SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 2010
For the quarter ended March 31, 2011
Commission file number 333-100047
KRONOS INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE	22-2949593
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
5430 LBJ Freeway, Suite 1700
Dallas, Texas 75240-2697
(Address of principal executive offices)
Registrant's telephone number, including area code: (972) 233-1700

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes X No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).* Yes No

*	The registrant has not yet been phased into the interactive data requirements

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Large accelerated filer Accelerated filer Non-accelerated filer X Smaller reporting company

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No X

Number of shares of the Registrant's common stock outstanding on ~~October~~April 1529, ~~2010~~2011: 2,968.

The Registrant is a wholly owned subsidiary of Kronos Worldwide, Inc. (File No. 1-31763) and meets the conditions set forth in General Instructions H(1)(a) and H(1)(b) of Form 10-Q for reduced disclosure format.

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KRONOS INTERNATIONAL, INC. AND SUBSIDIARIES

INDEX

		Page
		number
Part I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets -
	December 31, 2009; September 30, 2010 (Unaudited)	3
	December 31, 2010; March 31, 2011 (Unaudited)	3
	Condensed Consolidated Statements of Operations (Unaudited) -
	Condensed Consolidated Statements of Income (Unaudited) -
	Three and nine months ended September 30, 2009 and 2010	5
	Three months ended March 31, 2010 and 2011	5
	Condensed Consolidated Statement of Stockholder’s
	Equity and Comprehensive Income (Loss) (Unaudited)-
	Equity and Comprehensive Income (Unaudited)-
	Nine months ended September 30, 2010	6
	Three months ended March 31, 2011	6
	Condensed Consolidated Statements of Cash Flows (Unaudited) -
	Nine months ended September 30, 2009 and 2010	7
	Three months ended March 31, 2010 and 2011	7
	Notes to Condensed Consolidated Financial Statements (Unaudited)	8
Item 2.	Management's Discussion and Analysis of Financial
	Condition and Results of Operations	1314
Item 3.	Quantitative and Qualitative ~~Disclosures~~Disclosure About Market Risk	2422
Item 4.	Controls and Procedures	2422
Part II.	OTHER INFORMATION
Item 1.	Legal Proceedings	2624
Item 1A.	Risk Factors	2624
Item 6.	Exhibits	2624
Items 2, 3, 4 and 5 of Part II are omitted because there is no information to report.

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KRONOS INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

ASSETS	December 31,		~~September~~March 3031,
	2009		2010
	2010		2011
			(Unaudited)
Current assets:
Cash and cash equivalents	$	2949.48	$	2649.16
Restricted cash		1.79		1.23
Accounts and other receivables		~~141~~161.5		~~176~~208.92
Inventories		~~207~~202.79		~~189~~251.13
Prepaid expenses and other		64.30		85.0
Deferred income taxes		.14		.14
Total current assets		~~386~~420.75		~~401~~515.48
Other assets:
Deferred financing costs, net		54.83		3.95
Deferred income taxes		~~185~~191.56		~~189~~192.89
Other		5.24		5.08
Total other assets		~~196~~201.53		~~198~~202.72
Property and equipment:
Land		4542.14		4244.27
Buildings		~~181~~170.69		~~170~~180.29
Equipment		~~862~~828.35		~~810~~876.23
Mining properties		115.79		~~113~~121.06
Construction in progress		710.92		1711.78
		1,212.6		1,153.3
		1,167.9		1,235.3
Less accumulated depreciation and amortization		~~781~~766.90		~~760~~816.13
Net property and equipment		~~430~~401.79		~~393~~419.20
Total assets	$	1,~~013~~023.97	$	~~993~~1,137.30

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KRONOS INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

(In millions)

LIABILITIES AND STOCKHOLDER’S EQUITY	December 31, ~~2009~~2010			~~September~~March 3031, ~~2010~~2011
				(Unaudited)
Current liabilities:
Current maturities of long-term debt	$	2.12		$	2.12
Accounts payable and accrued liabilities		~~163~~152.4			~~150~~172.67
Income taxes		3.6.8			213.64
Deferred income taxes		4.7			45.31
Total current liabilities		~~173~~166.81			~~159~~193.64
Noncurrent liabilities:
Long-term debt		~~594~~537.4			~~539~~567.96
Deferred income taxes		1114.69			1015.48
Accrued pension cost		~~108~~100.67			99103.5
Other		2224.12			2225.05
Total noncurrent liabilities		~~736~~677.72			~~671~~712.84
Stockholder’s equity:
Stockholder's equity:
Common stock		.3			.3
Additional paid-in capital		1,~~962~~976.10			1,~~972~~979.45
Retained deficit		(1,~~471~~385.61	)		(1,~~406~~344.90	)
Notes receivable from affiliates		(~~235~~255.6	)		(~~250~~260.47	)
Accumulated other comprehensive loss		(~~151~~155.82	)		(~~153~~143.59	)
Total stockholder’s equity		103.4			161.9
Total stockholder's equity		180.4			231.2
Total liabilities and stockholder’s equity	$	1,~~013~~023.97		$	~~993~~1,137.30

Commitments and contingencies (Notes 6 and 9)

See accompanying Notes to Condensed Consolidated Financial Statements.

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KRONOS INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~INCOME

(In millions)

	Three months ended September 30,						Nine months ended September 30,
	Three months ended March 31,
	2009			2010			2009			2010
	2010			2011
	(Unaudited)
	(unaudited)
Net sales	$	~~224~~228.68		$	~~250~~298.47		$	~~592.9~~		$	~~735.8~~
Cost of sales		~~184~~187.56			~~192~~194.84			~~560.2~~			~~582.0~~
Gross margin		4041.12			57104.63			~~32.7~~			~~153.8~~
Selling, general and administrative expense		30.2			3133.14			~~83.4~~			~~91.9~~
Currency transaction gains		1.6			3.2			7.4			3.5
Currency transaction gains, net		1.9			-
Other operating income, net		12.32			12.94			~~4.0~~			~~6.9~~
Income (loss) from operations		12.8			31.6			(39.3	)		72.3
Income from operations		15.1			73.3
Other income (expense):
Interest income		.1-			-.1			.1			.1
Interest expense		(10.3	)		(8.9	)		(29.6	)		(28.5	)
Loss on prepayment of debt		-			(3.3	)
Income (loss) before income taxes		2.6			22.7			(68.8	)		43.9
Interest expense		(10.1	)		(9.3	)
Income tax expense (benefit)		(.4	)		7.3			(21.6	)		(20.8	)
Income before income taxes		5.0			60.8
Net income (loss)	$	3.0		$	15.4		$	(47.2	)	$	64.7
Income tax expense (benefit)		(35.3	)		19.7
Net income	$	40.3		$	41.1

See accompanying Notes to Condensed Consolidated Financial Statements.

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KRONOS INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER’S EQUITY AND COMPREHENSIVE INCOME ~~(LOSS)~~

~~Nine~~Three months ended ~~September~~March 3031, ~~2010~~2011

(In millions)

			Additional					Notes receivable			Accumulated other			Total
	Common stock		Additional paid-in capital		Retained deficit			Notes receivable from affiliates			Accumulated other comprehensive loss			Total stockholder’s equity			Comprehensive income
	Common stock		paid-in capital		Retained deficit			from affiliates			comprehensive loss			stockholder’s equity			Comprehensive income (loss)
	(Unaudited)
Balance at December 31, 2009	$	.3	$	1,962.1	$	(1,471.6	)	$	(235.6	)	$	(151.8	)	$	103.4
Balance at December 31, 2010	$	.3	$	1,976.0	$	(1,385.1	)	$	(255.6	)	$	(155.2	)	$	180.4
Net income		-		-		6441.71			-			-			6441.71		$	6441.71
Other comprehensive loss, net of tax		-		-		-			-			(1.7	)		(1.7	)		(1.7	)
Other comprehensive income, net		-		-		-			-			11.3			11.3			11.3
Intercompany interest – Kronos Worldwide, Inc.		-		~~10.~~3.5		-			(145.81	)		-			(41.56	)		-
Balance at September 30, 2010	$	.3	$	1,972.4	$	(1,406.9	)	$	(250.4	)	$	(153.5	)	$	161.9
Balance at March 31, 2011	$	.3	$	1,979.5	$	(1,344.0	)	$	(260.7	)	$	(143.9	)	$	231.2
Comprehensive income																	$	6352.04

See accompanying Notes to Condensed Consolidated Financial Statements.

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KRONOS INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

	Nine months ended September 30,
	Three months ended March 31,
	2009			2010
	2010			2011
	(Unaudited)
Cash flows from operating activities:
Net income (loss)	$	(47.2	)	$	64.7
Net income	$	40.3		$	41.1
Depreciation and amortization		3010.40			289.69
Deferred income taxes		(2134.50	)		~~(27~~7.07	)
Defined benefit pension plan expense greater (less) than cash funding		(1.8	)		2.3
Loss on prepayment of debt		-			3.3
Other, net		.9			2.8
Call premium paid		-			(2.5	)
Defined benefit pension plan expense greater (less) than cash funding		1.4			(1.9	)
Other, net		-			.2
Change in assets and liabilities:
Accounts and other receivables		(2429.43	)		(5037.06	)
Inventories		~~117~~3.25			5(35.07	)
Prepaid expenses		(31.71	)		-(.7	)
Accounts payable and accrued liabilities		54.23			148.8
Income taxes		(1.59	)		(5.47	)
Accounts with affiliates		2.(6.1	)		~~(16~~12.29	)
Other, net		(.23	)		2(1.41	)
Net cash provided by operating activities		58.0			27.0
Net cash provided by (used in) operating activities		(13.2	)		10.1
Cash flows from investing activities:
Capital expenditures		(157.12	)		(1913.20	)
Change in restricted cash, net		.5			.56
Net cash used in investing activities		(~~14.~~6.7	)		(1812.74	)
Cash flows from financing activities:
Indebtedness:
Borrowings		2921.16			41113.83
Principal payments		(488.38	)		(51113.8	)
Deferred financing fees		(.6	)		-
Net cash provided by (used in) financing activities		12.8			(.5	)
Net cash used in financing activities		(19.8	)		(10.0	)
Cash and cash equivalents - net change from:
Operating, investing and financing activities		23(7.61	)		(12.78	)
Currency translation		4(1.67	)		(12.6	)
Balance at beginning of period		1029.84			2949.48
Balance at end of period	$	3920.06		$	2649.16
Supplemental disclosures:
Cash paid for (received):
Cash paid for:
Interest	$	19.6		$	18.3
Interest (including call premium paid)	$	.2		$	5.8
Income taxes		(.46	)		56.80
Accrual for capital expenditures		1.3			12.96
Capital lease obligation incurred		3.6			-

See accompanying Notes to Condensed Consolidated Financial Statements.

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KRONOS INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September~~March 3031, ~~2010~~2011

(Unaudited)

Note 1 - Organization and basis of presentation:

Organization – We are a wholly-owned subsidiary of Kronos Worldwide, Inc. ("Kronos") (NYSE: KRO). We are incorporated in the state of Delaware, U.S.A., with our seat of management in Leverkusen, Germany. At ~~September~~March 3031, ~~2010~~2011, Valhi, Inc. (NYSE: VHI) held approximately 5950% of Kronos’ outstanding common stock and NL Industries, Inc. (NYSE: NL) held an additional 3630% of Kronos’ common stock. Valhi owns approximately 83% of NL’s outstanding common stock. Approximately 94% of Valhi’s outstanding common stock is held by subsidiaries of Contran Corporation. Substantially all of Contran’s outstanding voting stock is held by trusts established for the benefit of certain children and grandchildren of Harold C. Simmons (for which Mr. Simmons is sole trustee), or is held directly by Mr. Simmons or other persons or entities related to Mr. Simmons. Consequently, Mr. Simmons may be deemed to control each of these companies.

Basis of presentation – The unaudited Condensed Consolidated Financial Statements contained in this Quarterly Report have been prepared on the same basis as the audited Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, ~~2009~~2010 that we filed with the Securities and Exchange Commission (“SEC”) on March 94, ~~2010~~2011 (the “~~2009~~2010 Annual Report”). In our opinion, we have made all necessary adjustments (which include only normal recurring adjustments) in order to state fairly, in all material respects, our consolidated financial position, results of operations and cash flows as of the dates and for the periods presented. We have condensed the Consolidated Balance Sheet and Statement of Stockholder’s Equity and Comprehensive Income (Loss) at December 31, ~~2009~~2010 contained in this Quarterly Report as compared to our audited Consolidated Financial Statements at that date, and we have omitted certain information and footnote disclosures (including those related to the Consolidated Balance Sheet at December 31, ~~2009~~2010) normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Our results of operations for the interim ~~periods~~period ended ~~September~~March 3031, ~~2010~~2011 may not be indicative of our operating results for the full year. The Condensed Consolidated Financial Statements contained in this Quarterly Report should be read in conjunction with our ~~2009~~2010 Consolidated Financial Statements contained in our ~~2009~~2010 Annual Report.

Unless otherwise indicated, references in this report to “we,” “us” or “our” refer to Kronos International, Inc. and its subsidiaries taken as a whole.

- 8 -

Note 2 – Accounts and other receivables:

	December 31, 2009			September 30, 2010
	December 31, 2010			March 31, 2011
	(In millions)
Trade receivables	$	~~126~~137.89		$	~~152~~177.73
Recoverable VAT and other receivables		1523.30			2329.72
Refundable income taxes		.49			-1.0
Receivable from affiliate -
Kronos Canada		1.69			2.53
Allowance for doubtful accounts		(2.62	)		(21.06	)
Total	$	~~141~~161.5		$	~~176~~208.92

Note 3 - – Inventories:

	December 31, 2009		September 30, 2010
	December 31, 2010		March 31, 2011
	(In millions)
Raw materials	$	4641.85	$	4458.24
Work in process		139.39		911.03
Finished products		98107.90		90133.58
Supplies		4844.75		4547.48
Total	$	~~207~~202.79	$	~~189~~251.13

Note 4 - – Accounts payable and accrued liabilities:

	December 31, 2009		September 30, 2010
	December 31, 2010		March 31, 2011
	(In millions)
Accounts payable	$	6981.91	$	6280.48
Employee benefits		1825.70		2426.65
Accrued sales discounts and rebates		199.30		134.39
Payable to affiliates:
Kronos (US), Inc.		3014.20		1228.60
Kronos Canada, Inc.		.2		.1
Accrued interest		7.9		16.1
Kronos Worldwide, Inc.		-		.1
Other		17.2		21.5
Louisiana Pigment Company, L.P.		-		.1
Total	$	163.4	$	150.6
Accrued interest		7.4		13.6
Other		15.7		18.6
Total	$	152.4	$	172.7

Note 5 -– Long-term debt:

	December 31, 2009		September 30, 2010
	December 31, 2010		March 31, 2011
	(In millions)
Long term debt:
Long-term debt:
6.5% Senior Secured Notes	$	~~574~~532.68	$	~~534~~450.85
Revolving credit facility		~~13.0~~-		-112.9
Other		86.98		76.24
Total debt		~~596~~539.56		~~542~~569.08
Less current maturities		2.12		2.12
Total long-term debt	$	~~594~~537.4	$	~~539~~567.96

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~~Revolving~~Senior ~~credit~~Secured ~~facility~~Notes - ~~During~~On ~~the~~March ~~first~~24, ~~nine~~2011, ~~months~~we ofredeemed ~~2010,~~euro we80 ~~repaid~~million aof ~~net~~our euro 9400 million 6.05% Senior Secured Notes at 102.17% of the principal amount for an aggregate of $115.7 million, (including a $82.5 million ~~when~~call ~~borrowed/repaid)~~premium. Following ~~under~~such ~~our~~partial ~~bank~~redemption, ~~credit~~euro ~~facility~~320 million principal amount of the Senior Notes remain outstanding. ~~Our~~We borrowed under our revolving credit facility, ~~currently~~as ~~matures~~discussed below, in ~~May~~order ~~2011~~to fund the redemption. We ~~have~~recognized ~~commenced~~a ~~discussions~~$3.3 ~~with~~million pre-tax interest charge related to the ~~lenders~~prepayment of the 6.5% Senior Secured Notes in ~~such~~the ~~facility~~first ~~regarding~~quarter anof ~~extension~~2011, consisting of the ~~facility,~~call premium and wethe ~~expect~~write-off toof ~~have~~unamortized adeferred ~~new~~financing ~~agreement~~costs ofand ~~extension~~the inoriginal ~~place~~issue ~~prior~~discount toassociated ~~such~~with ~~maturity~~the ~~date~~redeemed Senior Notes.

InRevolving ~~May 2010, we satisfied certain specified financial covenants in our revolving~~ credit facility, ~~and~~- asDuring ~~a result~~ the ~~maximum~~first ~~borrowing~~three ~~availability~~months ~~under~~of ~~such~~2011, ~~facility~~we ~~returned~~borrowed toa ~~the~~net ~~full~~ euro 80 million ~~facility size at that time~~($113. In3 ~~addition,~~million inwhen ~~August~~borrowed) ~~2010~~under weour ~~satisfied~~bank ~~the financial ratio of net secured debt to earnings before income taxes, interest and depreciation as defined in the~~ credit facility,. The ~~and~~average ~~as a result two financial covenants added to such credit facility in September 2009 are no longer effective, and the~~ interest rate on ~~outstanding~~these borrowings ~~under~~at ~~such~~March ~~credit~~31, ~~facility~~2011 was ~~prospectively reduced from LIBOR plus a margin ranging from 3% to 4% to LIBOR plus 1~~2.7539%.

Restrictions and other. - Our credit facility described above requires the borrower to maintain minimum levels of equity, requires the maintenance of certain financial ratios, limits dividends and additional indebtedness and contains other provisions and restrictive covenants customary in lending transactions of this type. We are in compliance with all of our debt covenants at ~~September~~March 3031, ~~2010~~2011. We believe we will be able to comply with the financial covenants contained in our credit facility through the maturity of the facility; however if future operating results differ materially from our expectations we may be unable to maintain compliance.

The terms of the indenture governing the 6.5% Senior Secured Notes limit our ability to pay dividends and make other restricted payments. At ~~September~~March 3031, ~~2010~~2011, the maximum amount of dividends and other restricted payments that we could make (the “Restricted Payment Basket”) was $2283.50 million. For several quarters prior to September 30, 2010, the indenture prohibited us from utilizing the Restricted Payment Basket because we had not met a specified financial ratio contained in this indenture; upon satisfying this financial ratio as of September 30, 2010 this prohibition ceased to be applicable.

Note 6 - Income taxes:

	Nine months ended September 30,
	Three months ended March 31,
	2009			2010
	2010			2011
	(In millions)
Expected tax expense (benefit), at U.S. federal statutory income tax rate of 35%	$	~~(24.~~1.7	)	$	1521.43
Non-U.S. tax rates		2(.34	)		(12.71	)
Nondeductible expenses		1(.59	)		1.14
German tax attribute adjustment		(35.42	)		~~(35.2~~-	)
Other, net		(.9	)		(.4	)
Prior year adjustment		(.7	)		-
Total	$	(21.6	)	$	(20.8	)
Nontaxable income		.3			(.2	)
Other, net		(.1	)		.3
Total	$	(35.3	)	$	19.7

Tax authorities are examining certain of our tax returns and have or may propose tax deficiencies, including penalties and interest. Because of the inherent uncertainties involved in the settlement initiatives and court and tax proceedings, we cannot guarantee that these tax matters will be resolved in our favor, and therefore our potential exposure, if any, is also uncertain. We believe we have adequate accruals for additional taxes and related interest expense which could ultimately result from tax examinations. We believe the ultimate disposition of tax examinations should not have a material adverse effect on our consolidated financial position, results of operations or liquidity. We currently estimate that our unrecognized tax benefits will not change materially during the next twelve months.

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Certain of our non-U.S. tax returns are being examined and tax authorities may propose tax deficiencies, including interest and penalties. We cannot guarantee that these tax matters will be resolved in our favor due to the inherent uncertainties involved in settlement initiatives and court and tax proceedings. We believe we have adequate accruals for additional taxes and related interest expense which could ultimately result from tax examinations. We believe the ultimate disposition of tax examinations should not have a material adverse effect on our consolidated financial position, results of operations or liquidity. We do not currently believe that our unrecognized tax benefits will change significantly within the next twelve months.

As a consequence of a European Court ruling that resulted in a favorable resolution of certain income tax issues in Germany, during the first quarter of 2010 the German tax authorities agreed to an increase in our German net operating loss carryforwards. Accordingly, we recognized a non-cash income tax benefit of $35.2 million in the first quarter of 2010.

Note 7 – Employee benefit plans:

The components of net periodic defined benefit pension cost are presented in the table below.

	Three months ended September 30,						Nine months ended September 30,
	Three months ended March 31,
	2009			2010			2009			2010
	2010			2011
	(In millions)
Service cost	$	12.41		$	12.90		$	~~4.1~~		$	~~5.8~~
Interest cost		4.45			4.15			~~13.4~~			~~12.9~~
Expected return on plan assets		(23.91	)		(23.90	)		~~(8.8~~	)		~~(9.0~~	)
Amortization of prior service cost		.1			.1			.4			.4
Amortization of net transition obligations		-			-			.1			.1
Recognized actuarial losses		1.2			1.2
Recognized actuarial losses		1.1			1.1			3.2			3.4
Total	$	4.8		$	4.8
Total	$	4.1		$	4.3		$	12.4		$	13.6

Contributions – We expect our ~~2010~~2011 contributions for our pension plans to be ~~consistent~~approximately ~~with~~$22 ~~the amount disclosed in our 2009 Annual Report~~million.

Note 8 – Other noncurrent liabilities:

	December 31, 2009		September 30, 2010
	December 31, 2010		March 31, 2011
	(In millions)
Reserve for uncertain tax positions	$	910.56	$	1011.21
Employee benefits		9.27		810.51
Other		3.49		34.3
Total	$	2224.12	$	2225.05

Note 9 – Commitments and contingencies:

Litigation matters – From time-to-time we are involved in various environmental, contractual, product liability, patent (or intellectual property), employment and other claims and disputes incidental to our operations. In certain cases, we have insurance coverage for these items. We currently believe the disposition of all claims and disputes, individually or in the aggregate, should not have a material adverse effect on our consolidated financial position, results of operations or liquidity beyond the accruals we have already provided for.

Please refer to our ~~2009~~2010 Annual Report ~~and our Quarterly Reports on Form 10-Q~~ for ~~the quarters ended March 31, 2010 and June 30, 2010 for~~ a discussion of certain other legal proceedings to which we are a party.

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Note 10 –- Financial instruments:

The following table summarizes the valuation of our ~~short-term investments and~~ financial instruments recorded on a fair value basis ~~under ASC Topic 820, Fair Value Measurements and Disclosures~~ as of December 31, ~~2009~~2010 and ~~September~~March 3031, ~~2010~~2011:

	Fair Value Measurements
	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in millions)
	(In millions)
Currency forward contracts
December 31, 2010:
December 31, 2009	$	1.6	$	1.6	$	-	$	-
Currency forward contracts	$	2.6	$	2.6		-		-
September 30, 2010		2.1		2.1		-		-
March 31, 2011:
Currency forward contracts	$	2.7	$	2.7		-		-

Certain of our sales generated by our operations are denominated in U.S. dollars. We periodically use currency forward contracts to manage a very nominal portion of currency exchange rate risk associated with trade receivables denominated in a currency other than the holder's functional currency or similar exchange rate risk associated with future sales. We have not entered into these contracts for trading or speculative purposes in the past, nor do we currently anticipate entering into such contracts for trading or speculative purposes in the future. Derivatives used to hedge forecasted transactions and specific cash flows associated with financial assets and liabilities denominated in currencies other than the U.S. dollar and which meet the criteria for hedge accounting are designated as cash flow hedges. Consequently, the effective portion of gains and losses is deferred as a component of accumulated other comprehensive income and is recognized in earnings at the time the hedged item affects earnings. Contracts that do not meet the criteria for hedge accounting are marked-to-market at each balance sheet date with any resulting gain or loss recognized in income currently as part of net currency transactions. The fair value of the currency forward contracts is determined using Level 1 inputs based on the currency spot forward rates quoted by banks ~~or currency dealers~~. At ~~September~~March 3031, ~~2010~~2011, we had currency forward contracts to exchange:

· an aggregate ~~euro~~$10 ~~5.4~~ million for an equivalent value of Norwegian kroner at exchange rates ranging from kroner 86.4759 to kroner 86.5260 per ~~euro~~U.S. dollar. These contracts with DnB Nor Bank ASA mature from ~~October~~April ~~2010~~2011 through ~~December~~July ~~2010~~2011 at a rate of ~~euro 1~~$2.85 million per month~~, subject to early redemption provisions at our option~~. ~~At September 30, 2010, the actual exchange rate was kroner 7.97 per euro; and~~

· an aggregate ~~$30~~euro 11.98 million for an equivalent value of Norwegian kroner at exchange rates ranging from kroner 58.9219 to kroner 68.6028 per Ueuro.S. ~~dollar.~~ These contracts with DnB Nor Bank ASA mature from ~~November~~April ~~2010~~2011 through ~~July~~August 2011 at a rate of $2euro 1.38 million to $5euro 2.5 million per month~~. At September 30~~, ~~2010~~subject ~~the~~to ~~actual~~early ~~exchange~~redemption ~~rate~~provisions ~~was~~at ~~Kroner~~our 5option.~~95 per U.S. dollar.~~

The estimated fair value of ~~our~~such currency forward contracts at ~~September~~March 3031, ~~2010~~2011 was a $2.17 million net asset, which is ~~included~~recognized inas ~~our~~part ~~Condensed~~of ~~Consolidated~~Accounts ~~Balance~~and ~~Sheet~~other asreceivables ~~$2.1~~in ~~million~~our ~~recognized~~Consolidated asBalance ~~part~~Sheet ~~of Prepaid Expenses~~ and ~~Other. There is also~~ a corresponding $2.17 million currency transaction gain in our ~~Condensed~~ Consolidated ~~Statement~~Statements of ~~Operations~~Income. We are not currently using hedge accounting for our outstanding currency forward contracts at ~~September~~March 3031, ~~2010~~2011, and we did not use hedge accounting for any of such contracts we previously held ~~earlier~~ in 2010 ~~and 2009~~.

- 12 -

The following table presents the financial instruments that are not carried at fair value but which require fair value disclosure as of December 31, 2010 and March 31, 2011.

	December 31,				September 30,
	December 31, 2010				March 31, 2011
	2009				2010
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In millions)
Cash, cash equivalents and restricted cash	$	3151.17	$	3151.17	$	2750.39	$	2750.39
Long-term debt (excluding capitalized leases):
Notes payable and long-term debt:
Fixed rate with market quotes -
6.5% Senior Secured Notes	$	~~574~~532.68	$	~~466~~536.20	$	~~534~~450.85	$	~~505~~456.73
Variable rate bank revolving credit facility		13.0		13.0		-		-
European credit facility		-		-		112.9		112.9

At ~~September~~December 3031, 2010 and March 31, 2011, the estimated market price of the 6.5% ~~Senior Secured~~ Notes was approximately euro ~~943~~1,004 and euro 1,011 per euro 1,000 principal amount, respectively. The fair value of our 6.5% ~~Senior Secured~~ Notes is based upon quoted market prices at each balance sheet date; these quoted market prices represent Level 2 inputs because the markets in which the ~~Senior Secured~~ Notes trade are not active. The fair value of variable interest rate debt is deemed to approximate book value. Due to their near-term maturities, the carrying amounts of accounts receivable and accounts payable are considered equivalent to fair value.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS:

Business ~~and results of operations~~ overview

We are ~~one~~a ~~of the~~ leading global ~~producers~~producer and ~~marketers~~marketer of value-added titanium dioxide pigments (“TiO2”)~~, a base industrial product used in a wide range of applications~~. TiO2 is used infor a ~~diverse~~variety ~~range~~ of ~~customer~~manufacturing applications ~~and end-use markets~~, including ~~coatings~~plastics, ~~plastics~~paints, paper, ~~food, cosmetics, inks, textile fibers, rubber, pharmaceuticals, glass, ceramics~~ and other industrial ~~and consumer markets~~products. For the ~~nine~~three months ended ~~September~~March 3031, ~~2010~~2011, approximately three-fourths of our sales volumes were into European markets. Our production facilities are located ~~throughout~~in Europe.

We ~~reported~~consider ~~net~~TiO2 ~~income~~to ofbe ~~$15.4~~a ~~million~~“quality inof ~~the~~life” ~~third~~product, ~~quarter~~with ofdemand ~~2010~~affected asby ~~compared~~gross todomestic ~~net~~product ~~income~~(or of“GDP”) ~~$3.0~~and ~~million~~overall economic conditions in ~~the~~our ~~third~~markets ~~quarter~~located in various regions of ~~2009~~the world. ~~For~~Over the ~~first~~long-term, ~~nine~~we ~~months~~expect ofdemand ~~2010,~~for weTiO2 ~~reported~~across ~~net~~all ~~income~~markets ofwill ~~$64.7~~grow ~~million,~~on ~~compared~~average by 2% to a3% ~~net~~per ~~loss~~year, ofconsistent ~~$47.2~~with ~~million~~our inexpectations for the ~~first~~long-term ~~nine~~growth ~~months~~in ~~of 2009~~GDP. ~~Our~~However, ~~net~~even ~~income~~if ~~increased~~we inand our competitors maintain consistent shares of the ~~third~~worldwide ~~quarter~~market, ~~and~~demand ~~first~~for ~~nine~~TiO2 ~~months~~in ofany ~~2010~~interim asor ~~compared~~annual toperiod may not change in the same ~~periods~~proportion ofas ~~2009~~the ~~primarily~~change in GDP, in part due to ~~(i)~~relative changes in the ~~net~~TiO2 ~~effects~~inventory levels of ~~higher~~our ~~income~~customers. We ~~from~~believe ~~operations~~our incustomers’ ~~2010~~inventory ~~resulting~~levels ~~principally~~are ~~from~~influenced ~~higher~~in ~~sales~~part ~~and~~by ~~production~~their ~~volumes~~expectations ~~and~~for ~~higher~~future changes in market TiO2 selling prices inas well as their expectations for future availability of product. Although certain of our TiO2 grades are considered specialty pigments, the ~~2010~~majority ~~periods~~of our grades and ~~(ii)~~substantially aall ~~non-cash~~of ~~deferred~~our ~~income~~production ~~tax~~are ~~benefit~~considered ofcommodity ~~$35.2~~pigment ~~million~~products ~~recognized~~with inprice and availability being the ~~first~~most ~~quarter~~significant ofcompetitive ~~2010~~factors along with quality and customer service.

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Forward-looking information

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Statements in this Quarterly Report on Form 10-Q that are not historical facts are forward-looking in nature and represent management’s beliefs and assumptions based on currently available information. Statements in this report including, but not limited to, statements found in Item 2 - "Management’s Discussion and Analysis of Financial Condition and Results of Operations," are forward-looking statements that represent our management’s beliefs and assumptions based on currently available information. In some cases you can identify forward-looking statements by the use of words such as "believes," "intends," "may," "should," "could," "anticipates," "expects" or comparable terminology, or by discussions of strategies or trends. Although we believe the expectations reflected in forward-looking statements are reasonable, we do not know if these expectations will be correct. Such statements by their nature involve substantial risks and uncertainties that could significantly impact expected results. Actual future results could differ materially from those predicted. The factors that could cause our actual future results to differ materially from those described herein are the risks and uncertainties discussed in this Quarterly Report and those described from time to time in our other filings with the SEC including, but are not limited to, the following:

· Future supply and demand for our products;

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

· The cyclicality of our businesses;

· Customer inventory levels (such as the extent to which our customers may, from time to time, accelerate purchases of TiO2 in advance of anticipated price increases or defer purchases of TiO2 in advance of anticipated price decreases);

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

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

· Competitive products and substitute products;

· Customer and competitor strategies;

· Potential consolidation or solvency of our competitors;

· The impact of pricing and production decisions;

· Competitive technology positions;

· Our ability to protect our intellectual property rights in our technology;

· The introduction of trade barriers;

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

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

· Our ability to renew or refinance credit facilities;

· Our ability to maintain sufficient liquidity;

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

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

· Environmental matters (such as those requiring compliance with emission and discharge standards for existing and new facilities);

· Government laws and regulations and possible changes therein;

· The ultimate resolution of pending litigation; and

· Possible future litigation.

- 14 -

Should one or more of these risks materialize (or the consequences of such a development worsen), or should the underlying assumptions prove incorrect, actual results could differ materially from those forecasted or expected. We disclaim any intention or obligation to update or revise any forward-looking statement whether as a result of changes in information, future events or otherwise

Results of operations

We consider TiO2 to be a “quality of life” product, with demand affected by gross domestic product (or “GDP”) and overall economic conditions in our markets located in various regions of the world. Over the long-term, we expect that demand for TiO2 will grow by 2% to 3% per year, consistent with our expectations for the long-term growth in GDP. However, even if we and our competitors maintain consistent shares of the worldwide market, demand for TiO2 in any interim or annual period may not change in the same proportion as the change in GDP, in part due to relative changes in the TiO2 inventory levels of our customers. We believe our customers’ inventory levels are partly influenced by their expectation for future changes in TiO2 selling prices. The majority of our TiO2 grades and substantially all of our production are considered commodity pigment products; we compete for sales primarily on the basis of price.

The factors having the most impact on our reported operating results are:

· Our TiO2 selling prices,

·	Our TiO2 sales and production volumes,

·	TiO2 selling prices,

·	Currency exchange rates (particularly the exchange rate for the U.S. dollar relative to the euro and the Norwegian krone) and

·	Manufacturing costs, particularly raw materials, maintenance and energy-related expenses.

Our key performance indicators are our TiO2 average selling prices, and our level of TiO2 sales and production volumes. TiO2 selling prices generally follow industry trends and prices will increase or decrease generally as a result of competitive market pressures.

In addition, our effective income tax rate in 2010 was impacted by certain favorable developments, as discussed further below.

Executive summary

We reported net income of $41.1 million in the first quarter of 2011 as compared to net income of $40.3 million in the first quarter of 2010. Our net income for the first quarter 2011 is higher principally due to higher income from operations resulting principally from higher average selling prices and higher production volumes in 2011. In addition, our results of operations in the first quarter of 2010 includes a $35.2 million non-cash income tax benefit related to a European Court ruling that resulted in a favorable resolution of certain tax issues in Germany.

- 14 -

Forward-looking information

·	Future supply and demand for our products

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

·	The cyclicality of our businesses

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

·	Changes in the availability of raw materials (such as ore)

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

·	Competitive products and substitute products

·	Customer and competitor strategies

·	Potential consolidation of our competitors

·	The impact of pricing and production decisions

·	Competitive technology positions

·	The introduction of trade barriers

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

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

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

·	Our ability to renew or refinance credit facilities

·	Our ability to maintain sufficient liquidity

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

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

·	Environmental matters (such as those requiring compliance with emission and discharge standards for existing and new facilities)

·	Government laws and regulations and possible changes therein

·	The ultimate resolution of pending litigation; and

·	Possible future litigation.

- 15 -

~~Quarter~~Should ~~ended~~one ~~September~~or 30more of these risks materialize (or the consequences of such a development worsen), ~~2009~~or ~~compared~~should the underlying assumptions prove incorrect, actual results could differ materially from those forecasted or expected. We disclaim any intention or obligation to ~~the~~update or revise any forward-looking statement whether as a result of changes in information, future events or otherwise.

~~Quarter~~Results ~~ended~~of ~~September 30, 2010~~operations

	Three months ended September 30,
	2009				2010
	(Dollars in millions)
Net sales	$	224.6	100	%	$	250.4		100	%
Cost of sales		184.5	82			192.8		77
Gross margin		40.1	18			57.6		23
Other operating income and expenses, net		27.3	12			26.0		10
Income from operations	$	12.8	6	%	$	31.6		13	%
							%
							Change
TiO2 operating statistics:
Sales volumes*		86				89		3	%
Production volumes*		86				91		6	%
Percent change in net sales:
TiO2 product pricing								17	%
TiO2 sales volumes								3
TiO2 product mix								1
Changes in currency exchange rates								(10	)
								11	%
Total

Quarter ended March 31, 2010 compared to the

Quarter ended March 31, 2011 -

	Three months ended March 31,
	2010				2011
	(Dollars in millions)

Net sales	$	228.8	100	%	$	298.7		100	%
Cost of sales		187.6	82			194.4		65

Gross margin		41.2	18			104.3		35
Other operating income and expenses, net		26.1	11			31.0		10

Income from operations	$	15.1	7	%	$	73.3		25	%

							%
							Change
TiO2 operating statistics:
Sales volumes*		84				84		-
Production volumes*		82				90		10	%

Percent change in net sales:
TiO2 product pricing								35	%
TiO2 sales volumes								-
TiO2 product mix								(2	)
Changes in currency exchange rates								(2	)

Total								31	%

________________________________

* Thousands of metric tons

~~Net~~Current ~~sales~~industry conditions– ~~Net~~Throughout ~~sales~~2010 ~~increased~~and ~~11%~~continuing orinto ~~$25.8~~2011, ~~million~~global ~~compared~~customer demand for our TiO2 products continued to strengthen, and our production facilities operated at near full practical capacity rates. We believe inventories throughout the ~~third~~TiO2 ~~quarter~~industry remain at historically low levels despite efforts of ~~2009~~major ~~primarily~~TiO2 ~~due~~producers to aoperate ~~17%~~their ~~increase~~facilities inat ~~average~~near full capacity. As a result, we increased TiO2 selling prices throughout 2010 and athe 3%first ~~increase~~quarter of 2011 that resulted in ~~sales~~increased ~~volumes~~profitability and cash flows. Even with such increased profitability, ~~partially~~we believe ~~offset~~profit bymargins ~~the~~are currently ~~negative~~at ~~impact~~a oflevel ~~currency~~which ~~exchange~~does ~~rates~~not reasonably justify greenfield or other major expansions of TiO2 capacity. WeProvided ~~estimate~~global demand for TiO2 products remains strong, we expect the ~~unfavorable~~low ~~effect~~level of ~~changes~~worldwide inTiO2 ~~currency~~inventories ~~exchange~~to ~~rates~~continue ~~decreased~~for ~~our~~several ~~net~~years ~~sales~~due byto ~~approximately~~the ~~$22~~constraints ~~million,~~of oradding ~~10%~~significant new production capacity, asespecially ~~compared~~for topremium ~~the~~grades ~~same~~of ~~period~~TiO2 inproducts ~~2009~~through the chloride process. ~~TiO2~~Given ~~selling~~these ~~prices~~current ~~will~~dynamics ~~increase~~in orthe ~~decrease~~TiO2 ~~generally~~industry, as awell ~~result~~as ofthe ~~competitive~~expectation ~~market~~for ~~pressures~~increases ~~and~~in ~~changes~~our inmanufacturing ~~the~~costs ~~relative~~discussed ~~level~~below, we anticipate further implementation of ~~supply~~TiO2 ~~and~~selling ~~demand~~price increases. WeOverall, ~~currently~~based ~~expect~~on ~~average~~positive ~~selling~~market ~~prices~~dynamics in the ~~fourth~~TiO2 ~~quarter~~industry, ofwe ~~2010~~expect toour beprofitability ~~higher~~and ~~than~~cash ~~the~~flows ~~average~~to ~~selling~~significantly ~~prices~~increase in ~~the~~2011 ~~third~~and ~~quarter~~the offoreseeable ~~2010~~future.

Sales volumes in the third quarter of 2010 increased 3% as compared to the same period in 2009 due to higher demand in the European market resulting from the improvement in current economic conditions. We expect demand will continue to remain above 2009 levels for the remainder of the year.

Cost of sales - Cost of sales increased $8.3 million or 4% in the third quarter of 2010 compared to 2009 due to the net impact of a 3% increase in sales volumes, a 6% increase in TiO2 production volumes, higher raw material costs of $4.8 million, and an increase in maintenance costs of $8.0 million which is consistent with the increased production volumes. In addition, cost of sales in the third quarter of 2010 was negatively impacted by approximately $3 million as a result of higher production costs in 2010 at our ilmenite mines in Norway. Cost of sales as a percentage of net sales decreased to 77% in the third quarter of 2010 compared to 82% in the third quarter of 2009 primarily due to the higher selling prices and higher production volumes in the third quarter of 2010.

- 16 -

~~Income~~Net ~~from~~sales ~~operations~~ – ~~Income~~Net ~~from~~sales ~~operations increased by $18.8 million from $12.8 million~~ in the ~~third~~first quarter of ~~2009~~2011 toincreased $31%, or $69.69 million, incompared to the ~~third~~first quarter of 2010~~. Income~~ ~~from~~primarily ~~operations~~due asto a ~~percentage of net sales increased to 13~~35% inincrease ~~the third quarter of 2010 from 6%~~ in ~~the~~average ~~same~~TiO2 ~~period~~selling ~~for 2009~~prices. ~~This~~TiO2 ~~increase~~selling ~~was~~prices ~~driven~~will byincrease ~~the~~or ~~improvement~~decrease ingenerally ~~gross~~as ~~margin,~~a ~~which~~result ~~increased to 23% for the third quarter~~ of ~~2010~~competitive ~~compared~~market topressures, ~~18%~~changes ~~for~~in the ~~third~~relative ~~quarter~~level of ~~2009. Our~~supply ~~gross~~and ~~margin~~demand ~~has~~as ~~increased~~well ~~primarily~~as ~~because~~changes ofin ~~higher~~raw ~~sales~~material ~~volumes, higher selling prices~~ and ~~lower~~other manufacturing costs ~~per ton resulting from higher production volumes~~. ~~However,~~Based ~~changes~~on incurrent ~~currency~~conditions ~~exchange~~in ~~rates~~the ~~have~~TiO2 ~~negatively~~industry, ~~affected~~as ~~our~~well ~~gross~~as ~~margin~~the ~~and~~expectation ~~income~~for ~~from~~increases ~~operations. We estimate that changes~~ in ~~currency~~our ~~exchange~~manufacturing ~~rates~~costs ~~decreased~~discussed ~~income~~below, ~~from~~we ~~operations~~currently byexpect ~~approximately~~average $2selling ~~million~~prices in the ~~third~~remainder ~~quarter~~ of ~~2010~~2011 asto ~~compared~~continue to be significantly higher than the ~~same~~comparable ~~period~~periods in ~~2009~~2010.

~~Interest~~Sales ~~expense~~volumes –in ~~Interest~~the ~~expense~~first ~~decreased~~quarter ~~$1.4~~of ~~million~~2011 ~~from~~were ~~$10.3~~comparable ~~million~~to in the ~~third~~first quarter of ~~2009~~2010 toas ~~$8.9~~higher ~~million~~sales volumes in ~~the~~Europe ~~third~~were ~~quarter~~offset ofby ~~2010~~lower ~~due~~sales tovolumes ~~decreased~~in ~~average~~the ~~borrowings~~export ~~under~~and ~~our~~North ~~revolving~~American ~~credit~~markets. We ~~facility,~~expect ~~which~~demand ~~was~~will ~~fully~~improve ~~repaid~~and inremain strong for the ~~third~~remainder ~~quarter~~ of ~~2010~~the year. ~~The~~In ~~interest~~addition, ~~expense~~ we ~~recognize~~estimate ~~will~~the ~~vary~~unfavorable ~~with~~effect ~~fluctuations~~of changes in currency exchange rates decreased our net sales by approximately $5 million, or 2%, as compared to the ~~euro~~first ~~exchange~~quarter ~~rate~~of 2010.

~~Provision~~Cost ~~for~~of ~~income~~sales ~~taxes~~- ~~(benefit)~~Cost –of ~~Our~~sales ~~provision~~increased ~~for income taxes was~~ $76.38 million or 4% in the ~~third~~first quarter of ~~2010~~2011 compared to an2010 ~~income~~due ~~tax~~to ~~benefit~~the net impact of a 10% increase in TiO2 production volumes, higher raw material costs of $010.40 million in(primarily ~~the~~feedstock ~~same~~ore ~~period~~and ~~last~~petroleum ~~year. This~~coke), an increase in ~~provision~~maintenance ~~for~~costs ~~income~~of ~~taxes~~$3.0 ~~was~~million which is consistent with the increased production volumes and currency fluctuations (primarily ~~due~~the euro). Cost of sales as a percentage of net sales decreased to ~~improved~~65% ~~income~~in ~~from~~the ~~operations~~first quarter of 2011 compared to 82% in the ~~third~~first quarter of 2010 ~~compared~~primarily due to the ~~third~~higher selling prices and higher production volumes in the first quarter of ~~2009~~2011.

WeIncome ~~have~~from ~~substantial~~operations ~~net~~– ~~operating~~Income ~~loss~~from ~~carryforwards~~operations inincreased ~~Germany~~by ~~(the~~$58.2 ~~equivalent~~million offrom $~~941~~15.1 million ~~for~~in ~~German~~the ~~corporate~~first ~~purposes~~quarter ~~and~~of 2010 to $~~288~~73.3 million ~~for~~in ~~German~~the ~~trade~~first ~~tax~~quarter ~~purposes~~of at2011. Income ~~December~~from ~~31,~~operations ~~2009),~~as ~~which~~a ~~amounts~~percentage ~~exclude~~of ~~the~~net ~~adjustment~~sales increased to ~~such~~25% ~~carryforwards recognized~~ in the first quarter of ~~2010~~2011 ~~(See~~from ~~Note~~7% 6in tothe ~~our~~same ~~Condensed~~period ~~Consolidated~~for ~~Financial Statements)~~2010. AtThis ~~September~~increase ~~30,~~was ~~2010,~~driven weby ~~have~~the ~~concluded~~improvement ~~that~~in nogross ~~deferred~~margin, ~~income~~which ~~tax~~increased ~~asset~~to ~~valuation~~35% ~~allowance~~for isthe ~~required~~first toquarter beof ~~recognized~~2011 ~~with~~compared ~~respect~~ to ~~such~~18% ~~carryforwards,~~for ~~principally~~the ~~because~~first ~~(i)~~quarter ~~such~~of ~~carryforwards~~2010. Our ~~have~~gross anmargin ~~indefinite~~has ~~carryforward~~increased ~~period,~~primarily ~~(ii)~~because ~~we have utilized a portion~~ of ~~such~~higher ~~carryforwards~~selling ~~during~~prices ~~the most recent three-year period~~ and ~~(iii)~~higher weproduction ~~currently~~volumes ~~expect~~which tomore ~~utilize~~than offset the ~~remainder~~impact of ~~such~~higher ~~carryforwards~~manufacturing ~~over~~costs ~~the~~(primarily ~~long~~raw ~~term~~materials and maintenance). ~~However~~Additionally, ~~prior~~changes toin ~~the~~currency ~~complete~~exchange ~~utilization~~rates ofhave ~~such~~negatively ~~carryforwards,~~affected ~~particularly~~our ifgross wemargin ~~were~~and toincome ~~generate~~from ~~losses in our German~~ operations. We ~~for~~estimate anthat ~~extended~~changes ~~period~~in ofcurrency ~~time,~~exchange itrates isdecreased ~~possible~~income ~~that~~from weoperations ~~might~~by ~~conclude~~approximately ~~the~~$7 ~~benefit~~million ofin ~~such carryforwards would no longer meet~~ the ~~more-likely-than-not~~first ~~recognition~~quarter ~~criteria,~~of at2011 ~~which~~as ~~point~~compared ~~we would be required~~ to ~~recognize a valuation allowance against some or all of~~ the ~~then-remaining~~same ~~tax~~period ~~benefit~~in ~~associated with the carryforwards~~2010.

Other non-operating income (expense) - On March 24, 2011, we redeemed euro 80 million of our euro 400 million 6.5% Senior Secured Notes and borrowed under our revolving credit facility at an average rate of 2.39% at March 31, 2011 in order to fund the redemption. As a result, we recognized a $3.3 million pre-tax interest charge related to the prepayment of the 6.5% Senior Secured Notes in the first quarter of 2011, consisting of the call premium and the write-off of unamortized deferred financing costs and original issue discount associated with the redeemed Senior Notes. See Note 5 to our Condensed Consolidated Financial Statements.

Interest expense decreased $.8 million from $10.1 million in the first quarter of 2010 to $9.3 million in the first quarter of 2011 due to the net effects of decreased average borrowings under our revolving credit facility, and changes in currency exchange rates. The interest expense we recognize will vary with fluctuations in the euro exchange rate.

- 17 -

~~Nine~~Income ~~months~~tax ~~ended~~provision ~~September~~(benefit) ~~30,~~– ~~2009~~Our income tax provision was $19.7 million in the first quarter of 2011 compared to an income tax benefit of $35.3 million in the ~~Nine~~same ~~months~~period ~~ended~~last ~~September~~year. Our ~~30,~~income tax benefit in 2010 includes a $35.2 million income tax benefit related to a European Court ruling that resulted in the favorable resolution of certain income tax issues in Germany and an increase in the amount of our German corporate and trade tax net operating loss carryforwards. See Note 6 to our Condensed Consolidated Financial Statements for a tabular reconciliation of our statutory income tax benefit to our actual tax benefit.

	Nine months ended September 30,
	2009					2010
	(Dollars in millions)
Net sales	$	592.9		100	%	$	735.8		100	%
Cost of sales		560.2		94			582.0		79
Gross margin		32.7		6			153.8		21
Other operating expenses, net		72.0		12			81.5		11
Income (loss) from operations	$	(39.3	)	(6	)%	$	72.3		10	%
								%
TiO2 operating statistics:								Change
Sales volumes*		226					269		19	%
Production volumes*		176					263		49	%
Percent change in net sales:
TiO2 product pricing									8	%
TiO2 sales volumes									19
TiO2 product mix									-
Changes in currency exchange rates									(3	)
Total									24	%

We have substantial net operating loss carryforwards in Germany (the equivalent of $952 million for German corporate purposes and $349 million for German trade tax purposes at December 31, 2010). At March 31, 2011, we have concluded that no deferred income tax asset valuation allowance is required to be recognized with respect to such carryforwards, principally because (i) such carryforwards have an indefinite carryforward period, (ii) we have utilized a portion of such carryforwards during the most recent three-year period and (iii) we currently expect to utilize the remainder of such carryforwards over the long term. However, prior to the complete utilization of such carryforwards, particularly if the economic recovery were to be short-lived or we were to generate losses in our German operations for an extended period of time, it is possible that we might conclude the benefit of such carryforwards would no longer meet the more-likely-than-not recognition criteria, at which point we would be required to recognize a valuation allowance against some or all of the then-remaining tax benefit associated with the carryforwards.

* Thousands of metric tons

Net sales – Net sales increased 24% or $142.9 million compared to the nine months ended September 30, 2009 primarily due to a 19% increase in sales volumes along with an 8% increase in average TiO2 selling prices, offset partially by the negative impact of currency exchange rates. We estimate the unfavorable effect of changes in currency exchange rates decreased our net sales by approximately $19 million, or 3%, as compared to the same period in 2009. TiO2 selling prices will increase or decrease generally as a result of competitive market pressures and changes in the relative level of supply and demand.

Sales volumes in the nine months ended September 30, 2010 increased 19% as compared to the same period in 2009 due to higher demand in the European and export market segments resulting from the improvement in current economic conditions. We expect demand will continue to remain above 2009 levels for the remainder of the year.

Cost of sales - Cost of sales increased $21.8 million or 4% in the nine months ended September 30, 2010 compared to the same period in 2009 due to the net impact of a 19% increase in sales volumes, a 49% increase in TiO2 production volumes, lower raw material costs of $2.0 million, lower utility costs of $12.6 million and an increase in maintenance costs of $18.1 million. In addition, cost of sales in the first nine months of 2010 was negatively impacted by approximately $11 million as a result of higher production costs in 2010 at our ilmenite mines in Norway. Cost of sales as a percentage of net sales decreased to 79% in the first nine months of 2010 compared to 94% in the same period 2009 primarily due to higher selling prices in 2010 and the significantly higher production volumes in 2010, as we implemented temporary plant curtailments during the first half of 2009 in order to reduce our finished goods inventories to an appropriate level. Such temporary plant curtailments resulted in approximately $70 million of unabsorbed fixed production costs which were charged directly to cost of sales in the first six months of 2009.

- 18 -

Income (loss) from operations – Income (loss) from operations increased by $111.6 million from an operating loss of $39.3 million in the first nine months of 2009 to operating income of $72.3 million in the first nine months of 2010. Income (loss) from operations as a percentage of net sales increased to 10% in the first nine months of 2010 from (6)% in the same period for 2009. This increase is driven by the improvement in gross margin, which increased to 21% for the first nine months of 2010 compared to 6% for the first nine months of 2009. Our gross margin has increased primarily because of higher sales volumes, higher selling prices and lower manufacturing costs per ton resulting from higher production volumes. However, changes in currency exchange rates have negatively affected our gross margin and income (loss) from operations. We estimate that changes in currency exchange rates decreased income (loss) from operations by approximately $8 million in the first nine months of 2010 as compared to the same period in 2009.

Interest expense – Interest expense decreased $1.1 million from $29.6 million for the first nine months of 2009 to $28.5 million for the first nine months of 2010 due to decreased average borrowings under our revolving credit facility which offset the effect of higher interest rates on our credit facility. The interest expense we recognize will vary with fluctuations in the euro exchange rate.

Income tax benefit – Our income tax benefit was $20.8 million in the first nine months of 2010 compared to an income tax benefit of $21.6 million in the same period last year. Our income tax benefit in 2010 includes a $35.2 million income tax benefit related to a European Court ruling that resulted in the favorable resolution of certain income tax issues in Germany and an increase in the amount of our German corporate and trade tax net operating loss carryforwards. See Note 6 to our Condensed Consolidated Financial Statements for a tabular reconciliation of our statutory income tax expense (benefit) to our actual income tax benefit.

Effects of Currency Exchange Rates

~~Our~~We have substantial operations and assets ~~are~~ located outside the United States (primarily in Germany, Belgium and Norway). The majority of our sales are denominated in currencies other than the U.S. dollar, principally the euro and other major European currencies. A portion of our sales are denominated in the U.S. dollar. Certain raw materials used worldwide, primarily titanium-containing feedstocks, are purchased in U.S. dollars, while labor and other production costs are purchased primarily in local currencies. Consequently, the translated U.S. dollar value of our sales and operating results are subject to currency exchange rate fluctuations which may favorably or adversely impact reported earnings and may affect the comparability of period-to-period operating results. In addition to the impact of the translation of sales and expenses over time, our operations also generate currency transaction gains and losses which primarily relate to the difference between the currency exchange rates in effect when non-local currency sales or operating costs are initially accrued and when such amounts are settled with the non-local currency.

-Overall, 19we -estimate that fluctuations in currency exchange rates had the following effects on our sales and income from operations for the first quarter of 2011 as compared to the first quarter of 2010.

Overall, we estimate that fluctuations in currency exchange rates had the following effects on our sales and income (loss) from operations for the periods indicated.

Impact of changes in currency exchange rates Three months ended March 31, 2010 vs. March 31, 2011
	Transaction gains/(losses) recognized							Translation gain/loss- impact of rate changes			Total currency impact 2010 vs. 2011
	2010		2011		Change			Translation gain/loss- impact of rate changes			Total currency impact 2010 vs. 2011
	(In millions)
Impact on:
Net sales	$	-	$	-	$	-		$	(5	)	$	(5	)
Income from operations		2		-		(2	)		(5	)		(7	)

Impact of changes in currency exchange rates Three months ended September 30, 2010 vs September 30, 2009
	Transaction gains/(losses) recognized						Translation gain/loss- impact of rate changes			Total currency impact 2009 vs 2010
	2009		2010		Change
	(in millions)
Impact on:
Net sales	$	-	$	-	$	-	$	(22	)	$	(22	)
Income from operations		2		3		1		(3	)		(2	)

- 18 -

Impact of changes in currency exchange rates Nine months ended September 30, 2010 vs September 30, 2009
	Transaction gains/(losses) recognized							Translation gain/loss- impact of rate changes			Total currency impact 2009 vs 2010
	2009		2010		Change
	(in millions)
Impact on:
Net sales	$	-	$	-	$	-		$	(19	)	$	(19	)
Income (loss) from operations		7		4		(3	)		(5	)		(8	)

Outlook

During ~~2009~~the ~~and~~first ~~to-date~~quarter inof ~~2010,~~2011 we ~~have~~operated ~~announced~~our ~~various~~production ~~TiO2~~facilities ~~price~~at ~~increases,~~near afull ~~portion~~practical ofcapacity ~~which~~levels, ~~were~~consistent ~~implemented~~with ~~during~~our ~~the~~operating ~~second~~rates ~~half~~throughout of2010. We ~~2009~~currently ~~and~~expect ~~the~~to ~~first~~continue ~~nine~~to ~~months~~operate ofour ~~2010,~~facilities ~~with~~at ~~portions~~near offull ~~the~~practical ~~remainder~~capacity ~~expected~~levels tothroughout ~~be implemented during~~ the ~~fourth~~remainder ~~quarter~~ of ~~2010 and into~~ 2011. ~~Our~~While ~~average~~we ~~TiO2~~will ~~selling~~continue ~~prices~~to ~~were~~work 8%on ~~higher~~debottlenecking projects in ~~the~~2011 ~~first nine months of 2010 as compared~~ to ~~the~~increase ~~first~~our ~~nine~~production ~~months of 2009~~capacity, ~~and~~we ~~our~~believe ~~average~~such ~~selling~~debottlenecking ~~prices~~projects atwill ~~the~~produce ~~end~~relatively ofnominal ~~the~~increases ~~first~~in ~~nine~~our ~~months~~capacity ofand ~~2010 were 18% higher~~ as ~~compared~~a toresult ~~the~~our ~~end~~overall ofproduction ~~2009. Based~~volumes onin an2011 ~~expected continuation of strong demand levels, we anticipate our average selling prices~~ will ~~continue~~not to increase ~~during~~significantly ~~the remainder of 2010~~ as ~~well~~compared asto ~~into 2011~~2010.

WeThe ~~implemented~~overall ~~production~~strong ~~curtailments~~global indemand ~~the~~for ~~first~~TiO2 ~~half~~we ofexperienced ~~2009~~ in ~~order~~the tofirst ~~reduce~~quarter ~~our~~of ~~inventory~~2011 ~~levels and improve our liquidity. Overall industry pigment demand has been and~~ is expected to continue tothrough bethe ~~higher~~remainder inof ~~2010~~the asyear ~~compared~~and toinventory ~~2009~~levels asthroughout athe ~~result~~TiO2 ofindustry ~~improving~~are ~~worldwide~~expected ~~economic~~to ~~conditions. While~~remain ~~we operated our facilities~~ at ~~approximately~~historically ~~51%~~low oflevels. As ~~capacity~~a ~~during~~result, ~~the~~in ~~first~~2011 ~~half of 2009,~~ we ~~increased~~expect our ~~capacity~~sales ~~utilization~~of TiO2 to approximately ~~92%~~match ~~during~~our ~~the second half of 2009~~production. WeGiven ~~operated~~ our ~~plants~~expectations atfor ~~near full capacity utilization during~~ the ~~first~~level ~~nine months~~ of ~~2010 and we currently expect to continue to operate~~ our ~~facilities~~increased atproduction ~~near full~~ capacity ~~levels during the remainder of 2010. Our expected capacity utilization levels could be adjusted upwards or downwards to match changes~~ in ~~demand~~2011 ~~for~~discussed ~~our~~above, ~~products. We~~we ~~also~~similarly expect ~~relative increases in~~ our ~~raw~~sales ~~material,~~volumes ~~energy~~in ~~and~~2011 ~~freight~~will not ~~costs~~increase ~~during~~significantly as ~~the~~compared ~~remainder~~to of 2010 ~~and a portion of any future price increases would compensate for such increases in our operating costs~~.

-We 20implemented -significant increases in TiO2 selling prices throughout 2010 and the first quarter of 2011. Our average TiO2 selling prices were 35% higher in the first quarter of 2011 as compared to the first quarter of 2010, and our average selling prices at the end of the first quarter of 2011 were 10% higher as compared to the end of 2010. As a result, and based on our expected continuation of strong demand levels, the low level of worldwide TiO2 inventories and increases in our manufacturing costs discussed below, we anticipate our average selling prices will continue to increase significantly during the remainder of 2011.

WeDuring ~~expect~~2011, ~~income~~we ~~from~~expect ~~operations~~to ~~will~~see besignificantly higher infeedstock ~~2010~~ore ascosts ~~compared~~driven toby ~~2009~~tight ore supplies, asand ~~the~~higher ~~favorable~~than ~~effects~~historical ofincreases ~~the~~in ~~worldwide~~petroleum ~~economic~~coke, ~~recovery~~energy and ~~improving~~freight ~~consumer~~which ~~confidence~~are ~~will~~being ~~continue~~driven toin ~~improve~~part ~~demand~~by inescalating ~~all~~worldwide offuel prices. Overall, we currently expect our ~~key~~per ~~market~~metric ~~segments. The~~ton ~~expected~~cost of TiO2 we produce will increase approximately 10% to 15% in ~~our~~2011 ~~sales~~as ~~volumes~~compared ~~for~~to 2010, ~~should~~which ~~allow~~is usslightly tohigher ~~maintain~~than our ~~near~~previous ~~full~~expectations ~~capacity~~due ~~utilization~~primarily ~~for~~to increases ~~the~~in ~~remainder~~our ofraw ~~the~~material ~~year~~costs. ~~With~~Given ~~such~~that ~~improved~~the ~~capacity~~current ~~utilization~~conditions ~~levels~~for ~~and~~the ~~higher~~TiO2 industry discussed above are not expected ~~selling~~to ~~prices~~change over the year, we ~~expect~~believe we should be able to ~~report~~recoup ~~improved~~such ~~operating~~higher ~~and~~costs ~~financial~~through ~~performance~~additional inselling ~~2010~~price increases.

Overall, we expect ~~to report net~~ income infrom ~~2010~~operations aswill ~~compared~~continue to ~~reporting~~be asignificantly ~~net~~higher ~~loss~~ in ~~2009~~the ~~due~~remainder toof ~~higher~~2011 ~~expected~~as ~~income~~compared ~~from~~to ~~operations~~the insame ~~2010~~periods asof ~~well~~2010, as the ~~impact~~favorable effect of ~~the~~higher ~~$35.2~~selling ~~million~~prices ~~non-cash~~will ~~income~~more ~~tax~~than ~~benefit~~offset ~~recognized in~~ the ~~first~~impact ~~quarter~~ of ~~2010,~~higher asproduction ~~discussed above~~costs.

Our expectations as to the future of the TiO2 industry are based upon a number of factors beyond our control, including worldwide growth of gross domestic product, competition in the marketplace, ~~solvency and~~ continued operation of competitors, unexpected or earlier than expected capacity additions or reductions and technological advances. If actual developments differ from our expectations, our results of operations could be unfavorably affected.

LIQUIDITY AND CAPITAL RESOURCES

Consolidated cash flows

Operating activities

Trends in cash flows as a result of our operating activities (excluding the impact of significant asset dispositions and relative changes in assets and liabilities) are generally similar to trends in our earnings.

~~Our~~- ~~cash~~19 provided by operating activities was $27.0 million in the first nine months of 2010, compared to cash provided of $58.0 million in the first nine months of 2009. This $31.0 million decrease was primarily due to the net effects of the following:-

·Our ~~Higher~~cash ~~income~~provided ~~from~~by ~~operations~~operating activities was $10.1 million in ~~2010~~the first three months of 2011, compared to $~~111~~13.62 million; ~~and~~of cash used in operating activities in the first three months of 2010. This $23.3 million increase was primarily due to the net effects of the following:

· Higher ~~net~~income ~~cash used~~ from ~~relative~~operations ~~changes~~ in ~~our~~2011 ~~inventories, receivables, payables and accruals~~ of $~~141~~58.62 million ~~in the first nine months of 2010 as compared to the first nine months of 2009.~~;

·	Higher net cash used from relative changes in our inventories, receivables, payables and accruals of $21.4 million in the first three months of 2011 as compared to the first three months of 2010;

·	Higher cash paid for income taxes in 2011 of $5.4 million due to our improved earnings; and

·	Higher cash paid for interest in 2011 of $5.6 million, due principally to the $2.5 million call premium associated with the redemption of euro 80 million of our 6.5% Senior Secured Notes, as well as the interest on the Senior Notes paid at redemption.

Changes in working capital were affected by accounts receivable and inventory changes. As shown below:

· Our average days sales outstanding ("“DSO"”) increased from December 31, ~~2009~~2010 to ~~September~~March 3031, ~~2010~~2011 due to the timing of collections on receivable balances; and

· Our average days sales in ~~inveotyr~~inventory ("“DSI"”) ~~decreased~~increased from December 31, ~~2009~~2010 to ~~September~~March 3031, ~~2010~~2011 as we were building inventory for the spring painting season.

For comparative purposes, we have also provided comparable prior ~~year~~years numbers below:

	December 31,	~~September~~March 3031,	December 31,	~~September~~March 3031,
	2008	2009	2009	2010
	2009	2010	2010	2011
DSO	6855 days	6562 days	5554 days	6462 days
DSI	~~123~~46 days	4447 days	4650 days	4262 days

- 21 -

Investing activities

Our capital expenditures of $157.12 million and $1913.20 million in the ~~nine~~three months ended ~~September~~March 3031, ~~2009~~2010 and ~~2010~~2011, respectively, were primarily for improvements and upgrades to existing facilities.

Financing activities

During the ~~nine~~three months ended ~~September~~March 3031, ~~2010~~2011, we ~~had net payments of euro 9.0 million ($8.5 million when borrowed/repaid) under our revolving credit facility.~~:

·	had net borrowings of euro 80 million ($113.3 million when borrowed) on our European credit facility; and

·	redeemed euro 80 million of our euro 400 million 6.5% Senior Secured Notes at 102.17% of the face value for an aggregate of $115.7 million, including a $2.5 million call premium on March 24, 2011.

Outstanding debt obligations

At ~~September~~March 3031, ~~2010~~2011, our consolidated debt was comprised of:

· euro ~~400~~320 million principal amount of our 6.5% Senior Secured Notes ($~~534~~450.85 million) due in 2013; and

· ~~Approximately~~euro 80 million ($7112.29 million) ofunder ~~other~~our ~~indebtedness.~~revolving credit facility which matures in October 2013; and

~~Our~~· ~~revolving~~approximately ~~credit facility currently matures in May 2011~~$6. We4 ~~have~~million ~~commenced discussions with the lenders in such facility regarding an extension~~ of ~~the~~other ~~facility, and we expect to have a new agreement of extension in place prior to such maturity date~~indebtedness.

~~Our~~- ~~revolving~~20 credit facility requires us to maintain minimum levels of equity, requires the maintenance of certain financial ratios, limits dividends and additional indebtedness and contains other provisions and restrictive covenants customary in lending transactions of this type. We are in compliance with all of our debt covenants at September 30, 2010. See Note 5 to our Condensed Consolidated Financial Statements. We believe we will be able to comply with the financial covenants contained in our credit facility through the maturity of the facility; however if future operating results differ materially from our expectations we may be unable to maintain compliance.-

Our ~~assets~~revolving ~~consist~~credit ~~primarily~~facility ofdescribed ~~investments~~above incontains ~~operating~~provisions ~~subsidiaries,~~which ~~and~~could ~~our~~result ~~ability to service parent level obligations, including the Senior Secured Notes, depends~~ in ~~large part upon~~ the ~~distribution~~acceleration of ~~earnings~~indebtedness ofprior ~~our~~to ~~subsidiaries,~~their ~~whether~~stated inmaturity ~~the~~for ~~form~~reasons ofother ~~dividends,~~than ~~advances~~defaults orfor ~~payments~~failure onto ~~account~~comply ofwith ~~intercompany~~applicable ~~obligations or otherwise~~covenants. ~~None~~For ofexample, ~~our~~certain ~~subsidiaries~~credit ~~have~~agreements ~~guaranteed~~allow the ~~Senior~~lender ~~Secured~~to ~~Notes,~~accelerate ~~although~~the wematurity ~~have pledged 65%~~ of the ~~common~~indebtedness ~~stock~~upon ora ~~other~~change ~~ownership interests~~ of ~~certain~~control ~~of our first-tier operating subsidiaries~~ (as ~~collateral~~defined ofin the ~~Senior~~agreement) ~~Secured Notes. The terms~~ of the ~~indenture governing the 6~~borrower.5% In ~~Senior~~addition, ~~Secured~~certain ~~Notes~~credit ~~limits~~agreements ~~our~~could ~~ability~~result toin ~~pay dividends and make other restricted payments. At September 30, 2010,~~ the ~~maximum~~acceleration ~~amount~~ of ~~dividends~~all ~~and~~or ~~other~~a ~~restricted~~portion ~~payments~~of ~~that we could make (~~the ~~“Restricted~~indebtedness ~~Payment~~following ~~Basket”)~~a ~~was~~sale ~~$22.5~~of ~~million. For~~assets ~~several~~outside ~~quarters prior to September 30, 2010,~~ the ~~indenture~~ordinary ~~prohibited~~course usof ~~from~~business. We ~~utilizing~~are ~~the Restricted Payment Basket because we had not met a specified financial ratio contained~~ in ~~this~~compliance ~~indenture;~~with ~~upon~~all ~~satisfying~~of ~~this~~our ~~financial~~debt ~~ratio~~covenants asat ofMarch ~~September 30~~31, ~~2010~~2011. See ~~this~~Note ~~prohibition~~5 ~~ceased~~ to beour ~~applicable~~Consolidated Financial Statements.

-Our 22assets consist primarily of investments in operating subsidiaries, and our ability to service parent level obligations, including the Senior Secured Notes, depends in large part upon the distribution of earnings of our subsidiaries, whether in the form of dividends, advances or payments on account of intercompany obligations or otherwise. None of our subsidiaries have guaranteed the Senior Secured Notes, we have pledged 65% of the common stock or other ownership interests of certain of our first-tier operating subsidiaries as collateral for the Senior Secured Notes. The terms of the indenture governing the Senior Secured Notes limits KII’s ability to pay dividends and make other restricted payments. At March 31, 2011, the maximum amount of dividends and other restricted payments that we could make (the “Restricted Payment Basket”) was approximately $83.0 million.

Future cash requirements

Liquidity

Our primary source of liquidity on an ongoing basis is cash flows from operating activities which is generally used to (i) fund working capital expenditures, (ii) repay any short-term indebtedness incurred for working capital purposes and (iii) provide for the payment of dividends. From time-to-time we will incur indebtedness, generally to (i) fund short-term working capital needs, (ii) refinance existing indebtedness or (iii) fund major capital expenditures or the acquisition of other assets outside the ordinary course of business. We will also from time-to-time sell assets outside the ordinary course of business and use the proceeds to (i) repay existing indebtedness, (ii) make investments in marketable and other securities, (iii) fund major capital expenditures or the acquisition of other assets outside the ordinary course of business or (iv) pay dividends.

Pricing within the TiO2 industry is cyclical, and changes in industry economic conditions significantly impact earnings and operating cash flows. Changes in TiO2 pricing, production volumes and customer demand, among other things, could significantly affect our liquidity.

We routinely evaluate our liquidity requirements, alternative uses of capital, capital needs and availability of resources in view of, among other things, our dividend policy, our debt service and capital expenditure requirements and estimated future operating cash flows. As a result of this process, we have in the past and may in the future seek to reduce, refinance, repurchase or restructure indebtedness, raise additional capital, repurchase shares of our common stock, modify our dividend policy, restructure ownership interests, sell interests in our subsidiaries or other assets, or take a combination of these steps or other steps to manage our liquidity and capital resources. Such activities have in the past and may in the future involve related companies. In the normal course of our business, we may investigate, evaluate, discuss and engage in acquisition, joint venture, strategic relationship and other business combination opportunities in the TiO2 industry. In the event of any future acquisition or joint venture opportunity, we may consider using then-available liquidity, issuing our equity securities or incurring additional indebtedness.

At- ~~September~~21 30, 2010, unused credit available under our existing revolving credit facility was approximately $107.2 million. At September 30, 2010, we could borrow all such amount without violating any covenants in this facility. In May 2010 we satisfied certain specified financial covenants in our revolving credit facility, and as a result the maximum borrowing availability under such facility returned to the full euro 80 million facility size at that time. The amount of unused credit availability under our European credit facility indicated above reflects the full euro 80 million facility size. See Note 5 to our Condensed Consolidated Financial Statements. Based upon our expectation for the TiO2 industry and anticipated demands on cash resources, we expect to have sufficient liquidity to meet our future obligations including operations, capital expenditures and debt service for the next 12-~~months.~~

At March 31, 2011, we had borrowed the full euro 80 million under our European credit facility. Based upon our expectation for the TiO2 industry and anticipated demands on cash resources, we expect to have sufficient liquidity to meet our short term obligations (defined as the twelve-month period ending March 31, 2012) and our long-term obligations (defined as the five-year period ending March 31, 2016, our time period for long-term budgeting). If actual developments differ from our expectations, our liquidity could be adversely affected.

Capital expenditures

We currently estimate that we will invest approximately $4062 million in capital expenditures for major improvements and upgrades to our existing facilities during ~~2010~~2011, including the $1913.20 million we have spent through ~~September~~March 3031, ~~2010~~2011. Compared to 2009, we have increased our planned capital expenditures in 2010 as we had significantly lowered our capital expenditures in 2009 in response to the economic conditions and as part of our efforts to improve our liquidity.

Off-balance sheet financing

We do not have any off-balance sheet financing agreements other than the operating leases discussed in our ~~2009~~2010 Annual Report.

- 23 -

Commitments and contingencies

See Notes 6 and 9 to the Condensed Consolidated Financial Statements for a description of certain income tax examinations currently underway and legal proceedings.

Recent accounting pronouncements

There have been no recent accounting pronouncements ~~expected to have a material impact on our Condensed Consolidated Financial Statements~~ for the period ended ~~September~~March 3031, ~~2010~~2011.

Critical accounting policies

For a discussion of our critical accounting policies, refer to Part I, Item 7 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our ~~2009~~2010 Annual Report. There have been no changes in our critical accounting policies during the first ~~nine~~three months of ~~2010~~2011.

ITEM 3. QUANTITATIVE AND QUALITATIVE ~~DISCLOSURES~~DISCLOSURE ABOUT MARKET RISK

We are exposed to market risk, including currency exchange rates, interest rates and ~~security~~raw material prices. For a discussion of such market risk items, refer to Part I, Item 7A. - “Quantitative and Qualitative Disclosure About Market Risk” in our ~~2009~~2010 Annual Report. There have been no material changes in these market risks during the first ~~nine~~three months of ~~2010~~2011.

Our operations are located outside the United States and our functional currency is not the U.S. dollar. As a result, the reported amounts of our assets and liabilities related to our operations, and therefore our consolidated net assets, will fluctuate based upon changes in currency exchange rates.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain a system of disclosure controls and procedures. The term "disclosure controls and procedures," as defined by Exchange Act Rule 13a–15(e), means controls and other procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit to the SEC under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information we are required to disclose in the reports we file or submit to the SEC under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions to be made regarding required disclosure. Each of Steven L. Watson, our Chief Executive Officer, and Gregory M. Swalwell, our Vice President, Finance and Chief Financial Officer, have evaluated the design and operating effectiveness of our disclosure controls and procedures as of ~~September~~March 3031, ~~2010~~2011. Based upon their evaluation, these executive officers have concluded that our disclosure controls and procedures are effective as of ~~September~~March 3031, ~~2010~~2011.

- 2422 -

Internal Control over Financial Reporting

We also maintain internal control over financial reporting. The term “internal control over financial reporting,” as defined by Exchange Act Rule 13a–15(f), means a process designed by, or under the supervision of, our principal executive and principal financial officers, or persons performing similar functions, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, and includes those policies and procedures that:

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

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

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

As permitted by the SEC, our assessment of internal control over financial reporting excludes (i) internal control over financial reporting of our equity method investees and (ii) internal control over the preparation of our financial statement schedules required by Article 12 of Regulation S-X.

Changes in Internal Control over Financial Reporting

There has been no change to our internal control over financial reporting during the quarter ended ~~September~~March 3031, ~~2010~~2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

- 2523 -

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

~~For~~Refer ~~a discussion of certain legal proceedings, refer~~ to Note 9 of the Condensed Consolidated Financial Statements, and to our ~~2009~~2010 Annual Report ~~and our Quarterly Reports on Form 10-Q~~ for ~~the~~descriptions ~~quarters~~of ~~ended~~certain ~~March~~legal ~~31, 2010 and June 30, 2010~~proceedings.

Item 1A. Risk Factors

For a discussion of the risk factors related to our businesses, refer to Part I, Item 1A., “Risk Factors,” in our ~~2009~~2010 Annual report. There have been no material changes to such risk factors during the ~~nine~~three months ended ~~September~~March 3031, ~~2010~~2011.

Item 6. Exhibits

3.1 - Amended and Restated Bylaws of Kronos International, Inc. as of October 4, 2010 – incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on October 4, 2010.

31.1 - Certification

31.2 - Certification

32.1 - Certification

- 2624 -

SIGNATURES

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

KRONOS INTERNATIONAL, INC.

(Registrant)

Date October 22, 2010		/s/ Gregory M. Swalwell_______
Date: May 3, 2011		/s/ Gregory M. Swalwell
		Gregory M. Swalwell
		Vice President, Finance and Chief Financial Officer
		Vice President, Finance and Chief Financial Officer (Principal Financial Officer)
		(Principal Financial Officer)
Date: May 3, 2011		/s/ Tim C. Hafer
Date October 22, 2010		/s/ Tim C. Hafer ______
		Tim C. Hafer
		Vice President and Controller (Principal Accounting Officer)

- 2725 -

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