1         | ) |   |   | - |   |
|   Issuance      of common stock and other                                                                                             |   |                                | 1.0          |   |   |   | - |   |
|                                                                                                                                            |   |                                |         |   |   |   |   |   |
|       Net cash provided      by (used in) financing       activities |   |                                | (11.4        | ) |   |   |  7.4 |   |
|                                                                                                                                            |   |                                |         |   |   |   |   |   |
| Cash and cash equivalents - net change from:                                                                 |   |                                |         |   |   |   |   |   |
|   Operating, investing and financing activities                                                                   |   |                                | (43.4        | ) |   |   | (84.9 | ) |
|   Currency translation                                                                                                           |   |                                | 1.2          |   |   |   | 2.0 |   |
| Cash and cash      equivalents at beginning of period                                                             |   |                                | 189.2        |   |   |   | 138.3 |   |
|                                                                                                                                            |   |                                |         |   |   |   |   |   |
| Cash and cash      equivalents at end of period                                                                   |   | $                                   | 147.0        |   |   | $ | 55.4 |   |
|                                                                                                                                            |   |                                |         |   |   |   |   |   |
|                                                                                                                                            |   |                                |         |   |   |   |   |   |
| Supplemental disclosures:                                                                                                                  |   |                                |         |   |   |   |   |   |
|   Cash paid for:                                                                                                            |   |                                |         |   |   |   |   |   |
|     Interest, net of amounts capitalized                                                                |   | $                                   | 30.6         |   |   | $ | 35.4 |   |
|     Income taxes, net                                                                                             |   |                                | 11.0         |   |   |   | 3.8 |   |
|   Accrual      for capital expenditures                                                                                               |   |                                | 1.4          |   |   |   | 6.0 |   |
|   Accrual      for capitalized permit costs                                                                                           |   |                                | .2           |   |   |   | .9 |   |
|                                                                                                                                            |   |                                |         |   |   |   |   |   |
|   Noncash      financing activities:                                                                                                  |   |                                |         |   |   |   |   |   |
|     Dividend      of TIMET common stock                                                                                     |   | $                                   | 899.3        |   |   | $ | - |   |
|     Issuance      of preferred stock in settlement of     tax      obligation                      |   |                                |   667.3 |   |   |   |  - |   |
|                                                                                                                                            |   |                                |         |   |   |   |   |   |
|                                                                                                                                            |   |                                |         |   |   |   |   |   |

----

|                               |   |                 |   |   |              |   |   |                 |   |   |               |   |   | Accumulated                     |   |   |                |   |   |                            |   |   |                    |   |
|------------------------------------|--------|----------------------|--------|--------|-------------------|--------|--------|----------------------|--------|--------|--------------------|--------|--------|---------------------------------|--------|--------|---------------------|--------|--------|---------------------------------|--------|--------|-------------------------|--------|
|                               |   |                 |   |   |              |   |   | Additional           |   |   |               |   |   | other                           |   |   |                |   |   | Total                           |   |   |                    |   |
|                               |   | Preferred stock |   |   | Common stock |   |   | paid-in capital |   |   | Accumulateddeficit |   |   | comprehensiveincome (loss) |   |   | Treasury stock |   |   | stockholders’ equity |   |   | Comprehensive loss |   |
|                               |   | (unaudited)          |   |
|                               |   |                 |   |   |              |   |   |                 |   |   |               |   |   |                            |   |   |                |   |   |                            |   |   |                    |   |
| Balance      at December 31, 2007  |   | $                    | 667.3  |   |              | $      | 1.2    |                 |   | $      | 10.4               |   |   | $                               | (74.1  | )      |                | $      | 51.5   |                            |   | $      | (37.9                   | )      |   | $ | 618.4 |   |   |   |   |
|                               |   |                 |   |   |              |   |   |                 |   |   |               |   |   |                            |   |   |                |   |   |                            |   |   |                    |   |   |   |   |   |   |   |   |
| Net      loss                      |   |                 | -      |   |              |   | -      |                 |   |   | -                  |   |   |                            | (6.1   | )      |                |   | -      |                            |   |   | -                       |   |   |   | (6.1 | ) |   | $ | (6.1 | ) |
|                               |   |                 |   |   |              |   |   |                 |   |   |               |   |   |                            |   |   |                |   |   |                            |   |   |                    |   |   |   |   |   |   |   |   |   |
| Other      comprehensive loss, net |   |                 | -      |   |              |   | -      |                 |   |   | -                  |   |   |                            | -      |   |                |   | (7.3   | )                               |   |   | -                       |   |   |   | (7.3 | ) |   |   | (7.3 | ) |
|                               |   |                 |   |   |              |   |   |                 |   |   |               |   |   |                            |   |   |                |   |   |                            |   |   |                    |   |   |   |   |   |   |   |   |   |
| Cash      dividends                |   |                 | -      |   |              |   | -      |                 |   |   | (10.5              | )      |   |                            | (12.2  | )      |                |   | -      |                            |   |   | -                       |   |   |   | (22.7 | ) |   |   |   |   |
|                               |   |                 |   |   |              |   |   |                 |   |   |               |   |   |                            |   |   |                |   |   |                            |   |   |                    |   |   |   |   |   |   |   |   |   |
| Other,      net                    |   |                 | -      |   |              |   | -      |                 |   |   | .1                 |   |   |                            | -      |   |                |   | -      |                            |   |   | -                       |   |   |   | .1 |   |   |   |   |   |
|                               |   |                 |   |   |              |   |   |                 |   |   |               |   |   |                            |   |   |                |   |   |                            |   |   |                    |   |   |   |   |   |   |   |   |   |
| Balance      at June 30, 2008      |   | $                    | 667.3  |   |              | $      | 1.2    |                 |   | $      | -                  |   |   | $                               | (92.4  | )      |                | $      | 44.2   |                            |   | $      | (37.9                   | )      |   | $ | 582.4 |   |   |   |   |   |
|                               |   |                 |   |   |              |   |   |                 |   |   |               |   |   |                            |   |   |                |   |   |                            |   |   |                    |   |   |   |   |   |   |   |   |   |
| Comprehensive      loss            |   |                 |   |   |              |   |   |                 |   |   |               |   |   |                            |   |   |                |   |   |                            |   |   |                    |   |   |   |   |   |   | $ | (13.4 | ) |
|                               |   |                 |   |   |              |   |   |                 |   |   |               |   |   |                            |   |   |                |   |   |                            |   |   |                    |   |   |   |   |   |   |   |   |   |
|                               |   |                 |   |   |              |   |   |                 |   |   |               |   |   |                            |   |   |                |   |   |                            |   |   |                    |   |   |   |   |   |   |   |   |   |
|                               |   |                 |   |   |              |   |   |                 |   |   |               |   |   |                            |   |   |                |   |   |                            |   |   |                    |   |   |   |   |   |   |   |   |   |

----

----

|   Businesssegment  |   |         Entity        |   | %      owned at June 30,2008                                                                                                                                                                                                                     |
|-----------------------------------|--------|--------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                              |   |                                                                                             |   |                                                                                                                                                                                                                                                       |
| Chemicals                         |   | Kronos                                                                                           |   |  95%                                                                                                                                                                                                                                                  |
| Component      products           |   | CompX                                                                                            |   |  87%                                                                                                                                                                                                                                                  |
| Waste      management             |   | WCS                                                                                              |   |                                               100% |

|                                                                                                        |   | Three      months ended June 30, |   |   | Six      months ended June 30, |   |
|-------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------|-------------------------------------|--------|
|                                                                                                        |   | 2007                                  |   |   | 2008                                |   |   | 2007 |   |   | 2008 |   |
|                                                                                                        |   | (In      millions)                    |   |
|                                                                                                        |   |                                  |   |   |                                |   |   |   |   |   |   |   |
| Net sales:                                                                                             |   |                                  |   |   |                                |   |   |   |   |   |   |   |
|   Chemicals                                                                                       |   | $                                     | 342.6  |   |                                | $      | 391.8 |   |   | $ | 656.6 |   |   | $ | 724.4 |   |
|   Component products                                                                         |   |                                  | 45.3   |   |                                |   | 43.7 |   |   |   | 88.8 |   |   |   | 84.2 |   |
|   Waste management                                                                           |   |                                  | 1.1    |   |                                |   | .6 |   |   |   | 2.6 |   |   |   | 1.5 |   |
|                                                                                                        |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|     Total net sales                                                           |   | $                                     | 389.0  |   |                                | $      | 436.1 |   |   | $ | 748.0 |   |   | $ | 810.1 |   |
|                                                                                                        |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Cost of sales:                                                                                    |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|   Chemicals                                                                                       |   | $                                     | 279.7  |   |                                | $      | 333.3 |   |   | $ | 524.1 |   |   | $ | 609.3 |   |
|   Component products                                                                         |   |                                  | 33.4   |   |                                |   | 32.7 |   |   |   | 64.8 |   |   |   | 63.8 |   |
|   Waste management                                                                           |   |                                  | 3.0    |   |                                |   | 3.7 |   |   |   | 6.1 |   |   |   | 7.0 |   |
|                                                                                                        |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|     Total cost of sales                                                  |   | $                                     | 316.1  |   |                                | $      | 369.7 |   |   | $ | 595.0 |   |   | $ | 680.1 |   |
|                                                                                                        |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Gross margin:                                                                                          |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|   Chemicals                                                                                       |   | $                                     | 62.9   |   |                                | $      | 58.5 |   |   | $ | 132.5 |   |   | $ | 115.1 |   |
|   Component products                                                                         |   |                                  | 11.9   |   |                                |   | 11.0 |   |   |   | 24.0 |   |   |   | 20.4 |   |
|   Waste management                                                                           |   |                                  | (1.9   | )      |                                |   | (3.1 | ) |   |   | (3.5 | ) |   |   | (5.5 | ) |
|                                                                                                        |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|     Total gross margin                                                        |   | $                                     | 72.9   |   |                                | $      | 66.4 |   |   | $ | 153.0 |   |   | $ | 130.0 |   |
|                                                                                                        |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Operating income (loss):                                                                          |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|   Chemicals                                                                                       |   | $                                     | 24.6   |   |                                | $      | 10.8 |   |   | $ | 54.9 |   |   | $ | 21.8 |   |
|   Component products                                                                         |   |                                  | 4.8    |   |                                |   | 4.5 |   |   |   | 10.4 |   |   |   | 7.5 |   |
|   Waste management                                                                           |   |                                  | (3.2   | )      |                                |   | (5.5 | ) |   |   | (6.2 | ) |   |   | (9.9 | ) |
|                                                                                                        |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|     Total operating income                                                    |   |                                  | 26.2   |   |                                |   | 9.8 |   |   |   | 59.1 |   |   |   | 19.4 |   |
|                                                                                                        |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Equity in      earnings of:                                                                            |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|   TIMET                                                                                           |   |                                  | -      |   |                                |   | - |   |   |   | 26.9 |   |   |   | - |   |
|   Other                                                                                      |   |                                  | 1.0    |   |                                |   | (.2 | ) |   |   | .5 |   |   |   | (.6 | ) |
|                                                                                                        |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| General corporate items:                                                                          |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|   Securities      earnings                                                                        |   |                                  | 8.1    |   |                                |   | 11.0 |   |   |   | 16.3 |   |   |   | 17.6 |   |
|   Insurance recoveries                                                                       |   |                                  | .5     |   |                                |   | 1.6 |   |   |   | 3.0 |   |   |   | 1.7 |   |
|   General expenses, net                                                                 |   |                                  | (11.0  | )      |                                |   | (9.0 | ) |   |   | (17.0 | ) |   |   | (14.6 | ) |
| Interest expense                                                                                       |   |                                  | (15.9  | )      |                                |   | (17.7 | ) |   |   | (31.5 | ) |   |   | (35.1 | ) |
|                                                                                                        |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|     Income (loss)      before income      taxes |   | $                                     | 8.9    |   |                                | $      | (4.5 | ) |   | $ | 57.3 |   |   | $ | (11.6 | ) |

----

|                                               |   | December      31, 2007 |   |   | June      30, 2008   |   |
|----------------------------------------------------|--------|-----------------------------|--------|--------|--------------------------------|--------|
|                                               |   | (In      millions)          |   |
|                                               |   |                        |   |   |                           |   |
| Accounts      receivable                           |   | $                           | 239.2  |   |                           | $      | 324.7 |   |
| Refundable      income taxes                       |   |                        | 7.7    |   |                           |   | 7.9 |   |
| Receivable      from affiliates:                   |   |                        |   |   |                           |   |   |   |
|   Contran      – income taxes, net |   |                        | 4.4    |   |                           |   | - |   |
|   Other                                  |   |                        | .2     |   |                           |   | .1 |   |
| Other      receivables                             |   |                        | 4.6    |   |                           |   | 3.6 |   |
| Allowance      for doubtful accounts               |   |                        | (2.4   | )      |                           |   | (2.4 | ) |
|                                               |   |                        |   |   |                           |   |   |   |
|       Total          |   | $                           | 253.7  |   |                           | $      | 333.9 |   |

|                                                                    |   | December      31, 2007 |   |   | June      30, 2008   |   |
|-------------------------------------------------------------------------|--------|-----------------------------|--------|--------|--------------------------------|--------|
|                                                                    |   | (In      millions)          |   |
|                                                                    |   |                        |   |   |                           |   |
| Raw materials:                                                     |   |                        |   |   |                           |   |
|   Chemicals                                                   |   | $                           | 66.2   |   |                           | $      | 49.5 |   |
|   Component products                                     |   |                        | 6.3    |   |                           |   | 9.1 |   |
|                                                                    |   |                        |   |   |                           |   |   |   |
|       Total raw materials       |   |                        | 72.5   |   |                           |   | 58.6 |   |
|                                                                    |   |                        |   |   |                           |   |   |   |
| Work      in process:                                                   |   |                        |   |   |                           |   |   |   |
|   Chemicals                                                   |   |                        | 19.9   |   |                           |   | 18.1 |   |
|   Component products                                     |   |                        | 9.8    |   |                           |   | 9.2 |   |
|                                                                    |   |                        |   |   |                           |   |   |   |
|       Total in-process products |   |                        | 29.7   |   |                           |   | 27.3 |   |
|                                                                    |   |                        |   |   |                           |   |   |   |
| Finished products:                                                 |   |                        |   |   |                           |   |   |   |
|   Chemicals                                                   |   |                        | 171.6  |   |                           |   | 181.3 |   |
|   Component products                                     |   |                        | 8.2    |   |                           |   | 7.5 |   |
|                                                                    |   |                        |   |   |                           |   |   |   |
|       Total finished products   |   |                        | 179.8  |   |                           |   | 188.8 |   |
|                                                                    |   |                        |   |   |                           |   |   |   |
| Supplies (primarily chemicals)                                |   |                        | 55.9   |   |                           |   | 62.5 |   |
|                                                                    |   |                        |   |   |                           |   |   |   |
|       Total                          |   | $                           | 337.9  |   |                           | $      | 337.2 |   |

----

|                                                                            |   | December      31, 2007   |   |   | June      30, 2008 |   |
|---------------------------------------------------------------------------------|--------|------------------------------------|--------|--------|-------------------------|--------|
|                                                                            |   | (In      millions)                 |   |
|                                                                            |   |                               |   |   |                    |   |
| Available-for-sale      marketable securities:                                  |   |                               |   |   |                    |   |
|   The      Amalgamated Sugar Company LLC                              |   | $                                  | 250.0  |   |                    | $      | 250.0 |   |
|   TIMET                                                               |   |                               | 60.2   |   |                    |   | 31.8 |   |
|   Other                                                          |   |                               | 9.6    |   |                    |   | 8.2 |   |
|                                                                            |   |                               |   |   |                    |   |   |   |
|       Total                                       |   | $                                  | 319.8  |   |                    | $      | 290.0 |   |
|                                                                            |   |                               |   |   |                    |   |   |   |
|                                                                            |   |                               |   |   |                    |   |   |   |
| Investment      in affiliates:                                                  |   |                               |   |   |                    |   |   |   |
|   TiO2 manufacturing joint venture                     |   | $                                  | 118.5  |   |                    | $      | 115.6 |   |
|   Other                                                          |   |                               | 19.4   |   |                    |   | 18.8 |   |
|                                                                            |   |                               |   |   |                    |   |   |   |
|       Total                                       |   | $                                  | 137.9  |   |                    | $      | 134.4 |   |
|                                                                            |   |                               |   |   |                    |   |   |   |
| Other assets:                                                              |   |                               |   |   |                    |   |   |   |
|   Waste disposal site operating permits, net |   | $                                  | 29.8   |   |                    | $      | 37.6 |   |
|   Deferred financing costs                                  |   |                               | 8.2    |   |                    |   | 8.6 |   |
|   IBNR      receivables                                               |   |                               | 7.8    |   |                    |   | 8.4 |   |
|   Other                                                               |   |                               | 21.5   |   |                    |   | 29.7 |   |
|                                                                            |   |                               |   |   |                    |   |   |   |
|       Total                                       |   | $                                  | 67.3   |   |                    | $      | 84.3 |   |

----

|                                                           |   |                        |   |   |                           |   |
|----------------------------------------------------------------|--------|-----------------------------|--------|--------|--------------------------------|--------|
|                                                           |   | December      31, 2007 |   |   | June      30, 2008   |   |
|                                                           |   | (In      millions)          |   |
|                                                           |   |                        |   |   |                           |   |
| Current:                                                       |   |                        |   |   |                           |   |
|   Accounts      payable                              |   | $                           | 115.6  |   |                           | $      | 117.7 |   |
|   Employee benefits                             |   |                        | 37.6   |   |                           |   | 33.9 |   |
|   Payable      to affiliates:                        |   |                        |   |   |                           |   |   |   |
|     Louisiana      Pigment Company         |   |                        | 11.4   |   |                           |   | 11.2 |   |
|     Contran      – trade items       |   |                        | 7.1    |   |                           |   | 8.3 |   |
|     Contran      – income taxes, net |   |                        | -      |   |                           |   | 4.2 |   |
|     TIMET                                  |   |                        | .5     |   |                           |   | .5 |   |
|   Accrued      sales discounts and rebates           |   |                        | 15.3   |   |                           |   | 18.8 |   |
|   Environmental costs                           |   |                        | 15.4   |   |                           |   | 13.4 |   |
|   Deferred income                               |   |                        | 4.0    |   |                           |   | 2.3 |   |
|   Interest                                           |   |                        | 8.3    |   |                           |   | 8.8 |   |
|   Reserve      for uncertain tax positions           |   |                        | .3     |   |                           |   | .1 |   |
|   Other                                              |   |                        | 52.3   |   |                           |   | 63.1 |   |
|                                                           |   |                        |   |   |                           |   |   |   |
|       Total                      |   | $                           | 267.8  |   |                           | $      | 282.3 |   |
|                                                           |   |                        |   |   |                           |   |   |   |
| Noncurrent:                                                    |   |                        |   |   |                           |   |   |   |
|   Reserve      for uncertain tax positions           |   | $                           | 47.2   |   |                           | $      | 48.6 |   |
|   Insurance claims and expenses       |   |                        | 15.2   |   |                           |   | 14.4 |   |
|   Employee benefits                             |   |                        | 8.4    |   |                           |   | 9.0 |   |
|   Other                                              |   |                        | 6.9    |   |                           |   | 7.2 |   |
|                                                           |   |                        |   |   |                           |   |   |   |
|       Total                      |   | $                           | 77.7   |   |                           | $      | 79.2 |   |

|                                                                                                   |   | December      31, 2007 |        |   | June      30, 2008   |   |
|--------------------------------------------------------------------------------------------------------|--------|-----------------------------|-------------|--------|--------------------------------|--------|
|                                                                                                   |   | (In      millions)          |        |
|                                                                                                   |   |                        |        |   |                           |   |
|                                                                                                   |   |                        |        |   |                           |   |
| Valhi      - Snake River Sugar Company                                                                 |   | $                           | 250.0       |   |                           | $      | 250.0 |   |
|                                                                                                   |   |                        |        |   |                           |   |   |   |
| Subsidiary      debt:                                                                                  |   |                        |        |   |                           |   |   |   |
|   Kronos International:    6.5% Senior Secured Notes |   |                        |  585.5 |   |                           |   |  626.1 |   |
|   European      revolving bank credit facility                                               |   |                        | -           |   |                           |   | 28.3 |   |
| CompX      promissory note payable to TIMET                                                            |   |                        | 50.0        |   |                           |   | 50.0 |   |
|   Kronos U.S. revolving      bank credit facility                        |   |                        | 15.4        |   |                           |   | 22.8 |   |
|   Other                                                                                      |   |                        | 5.7         |   |                           |   | 5.7 |   |
|                                                                                                   |   |                        |        |   |                           |   |   |   |
|       Total subsidiary debt                                    |   |                        | 656.6       |   |                           |   | 732.9 |   |
|                                                                                                   |   |                        |        |   |                           |   |   |   |
|       Total debt                                                    |   |                        | 906.6       |   |                           |   | 982.9 |   |
|                                                                                                   |   |                        |        |   |                           |   |   |   |
|       Less current maturities                                  |   |                        | 16.8        |   |                           |   | 24.7 |   |
|                                                                                                   |   |                        |        |   |                           |   |   |   |
|       Total long-term debt                                     |   | $                           | 889.8       |   |                           | $      | 958.2 |   |

----

|                                                                       |   | Three      months ended June 30, |     |   | Six      months ended June 30, |   |
|----------------------------------------------------------------------------|--------|---------------------------------------|----------|--------|-------------------------------------|--------|
|                                                                       |   | 2007                                  |     |   | 2008                                |   |   | 2007 |   |   | 2008 |   |
|                                                                       |   | (In      millions)                    |     |
|                                                                       |   |                                  |     |   |                                |   |   |   |   |   |   |   |
| Service cost                                                     |   | $                                     | 2.0      |   |                                | $      | 1.8 |   |   | $ | 3.9 |   |   | $ | 3.5 |   |
| Interest cost                                                    |   |                                  | 6.5      |   |                                |   | 7.7 |   |   |   | 13.0 |   |   |   | 15.0 |   |
| Expected return on plan assets                         |   |                                  | (7.0     | )      |                                |   | (8.2 | ) |   |   | (14.0 | ) |   |   | (16.2 | ) |
| Amortization of prior service cost                     |   |                                  | .1       |   |                                |   | .3 |   |   |   | .3 |   |   |   | .5 |   |
| Amortization of net transition   obligations |   |                                  |  .1 |   |                                |   |  .1 |   |   |   |  .2 |   |   |   |  .2 |   |
| Recognized actuarial losses                                      |   |                                  | 2.0      |   |                                |   | 1.1 |   |   |   | 3.9 |   |   |   | 2.3 |   |
|                                                                       |   |                                  |     |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|       Total                                  |   | $                                     | 3.7      |   |                                | $      | 2.8 |   |   | $ | 7.3 |   |   | $ | 5.3 |   |

|                                      |   | Three      months ended June 30, |   |   | Six      months ended June 30, |   |
|-------------------------------------------|--------|---------------------------------------|--------|--------|-------------------------------------|--------|
|                                      |   | 2007                                  |   |   | 2008                                |   |   | 2007 |   |   | 2008 |   |
|                                      |   | (In      millions)                    |   |
|                                      |   |                                  |   |   |                                |   |   |   |   |   |   |   |
| Service      cost                         |   | $                                     | .1     |   |                                | $      | .1 |   |   | $ | .2 |   |   | $ | .2 |   |
| Interest      cost                        |   |                                  | .5     |   |                                |   | .7 |   |   |   | 1.0 |   |   |   | 1.1 |   |
| Amortization      of prior service credit |   |                                  | -      |   |                                |   | (.1 | ) |   |   | (.2 | ) |   |   | (.2 | ) |
| Recognized      actuarial losses          |   |                                  | -      |   |                                |   | - |   |   |   | .1 |   |   |   | .1 |   |
|                                      |   |                                  |   |   |                                |   |   |   |   |   |   |   |   |   |   |   |
|       Total |   | $                                     | .6     |   |                                | $      | .7 |   |   | $ | 1.1 |   |   | $ | 1.2 |   |

|                                                                    |   | Six      months ended  June 30,  |   |
|-------------------------------------------------------------------------|--------|--------------------------------------------|--------|
|                                                                    |   | 2007                                       |   |   | 2008 |   |
|                                                                    |   | (In      millions)                         |   |
|                                                                    |   |                                       |   |   |   |   |
| Securities      earnings:                                               |   |                                       |   |   |   |   |
|   Dividends and interest                            |   | $                                          | 15.8   |   |   | $ | 18.2 |   |
|   Securities transactions, net                      |   |                                       | .5     |   |   |   | (.6 | ) |
|                                                                    |   |                                       |   |   |   |   |   |   |
|       Total securities earnings |   |                                       | 16.3   |   |   |   | 17.6 |   |
|                                                                    |   |                                       |   |   |   |   |   |   |
| Currency transactions, net                                    |   |                                       | 1.4    |   |   |   | (2.9 | ) |
| Insurance recoveries                                               |   |                                       | 3.0    |   |   |   | 1.7 |   |
| Other, net                                                         |   |                                       | 3.1    |   |   |   | 1.7 |   |
|                                                                    |   |                                       |   |   |   |   |   |   |
|       Total                          |   | $                                          | 23.8   |   |   | $ | 18.1 |   |

----

|                                                                                                 |   | Six      months ended  June 30,  |      |
|------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|-----------|
|                                                                                                 |   | 2007                                       |      |   | 2008 |   |
|                                                                                                 |   | (In      millions)                         |      |
|                                                                                                 |   |                                       |      |   |   |   |
| Expected      tax expense (benefit), at U.S. federal statutory income      tax rate of 35% |   | $                                          | 20.1      |   |   | $ | (4.0 | ) |
| Incremental      U.S. tax and rate differences on equity      in earnings                       |   |                                       |  2.2 |   |   |   |  2.8 |   |
| Non-U.S.      tax rates                                                                              |   |                                       | (.3       | ) |   |   | - |   |
| Nondeductible      expenses                                                                          |   |                                       | 1.5       |   |   |   | - |   |
| German      tax attribute adjustment                                                                 |   |                                       | 8.7       |   |   |   | (7.2 | ) |
| Change      in reserve for uncertain tax positions                                                   |   |                                       | .1        |   |   |   | 1.0 |   |
| U.S.      state income taxes, net                                                                    |   |                                       | .8        |   |   |   | .3 |   |
| Other,      net                                                                                      |   |                                       | -         |   |   |   | .2 |   |
|                                                                                                 |   |                                       |      |   |   |   |   |   |
|      Provision      for income taxes (benefit)                              |   | $                                          | 33.1      |   |   | $ | (6.9 | ) |

|                                      |   | December      31, 2007 |   |   | June      30, 2008   |   |
|-------------------------------------------|--------|-----------------------------|--------|--------|--------------------------------|--------|
|                                      |   | (In      millions)          |   |
|                                      |   |                        |   |   |                           |   |
| Minority      interest in net assets:     |   |                        |   |   |                           |   |
|   NL Industries            |   | $                           | 55.6   |   |                           | $      | 58.7 |   |
|   Kronos Worldwide         |   |                        | 20.5   |   |                           |   | 20.0 |   |
|   CompX International      |   |                        | 14.4   |   |                           |   | 13.6 |   |
|                                      |   |                        |   |   |                           |   |   |   |
|       Total |   | $                           | 90.5   |   |                           | $      | 92.3 |   |

|                                                         |   | Six      months ended June 30,  |   |
|--------------------------------------------------------------|--------|-------------------------------------------|--------|
|                                                         |   | 2007                                      |   |   | 2008 |   |
|                                                         |   | (In      millions)                        |   |
|                                                         |   |                                      |   |   |   |   |
| Minority interest in after-tax      earnings: |   |                                      |   |   |   |   |
|   NL Industries                               |   | $                                         | .7     |   |   | $ | .6 |   |
|   Kronos Worldwide                            |   |                                      | .6     |   |   |   | .3 |   |
|   CompX International                         |   |                                      | 1.7    |   |   |   | .5 |   |
|                                                         |   |                                      |   |   |   |   |   |   |
|       Total                    |   | $                                         | 3.0    |   |   | $ | 1.4 |   |

----

|   | · | we      have never settled any of thesecases; |
|--------|--------|-----------------------------------------------|

|   | · | no      final, non-appealable verdicts have ever been entered against us;      and |
|--------|--------|------------------------------------------------------------------------------------|

|   | · | we      have never ultimately been found liable with respect to any such      litigation matters. |
|--------|--------|---------------------------------------------------------------------------------------------------|

----

|   | · | complexity      and differing interpretations of governmental  regulations; |
|--------|--------|-----------------------------------------------------------------------------|

|   | · | number      of PRPs and their ability or willingness to fund such allocation of      costs; |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | financial      capabilities of the PRPs and the allocation of costs among      them; |
|--------|--------|--------------------------------------------------------------------------------------|

|   | · | solvency      of other PRPs; |
|--------|--------|------------------------------|

|   | · | multiplicity      of possible solutions; and |
|--------|--------|----------------------------------------------|

|   | · | number      of years of investigatory, remedial and monitoring activity      required. |
|--------|--------|----------------------------------------------------------------------------------------|

----

|                                                                                                                                             |   | Amount             |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|
|                                                                                                                                             |   | (In      millions) |   |
|                                                                                                                                             |   |               |   |
| Balance      at the beginning of the period                                                                                                      |   | $                  | 55.7   |   |
| Payments,      net                                                                                                                               |   |               | (4.1   | ) |
|                                                                                                                                             |   |               |   |   |
|       Balance      at the end of the period                                                                        |   | $                  | 51.6   |   |
|                                                                                                                                             |   |               |   |   |
| Amounts recognized in the Consolidated Balance Sheet at the  end of the period: |   |               |   |   |
|   Current liability                                                                                                               |   | $                  | 13.4   |   |
|   Noncurrent liability                                                                                                            |   |               | 38.2   |   |
|                                                                                                                                             |   |               |   |   |
|       Total                                                                                                        |   | $                  | 51.6   |   |

|   | · | to      recover response and remediation costs incurred at the    site; |
|--------|--------|-------------------------------------------------------------------------|

|   | · | a      declaration of the parties’ liability for response and remediation costs      incurred at the site; |
|--------|--------|------------------------------------------------------------------------------------------------------------------|

|   | · | a      declaration of the parties’ liability for response and remediation costs      to be incurred in the future at the site;and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

|   | · | a      declaration regarding the obligation of Tremont to indemnify Halliburton      and DII for costs and expenses attributable to the  site. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | facts      concerning our historicaloperations; |
|--------|--------|-------------------------------------------------|

|   | · | the      rate of new claims; |
|--------|--------|------------------------------|

|   | · | the      number of claims from which we have been dismissed;  and |
|--------|--------|-------------------------------------------------------------------|

|   | · | our      prior experience in the defense of these  matters, |
|--------|--------|-------------------------------------------------------------|

----

----

|   | · | Chemicals – Our      chemicals segment is operated through our majority ownership of      Kronos.  Kronos is a leading global producer and marketer of      value-added titanium dioxide pigments (“TiO2”).  TiO2 is      used for a variety of manufacturing applications, including plastics,      paints, paper and other industrialproducts. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Component Products – We      operate in the component products industry through our majority ownership      of CompX.  CompX is a leading manufacturer of security products,      precision ball bearing slides and ergonomic computer support systems used      in the office furniture, transportation, tool storage and a variety of      other industries.  CompX is also a leading manufacturer of      stainless steel exhaust systems, gauges and throttle controls for the      performance marine industry. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Waste Management – WCS      is our wholly-owned subsidiary which owns and operates a West Texas      facility for the processing, treatment and, storage of hazardous, toxic      and low level radioactive waste as well as the disposal of hazardous,      toxic and certain low level radioactive waste.  WCS is in the      process of seeking to obtain regulatory authorization to expand its      low-level and mixed low-level radioactive waste disposal      capabilities. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | · | The      cyclicality of certain of our businesses (such as Kronos’ TiO2      operations; |
|--------|--------|------------------------------------------------------------------------------------------------|

|   | · | Customer      inventory levels (such as the extent to which Kronos’ customers may, from      time to time, accelerate purchases of TiO2 in      advance of anticipated price increases or defer purchases of TiO2in      advance of anticipated pricedecreases; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Changes      in our 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, among other things, TiO2); |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

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

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

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

|   | · | Restructuring      transactions involving us and ouraffiliates; |
|--------|--------|-----------------------------------------------------------------|

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

|   | · | Demand      for high performance marinecomponents; |
|--------|--------|----------------------------------------------------|

|   | · | The      extent to which our subsidiaries were to become unable to pay us      dividends; |
|--------|--------|-------------------------------------------------------------------------------------------|

|   | · | Uncertainties      associated with new productdevelopment; |
|--------|--------|------------------------------------------------------------|

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

|   | · | 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 or changes in income tax      rates related to such attributes, the benefit of which has been recognized      under the more likely than not recognition criteria (such as Kronos’      ability to utilize its German net operating loss      carryforwards); |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Environmental      matters (such as those requiring compliance with emission and discharge      standards for existing and new facilities, or new developments regarding      environmental remediation at sites related to our former      operations); |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Government      laws and regulations and possible changes therein (such as changes in      government regulations which might impose various obligations on present      and former manufacturers of lead pigment and lead-based paint, including      NL, with respect to asserted health concerns associated with the use of      such products); |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The      ultimate resolution of pending litigation (such as NL's lead pigment      litigation and litigation surrounding environmental matters of NL and      Tremont); and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

|   | · | lower      operating income from each of our Chemicals, Component Products and Waste      Management Segments in 2008; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------|

|   | · | interest      income related to an escrow fund recognized by NL in  2008; |
|--------|--------|---------------------------------------------------------------------------|

|   | · | an      income tax charge recognized by our Chemicals Segment in 2007;      and |
|--------|--------|---------------------------------------------------------------------------------|

|   | · | an      income tax benefit recognized by our Chemicals Segment in      2008. |
|--------|--------|------------------------------------------------------------------------------|

|   | · | lower      operating income from each of our Chemicals, Component Products and Waste      Management Segments in 2008; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------|

|   | · | the      elimination of equity in earnings from TIMET starting in the second      quarter of 2007 due to the distribution of our TIMET shares in the first      quarter of 2007 as a special dividend to our  stockholders; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | interest      income related to an escrow fund recognized by NL in  2008; |
|--------|--------|---------------------------------------------------------------------------|

|   | · | an      income tax charge recognized by our Chemicals Segment in 2007;      and |
|--------|--------|---------------------------------------------------------------------------------|

|   | · | an      income tax benefit recognized by our Chemicals Segment in      2008. |
|--------|--------|------------------------------------------------------------------------------|

|   | · | lower      income taxes as the effect of a reduction in German income taxes rates was      recognized in 2007; |
|--------|--------|----------------------------------------------------------------------------------------------------------------|

|   | · | no      equity in earnings from TIMET as we ceased to account for our interest in      TIMET by the equity method following our March 2007 special distribution      of TIMET common stock; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | lower      expected operating income from our Chemicals Segment due to continued      lower average selling prices and increases in raw material      costs. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | Our      TiO2      average selling prices; |
|--------|--------|--------------------------------------------|

|   | · | Foreign      currency exchange rates (particularly the exchange rate for the U.S.      dollar relative to the euro and the Canadian  dollar); |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our      TiO2      sales and production volumes; and |
|--------|--------|------------------------------------------------------|

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

|                                                      |   | Three months ended June 30, |   |   | Six months ended June 30, |   |
|-----------------------------------------------------------|--------|-----------------------------|--------|--------|---------------------------|--------|
|                                                      |   | 2007                        |   |   | 2008                      |   |   | % Change |   |   | 2007 |   |   | 2008 |   |   | % Change |   |
|                                                      |   | (Dollars      in millions)  |   |   |                      |   |   |   |   |
|                                                      |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      sales                                            |   | $                           | 342.6  |   |                      | $      | 391.8 |   |   |   | 14 | % |   | $ | 656.6 |   |   | $ | 724.4 |   |   |   | 10 | % |
| Cost      of sales                                        |   |                        | 279.7  |   |                      |   | 333.3 |   |   |   | 19 |   |   |   | 524.1 |   |   |   | 609.3 |   |   |   | 16 |   |
|                                                      |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross      margin                                         |   | $                           | 62.9   |   |                      | $      | 58.5 |   |   |   | (7 | ) |   | $ | 132.5 |   |   | $ | 115.1 |   |   |   | (13 | ) |
|                                                      |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income                                     |   | $                           | 24.6   |   |                      | $      | 10.9 |   |   |   | (56 | ) |   | $ | 54.9 |   |   | $ | 21.9 |   |   |   | (60 | ) |
|                                                      |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Percent      of net sales:                                |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Cost      of sales                            |   |                        | 82     | %      |                      |   | 85 | % |   |   |   |   |   |   | 80 | % |   |   | 84 | % |   |   |   |   |
|   Gross      margin                             |   |                        | 18     |   |                      |   | 15 |   |   |   |   |   |   |   | 20 |   |   |   | 16 |   |   |   |   |   |
|   Operating      income                         |   |                        | 7      |   |                      |   | 3 |   |   |   |   |   |   |   | 8 |   |   |   | 3 |   |   |   |   |   |
|                                                      |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ti02      operating statistics:                           |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Sales      volumes*                           |   |                        | 137    |   |                      |   | 141 |   |   |   | 3 | % |   |   | 262 |   |   |   | 269 |   |   |   | 3 | % |
|   Production      volumes*                      |   |                        | 128    |   |                      |   | 133 |   |   |   | 4 |   |   |   | 261 |   |   |   | 265 |   |   |   | 2 |   |
|                                                      |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Percent      change in net sales:                    |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Ti02      product pricing                     |   |                        |   |   |                      |   |   |   |   |   | (1 | )% |   |   |   |   |   |   |   |   |   |   | (3 | )% |
|   Ti02      sales volumes                       |   |                        |   |   |                      |   |   |   |   |   | 3 |   |   |   |   |   |   |   |   |   |   |   | 3 |   |
|   Ti02      product mix                         |   |                        |   |   |                      |   |   |   |   |   | 2 |   |   |   |   |   |   |   |   |   |   |   | 2 |   |
| Changes      in foreign currency exchange      rates |   |                        |   |   |                      |   |   |  10 |   |   |   |   |   |   |   |   |   |   |   |  8 |   |
|                                                      |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       Total                 |   |                        |   |   |                      |   |   |   |   |   | 14 | % |   |   |   |   |   |   |   |   |   |   | 10 | % |

----

|                              | Three      months endedJune      30, 2008     vs.      2007                                                                                                                                                        | Six      months endedJune      30, 2008    vs.      2007                                                                                                                                               |
|-----------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                              | Increase (decrease) in    millions                                                                                                                                                                                                                              |
| Impact      on:                   |                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                           |
|   Net      sales        | $33                                                                                                                                                                                                                                                             | $ 54                                                                                                                                                                                                                                      |
|   Operating      income |                                                (8) |                                             (16) |

----

|                              |   | Three months ended June 30, |   |   | Six months ended June 30, |   |
|-----------------------------------|--------|-----------------------------|--------|--------|---------------------------|--------|
|                              |   | 2007                        |   |   | 2008                      |   |   | % Change |   |   | 2007 |   |   | 2008 |   |   | % Change |   |
|                              |   | (Dollars      in millions)  |   |   |                      |   |
|                              |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      sales                    |   | $                           | 45.3   |   |                      | $      | 43.7 |   |   |   | (3 | )% |   | $ | 88.8 |   |   | $ | 84.2 |   |   |   | (5 | )% |
| Cost      of sales                |   |                        | 33.4   |   |                      |   | 32.7 |   |   |   | (2 | ) |   |   | 64.8 |   |   |   | 63.8 |   |   |   | (2 | ) |
|                              |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross      margin                 |   | $                           | 11.9   |   |                      | $      | 11.0 |   |   |   | (7 | )% |   | $ | 24.0 |   |   | $ | 20.4 |   |   |   | (15 | )% |
|                              |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income             |   | $                           | 4.8    |   |                      | $      | 4.5 |   |   |   | (7 | )% |   | $ | 10.4 |   |   | $ | 7.5 |   |   |   | (28 | )% |
|                              |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Percent      of net sales:        |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Cost      of sales    |   |                        | 74     | %      |                      |   | 75 | % |   |   |   |   |   |   | 73 | % |   |   | 76 | % |   |   |   |   |
|   Gross      margin     |   |                        | 26     |   |                      |   | 25 |   |   |   |   |   |   |   | 27 |   |   |   | 24 |   |   |   |   |   |
|   Operating      income |   |                        | 11     |   |                      |   | 10 |   |   |   |   |   |   |   | 12 |   |   |   | 9 |   |   |   |   |   |

|                              | Three      months endedJune      30, 2008     Vs.      2007     | Six      months endedJune      30, 2008    vs.      2007                                                                                                                                                     |
|-----------------------------------|--------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                              | Increase (decrease) in    millions                                                                           |
| Impact      on:                   |                                                                                                         |                                                                                                                                                                                                                                                 |
|   Net      sales        | $.3                                                                                                          | $1.0                                                                                                                                                                                                                                                 |
|   Operating      income |       .2                                                                       |                                              (.4) |

|   | · | Security      products are the least affected by the softness in consumer demand, as      these products are sold to a diverse number of business customers across a      wide range of markets, most of which are not directly impacted by changes      in consumer demand.  While demand may be fairly stable for these      products, it is unclear as to when sales growth will    return. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Furniture      component products are primarily concentrated in the office furniture,      toolbox, home appliance and a number of other      industries.  Several of these industries are more directly      affected by consumer demand than those served by our security      products.  We expect many of the markets served by our furniture      component products will continue to experience low demand in the short      term. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Marine      products have been affected the most by the slowing economy as the      decrease in consumer confidence, the decline in home values, a tighter      credit market and higher fuel costs have resulted in a significant      reduction in consumer spending in the marine market.  The marine      market is not currently expected to recover until consumer confidence      returns and home values stabilize.  A continued      under-performance of the marine market over the next twelve to eighteen      months could negatively impact CompX’s required annual impairment      evaluation of the goodwill allocated to its marine line.  An adverse      outcome from the evaluation could directly affect operating      earnings. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                |   | Three      months ended |   |   | Six      months ended |   |
|---------------------|--------|-------------------------|--------|--------|-----------------------|--------|
|                |   | June 30,                |   |   | June 30,              |   |
|                |   | 2007                    |   |   | 2008                  |   |   | 2007 |   |   | 2008 |   |
|                |   | (In      millions)      |   |
|                |   |                    |   |   |                  |   |   |   |   |   |   |   |
| Net      sales      |   | $                       | 1.1    |   |                  | $      | .6 |   |   | $ | 2.6 |   |   | $ | 1.5 |   |
| Cost      of sales  |   |                    | 3.0    |   |                  |   | 3.7 |   |   |   | 6.1 |   |   |   | 7.0 |   |
|                |   |                    |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Gross      margin   |   | $                       | (1.9   | )      |                  | $      | (3.1 | ) |   | $ | (3.5 | ) |   | $ | (5.5 | ) |
|                |   |                    |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |
| Operating      loss |   | $                       | (3.2   | )      |                  | $      | (5.5 | ) |   | $ | (6.2 | ) |   | $ | (9.9 | ) |

----

|   | · | lower      consolidated operating income in 2008 of $39.7 million, due to the lower      earnings at all of our segments; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------|

|   | · | lower      cash paid for income taxes in 2008 of $7.2 million due in part to the 2007      capital gains generated on our March 2007 special dividend of our TIMET      common stock as well as lower earnings in 2008 as compared to      2007; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | higher      general corporate interest income in 2008 of $2.4 million due principally      to $4.3 million of interest received from certain escrow funds of NL;      and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | lower      net cash used by changes in receivables, inventories, payables and accrued      liabilities in 2008 of $6.4 million, due primarily to relative changes in      Kronos’ inventory levels. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                  |   | Six      months ended June 30, |   |
|-------------------------------------------------------|--------|-------------------------------------|--------|
|                                                  |   | 2007                                |   |   | 2008 |   |
|                                                  |   | (In      millions)                  |   |
|                                                  |   |                                |   |   |   |   |
| Cash      provided by (used in) operating activities: |   |                                |   |   |   |   |
|   Kronos                                    |   | $                                   | (.1    | ) |   | $ | (31.5 | ) |
|   CompX                                     |   |                                | 5.3    |   |   |   | 5.3 |   |
|   Waste Control Specialists       |   |                                | (6.3   | ) |   |   | (5.3 | ) |
|   NL Parent                            |   |                                | (4.8   | ) |   |   | 5.7 |   |
|   Tremont                                   |   |                                | (1.7   | ) |   |   | (.5 | ) |
|   Valhi Parent                         |   |                                | 32.5   |   |   |   | 22.8 |   |
|   Other                                     |   |                                | (.5    | ) |   |   | (.5 | ) |
|   Eliminations                              |   |                                | (36.0  | ) |   |   | (36.0 | ) |
|                                                  |   |                                |   |   |   |   |   |   |
|       Total        |   | $                                   | (11.6  | ) |   | $ | (40.0 | ) |

|   | · | $34.8      million in our Chemicals Segment; |
|--------|--------|----------------------------------------------|

|   | · | $3.4      million in our Component Products Segment;and |
|--------|--------|---------------------------------------------------------|

|   | · | $2.4      million in our Waste ManagementSegment |
|--------|--------|--------------------------------------------------|

|   | · | CompX      common stock for $1.0 million; and |
|--------|--------|-----------------------------------------------|

|   | · | other      marketable securities of $5.6million. |
|--------|--------|--------------------------------------------------|

|   | · | KII’s      euro 400 million aggregate principal amount of its 6.5% Senior Secured      Notes ($626.1 million at June 30, 2008) due in  2013; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our      $250 million loan from Snake River Sugar Company due in    2027; |
|--------|--------|---------------------------------------------------------------------------|

|   | · | CompX’s      promissory note payable to TIMET ($50.0 million outstanding at June 30,      2008) which has quarterly principal repayments of $250,000 commencing in      September 2008 and is due in 2014; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | KII's      European revolving credit facility ($28.3 million outstanding) due in      2011; |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | Kronos’      U.S. revolving credit facility ($22.8 million outstanding) due in 2008;      and |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | · | approximately      $5.7 million of other indebtedness. |
|--------|--------|--------------------------------------------------------|

----

|   | · | $128.5      million under Kronos’ various U.S. and non-U.S. credit      facilities; |
|--------|--------|-------------------------------------------------------------------------------------------|

|   | · | $98.6      million under Valhi’s revolving bank credit facility;  and |
|--------|--------|-----------------------------------------------------------------------------|

|   | · | $50.0      million under CompX’s revolving creditfacility. |
|--------|--------|------------------------------------------------------------------|

|                                                                                             |   |               |   |
|--------------------------------------------------------------------------------------------------|--------|--------------------|--------|
|                                                                                             |   | Amount             |   |
|                                                                                             |   | (In      millions) |   |
|                                                                                             |   |               |   |
|   Valhi Parent                                                                    |   | $                  | 15.6   |   |
|   Kronos                                                                               |   |               | 22.2   |   |
|   NL Parent                                                                       |   |               | 48.2   |   |
|   CompX                                                                                |   |               | 18.2   |   |
|   Tremont                                                                              |   |               | 9.1    |   |
|   Waste Control Specialists                                                  |   |               | 3.1    |   |
|                                                                                             |   |               |   |   |
|   Total cash, cash equivalents and marketable securities |   | $                  | 116.4  |   |

----

----

|   | · | certain      income tax examinations which are underway in various U.S. and non-U.S.      jurisdictions; |
|--------|--------|----------------------------------------------------------------------------------------------------------|

|   | · | certain      environmental remediation matters involving NL, Tremont and      Valhi; |
|--------|--------|--------------------------------------------------------------------------------------|

|   | · | certain      litigation related to NL’s former involvement in the manufacture of lead      pigment and lead-based paint; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|

|   | · | certain      other litigation to which we are aparty. |
|--------|--------|-------------------------------------------------------|

----

|   | · | pertain      to the maintenance of records that in reasonable detail accurately and      fairly reflect our 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 our      receipts and expenditures are made only in accordance with authorizations      of our management and directors,and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

| Item      2. | Unregistered      Sales of Equity Securities and Use of Proceeds; Share      Repurchases. |
|--------------|-------------------------------------------------------------------------------------------|

----

|   | Item      No. |   | Exhibit      Index |
|--------|---------------|--------|--------------------|
|   |          |   |               |
|   | 31.1          |   | Certification      |
|   |          |   |               |
|   | 31.2          |   | Certification      |
|   |          |   |               |
|   | 32.1          |   | Certification      |

----

|                                                                                                              |   |           VALHI,      INC.          (Registrant) |
|-------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                              |   |                                                                                                                                                 |
|                                                                                                              |   |                                                                                                                                                 |
|                                                                                                              |   |                                                                                                                                                 |
| Date        August 6,      2008             |   | /s/ Bobby D.      O’Brien                                           |
|                                                                                                              |   | Bobby      D. O’Brien(Vice      President and Chief Financial      Officer)                                                               |
|                                                                                                              |   |                                                                                                                                                 |
| Date        August 6, 2008                       |   | /s/ Gregory M.      Swalwell                                                             |
|                                                                                                              |   | Gregory      M. Swalwell(Vice      President and Controller, Principal      Accounting Officer)                                                 |
|                                                                                                              |   |                                                                                                                                                 |