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 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~~SECURITIES byAND ~~check~~EXCHANGE COMMISSION 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~~Washington, 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)D.*C. ~~Yes No~~ 20549

*FORM ~~The~~10-Q ~~registrant has not yet been phased into the interactive data requirements~~

~~Indicate~~QUARTERLY REPORT byPURSUANT ~~check~~TO ~~mark~~SECTION ~~whether~~13 ~~the~~OR ~~Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company~~ 15(~~as defined in Rule 12b-2 of the Securities Exchange Act of 1934~~d)~~. Large~~ ~~accelerated~~OF ~~filer Accelerated filer Non-accelerated filer X Smaller reporting company~~

~~Indicate~~THE bySECURITIES ~~check~~EXCHANGE ~~mark~~ACT ~~whether~~OF ~~the~~1934 ~~Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No X~~

~~Number~~For ~~of shares of~~ the ~~Registrant's~~quarter ~~common~~ended ~~stock outstanding on April 29~~June 30, 2011: ~~2,968.~~

~~The~~Commission ~~Registrant~~file isnumber ~~a wholly owned subsidiary of Kronos Worldwide, Inc. (File No. 1~~333-~~31763)~~100047 ~~and meets the conditions set forth in General Instructions H(1)(a) and H(1)(b) of Form 10-Q for reduced disclosure format.~~

-KRONOS 1INTERNATIONAL, -INC.

~~KRONOS~~(Exact ~~INTERNATIONAL,~~name ~~INC.~~of ~~AND~~Registrant ~~SUBSIDIARIES~~as specified in its charter)

INDEX

DELAWARE

22-2949593

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification No.)

		Page
		number
Part I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets -
	December 31, 2010; March 31, 2011 (Unaudited)	3
	Condensed Consolidated Statements of Income (Unaudited) -
	Three months ended March 31, 2010 and 2011	5
	Condensed Consolidated Statement of Stockholder’s
	Equity and Comprehensive Income (Unaudited)-
	Three months ended March 31, 2011	6
	Condensed Consolidated Statements of Cash Flows (Unaudited) -
	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	14
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	22
Item 4.	Controls and Procedures	22
Part II.	OTHER INFORMATION
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 6.	Exhibits	24
Items 2, 3, 4 and 5 of Part II are omitted because there is no information to report.

5430 LBJ Freeway, Suite 1700

-Dallas, 2Texas 75240-2697

~~KRONOS~~(Address ~~INTERNATIONAL,~~of ~~INC.~~principal ~~AND~~executive ~~SUBSIDIARIES~~offices)

~~CONDENSED~~Registrant’s ~~CONSOLIDATED~~telephone number, ~~BALANCE~~including ~~SHEETS~~area code: (972) 233-1700

Indicate by check mark whether the Registrant (In1) has ~~millions~~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 ¨

ASSETS	December 31,		March 31,
	2010		2011
			(Unaudited)
Current assets:
Cash and cash equivalents	$	49.8	$	49.6
Restricted cash		1.9		1.3
Accounts and other receivables		161.5		208.2
Inventories		202.9		251.3
Prepaid expenses and other		4.0		5.0
Deferred income taxes		.4		.4
Total current assets		420.5		515.8
Other assets:
Deferred financing costs, net		4.3		3.5
Deferred income taxes		191.6		192.9
Other		5.4		5.8
Total other assets		201.3		202.2
Property and equipment:
Land		42.4		44.7
Buildings		170.9		180.9
Equipment		828.5		876.3
Mining properties		115.9		121.6
Construction in progress		10.2		11.8
		1,167.9		1,235.3
Less accumulated depreciation and amortization		766.0		816.3
Net property and equipment		401.9		419.0
Total assets	$	1,023.7	$	1,137.0

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 x No ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated 3filer or a smaller reporting company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).

~~KRONOS~~Large ~~INTERNATIONAL,~~accelerated ~~INC.~~filer ~~AND~~¨ ~~SUBSIDIARIES~~Accelerated filer ¨ Non-accelerated filer x Smaller reporting company ¨

~~CONDENSED~~Indicate ~~CONSOLIDATED~~by ~~BALANCE~~check ~~SHEETS~~mark whether the Registrant is a shell company (~~CONTINUED~~as defined in Rule 12b-2 of the Act). Yes ¨ No x

~~(In~~Number ~~millions)~~of shares of the Registrant’s common stock outstanding on July 29, 2011: 2,968.

LIABILITIES AND STOCKHOLDER’S EQUITY	December 31, 2010			March 31, 2011
				(Unaudited)
Current liabilities:
Current maturities of long-term debt	$	2.2		$	2.2
Accounts payable and accrued liabilities		152.4			172.7
Income taxes		6.8			13.4
Deferred income taxes		4.7			5.1
Total current liabilities		166.1			193.4
Noncurrent liabilities:
Long-term debt		537.4			567.6
Deferred income taxes		14.9			15.8
Accrued pension cost		100.7			103.5
Other		24.2			25.5
Total noncurrent liabilities		677.2			712.4
Stockholder's equity:
Common stock		.3			.3
Additional paid-in capital		1,976.0			1,979.5
Retained deficit		(1,385.1	)		(1,344.0	)
Notes receivable from affiliates		(255.6	)		(260.7	)
Accumulated other comprehensive loss		(155.2	)		(143.9	)
Total stockholder's equity		180.4			231.2
Total liabilities and stockholder’s equity	$	1,023.7		$	1,137.0

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.

CommitmentsTable andof contingencies (Notes 6 and 9)Contents

~~See~~KRONOS ~~accompanying~~INTERNATIONAL, ~~Notes~~INC. toAND ~~Condensed~~SUBSIDIARIES ~~Consolidated Financial Statements.~~

-INDEX ~~4 -~~

KRONOS INTERNATIONAL, INC. AND SUBSIDIARIES


		Page number

Part I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets - December 31, 2010; June 30, 2011 (Unaudited)		3

	Condensed Consolidated Statements of Income (Unaudited) - Three and six months ended June 30, 2010 and 2011		5

	Condensed Consolidated Statement of Stockholder’s Equity and Comprehensive Income (Unaudited) - Six months ended June 30, 2011		6

	Condensed Consolidated Statements of Cash Flows (Unaudited) - Six months ended June 30, 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		15

Item 3.	Quantitative and Qualitative Disclosure About Market Risk		27

Item 4.	Controls and Procedures		27

Part II.	OTHER INFORMATION

Item 1.	Legal Proceedings		29

Item 1A.	Risk Factors		29

Item 6.	Exhibits		29

~~CONDENSED~~Items ~~CONSOLIDATED~~2, ~~STATEMENTS~~3, OF4 ~~INCOME~~and 5 of Part II are omitted because there is no information to report.

~~(In~~- ~~millions)~~2 -

	Three months ended March 31,
	2010			2011
	(unaudited)
Net sales	$	228.8		$	298.7
Cost of sales		187.6			194.4
Gross margin		41.2			104.3
Selling, general and administrative expense		30.2			33.4
Currency transaction gains, net		1.9			-
Other operating income, net		2.2			2.4
Income from operations		15.1			73.3
Other income (expense):
Interest income		-			.1
Loss on prepayment of debt		-			(3.3	)
Interest expense		(10.1	)		(9.3	)
Income before income taxes		5.0			60.8
Income tax expense (benefit)		(35.3	)		19.7
Net income	$	40.3		$	41.1

~~See~~KRONOS ~~accompanying~~INTERNATIONAL, ~~Notes~~INC. toAND ~~Condensed~~SUBSIDIARIES ~~Consolidated Financial Statements.~~

-CONDENSED 5CONSOLIDATED -BALANCE SHEETS

~~KRONOS~~(In ~~INTERNATIONAL,~~millions) ~~INC. AND SUBSIDIARIES~~

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDER’S EQUITY AND COMPREHENSIVE INCOME


	December 31, 2010		June 30, 2011
			(Unaudited)
ASSETS

Current assets:
Cash and cash equivalents	$	49.8	$	17.8
Restricted cash		1.9		1.8
Accounts and other receivables		161.5		260.6
Inventories		202.9		228.6
Prepaid expenses and other		4.0		3.2
Deferred income taxes		.4		.4


Total current assets		420.5		512.4


Other assets:
Deferred financing costs, net		4.3		3.1
Deferred income taxes		191.6		178.7
Other		5.4		9.3


Total other assets		201.3		191.1


Property and equipment:
Land		42.4		45.3
Buildings		170.9		183.1
Equipment		828.5		888.4
Mining properties		115.9		124.2
Construction in progress		10.2		22.3


		1,167.9		1,263.3

Less accumulated depreciation and amortization		766.0		835.7


Net property and equipment		401.9		427.6


Total assets	$	1,023.7	$	1,131.1

~~Three~~- ~~months~~3 ~~ended March 31, 2011~~-

(InTable millions)of Contents

	Common stock		Additional paid-in capital		Retained deficit			Notes receivable from affiliates			Accumulated other comprehensive loss			Total stockholder’s equity			Comprehensive income
	(Unaudited)
Balance at December 31, 2010	$	.3	$	1,976.0	$	(1,385.1	)	$	(255.6	)	$	(155.2	)	$	180.4
Net income		-		-		41.1			-			-			41.1		$	41.1
Other comprehensive income, net		-		-		-			-			11.3			11.3			11.3
Intercompany interest – Kronos Worldwide, Inc.		-		3.5		-			(5.1	)		-			(1.6	)		-
Balance at March 31, 2011	$	.3	$	1,979.5	$	(1,344.0	)	$	(260.7	)	$	(143.9	)	$	231.2
Comprehensive income																	$	52.4

KRONOS INTERNATIONAL, INC. AND SUBSIDIARIES

~~See~~CONDENSED ~~accompanying~~CONSOLIDATED ~~Notes~~BALANCE toSHEETS ~~Condensed~~(CONTINUED) ~~Consolidated Financial Statements.~~

-(In 6millions) -

KRONOS INTERNATIONAL, INC. AND SUBSIDIARIES


	December 31, 2010			June 30, 2011
				(Unaudited)
LIABILITIES AND STOCKHOLDER’S EQUITY

Current liabilities:
Current maturities of long-term debt	$	2.2		$	2.3
Accounts payable and accrued liabilities		152.4			154.0
Income taxes		6.8			13.8
Deferred income taxes		4.7			5.0


Total current liabilities		166.1			175.1


Noncurrent liabilities:
Long-term debt		537.4			509.4
Deferred income taxes		14.9			16.1
Accrued pension cost		100.7			104.0
Other		24.2			26.7


Total noncurrent liabilities		677.2			656.2


Stockholder’s equity:
Common stock		.3			.3
Additional paid-in capital		1,976.0			1,983.2
Retained deficit		(1,385.1	)		(1,276.2	)
Notes receivable from affiliates		(255.6	)		(266.2	)
Accumulated other comprehensive loss		(155.2	)		(141.3	)


Total stockholder’s equity		180.4			299.8


Total liabilities and stockholder’s equity	$	1,023.7		$	1,131.1

~~CONDENSED~~Commitments ~~CONSOLIDATED~~and ~~STATEMENTS~~contingencies OF(Notes ~~CASH~~6 ~~FLOWS~~and 9)

~~(In~~See ~~millions)~~accompanying Notes to Condensed Consolidated Financial Statements.

	Three months ended March 31,
	2010			2011
	(Unaudited)
Cash flows from operating activities:
Net income	$	40.3		$	41.1
Depreciation and amortization		10.0			9.9
Deferred income taxes		(34.0	)		7.7
Loss on prepayment of debt		-			3.3
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		(29.3	)		(37.6	)
Inventories		3.5			(35.7	)
Prepaid expenses		(1.1	)		(.7	)
Accounts payable and accrued liabilities		4.3			8.8
Income taxes		(1.9	)		5.7
Accounts with affiliates		(6.1	)		12.9
Other, net		(.3	)		(1.1	)
Net cash provided by (used in) operating activities		(13.2	)		10.1
Cash flows from investing activities:
Capital expenditures		(7.2	)		(13.0	)
Change in restricted cash, net		.5			.6
Net cash used in investing activities		(6.7	)		(12.4	)
Cash flows from financing activities:
Indebtedness:
Borrowings		21.6			113.3
Principal payments		(8.8	)		(113.8	)
Net cash provided by (used in) financing activities		12.8			(.5	)
Cash and cash equivalents - net change from:
Operating, investing and financing activities		(7.1	)		(2.8	)
Currency translation		(1.7	)		2.6
Balance at beginning of period		29.4			49.8
Balance at end of period	$	20.6		$	49.6
Supplemental disclosures:
Cash paid for:
Interest (including call premium paid)	$	.2		$	5.8
Income taxes		.6			6.0
Accrual for capital expenditures		1.3			2.6

- 4 -

SeeTable accompanyingof Notes to Condensed Consolidated Financial Statements.Contents

-KRONOS 7INTERNATIONAL, -INC. AND SUBSIDIARIES

~~KRONOS~~CONDENSED ~~INTERNATIONAL,~~CONSOLIDATED ~~INC.~~STATEMENTS ~~AND~~OF ~~SUBSIDIARIES~~INCOME

~~NOTES~~(In TOmillions) ~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

March 31, 2011


	Three months ended June 30,						Six months ended June 30,
	2010			2011			2010			2011
	(Unaudited)

Net sales	$	256.6		$	404.0		$	485.4		$	702.7
Cost of sales		201.6			255.9			389.2			450.3


Gross margin		55.0			148.1			96.2			252.4

Selling, general and administrative expense		30.7			40.4			60.8			73.8
Currency transaction gains (losses), net		(1.7	)		.2			.3			.2
Other operating income, net		3.1			2.5			5.0			4.9


Income from operations		25.7			110.4			40.7			183.7

Other income (expense):
Interest income		—			—			—			.1
Loss on prepayment of debt		—			—			—			(3.3	)
Interest expense		(9.5	)		(8.5	)		(19.5	)		(17.8	)


Income before income taxes		16.2			101.9			21.2			162.7

Income tax expense (benefit)		7.2			34.1			(28.1	)		53.8


Net income	$	9.0		$	67.8		$	49.3		$	108.9

~~(Unaudited)~~See accompanying Notes to Condensed Consolidated Financial Statements.

~~Note 1~~ - ~~Organization~~ ~~and~~5 ~~basis of presentation:~~-

OrganizationTable – 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 March 31, 2011, Valhi, Inc. (NYSE: VHI) held approximately 50% of Kronos’ outstanding common stock and NL Industries, Inc. (NYSE: NL) held an additional 30% 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.Contents

~~Basis~~KRONOS 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 31INTERNATIONAL, ~~2010 that we filed with the Securities and Exchange Commission (“SEC”) on March 4, 2011 (the “2010 Annual Report”)~~INC. In ~~our~~AND ~~opinion,~~SUBSIDIARIES 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, 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, 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 period ended March 31, 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 2010 Consolidated Financial Statements contained in our 2010 Annual Report.

~~Unless~~CONDENSED ~~otherwise~~CONSOLIDATED ~~indicated,~~STATEMENT ~~references~~OF inSTOCKHOLDER’S ~~this~~EQUITY ~~report~~AND toCOMPREHENSIVE ~~“we,”~~INCOME ~~“us” or “our” refer to Kronos International, Inc. and its subsidiaries taken as a whole.~~

-Six 8months -ended June 30, 2011

~~Note~~(In 2millions) ~~– Accounts and other receivables:~~

	December 31, 2010			March 31, 2011
	Commonstock			Additionalpaid-incapital			Retaineddeficit			Notesreceivablefromaffiliates			Accumulatedothercomprehensiveloss			Totalstockholder’sequity			Comprehensiveincome
	(In millions)
	(Unaudited)
Trade receivables	$	137.9		$	177.3
Balance at December 31, 2010	$	.3		$	1,976.0		$	(1,385.1	)	$	(255.6	)	$	(155.2	)	$	180.4
Recoverable VAT and other receivables		23.0			29.2
Net income		—			—			108.9			—			—			108.9		$	108.9
Refundable income taxes		.9			1.0
Other comprehensive income, net		—			—			—			—			13.9			13.9			13.9
Receivable from affiliate -
Intercompany interest – Kronos Worldwide, Inc.		—			7.2			—			(10.6	)		—			(3.4	)		—
Kronos Canada		1.9			2.3
Balance at June 30, 2011	$	.3		$	1,983.2		$	(1,276.2	)	$	(266.2	)	$	(141.3	)	$	299.8
Allowance for doubtful accounts		(2.2	)		(1.6	)
Comprehensive income																			$	122.8
Total	$	161.5		$	208.2

~~Note~~See 3accompanying ~~– Inventories:~~Notes to Condensed Consolidated Financial Statements.

	December 31, 2010		March 31, 2011
	(In millions)
Raw materials	$	41.5	$	58.4
Work in process		9.9		11.3
Finished products		107.0		133.8
Supplies		44.5		47.8
Total	$	202.9	$	251.3

- 6 -

NoteTable 4of – Accounts payable and accrued liabilities:Contents

	December 31, 2010		March 31, 2011
	(In millions)
Accounts payable	$	81.1	$	80.8
Employee benefits		25.0		26.5
Accrued sales discounts and rebates		9.0		4.9
Payable to affiliates:
Kronos (US), Inc.		14.0		28.0
Kronos Canada, Inc.		.2		.1
Kronos Worldwide, Inc.		-		.1
Louisiana Pigment Company, L.P.		-		.1
Accrued interest		7.4		13.6
Other		15.7		18.6
Total	$	152.4	$	172.7

KRONOS INTERNATIONAL, INC. AND SUBSIDIARIES

~~Note~~CONDENSED 5CONSOLIDATED –STATEMENTS ~~Long-term~~OF ~~debt:~~CASH FLOWS

	December 31, 2010		March 31, 2011
	(In millions)
Long-term debt:
6.5% Senior Secured Notes	$	532.8	$	450.5
Revolving credit facility		-		112.9
Other		6.8		6.4
Total debt		539.6		569.8
Less current maturities		2.2		2.2
Total long-term debt	$	537.4	$	567.6

(In millions)

- 9 -


	Six months ended June 30,
	2010			2011
	(Unaudited)

Cash flows from operating activities:
Net income	$	49.3		$	108.9
Depreciation and amortization		19.5			20.5
Deferred income taxes		(32.6	)		22.8
Loss on prepayment of debt		—			3.3
Call premium paid		—			(2.5	)
Defined benefit pension plan expense greater (less) than cash funding		1.2			(.6	)
Other, net		1.9			1.4
Change in assets and liabilities:
Accounts and other receivables		(57.9	)		(91.2	)
Inventories		8.0			(10.2	)
Prepaid expenses		.2			1.2
Accounts payable and accrued liabilities		3.8			5.5
Income taxes		.9			6.3
Accounts with affiliates		5.2			(5.6	)
Other, net		2.4			.1


Net cash provided by operating activities		1.9			59.9


Cash flows from investing activities:
Capital expenditures		(11.9	)		(23.1	)
Change in restricted cash, net		.4			.2
Other, net		—			(5.1	)


Net cash used in investing activities		(11.5	)		(28.0	)


Cash flows from financing activities:
Indebtedness:
Borrowings		38.1			113.3
Principal payments		(28.5	)		(179.5	)


Net cash provided by (used in) financing activities		9.6			(66.2	)


Cash and cash equivalents – net change from:
Operating, investing and financing activities		—			(34.3	)
Currency translation		(3.1	)		2.3
Balance at beginning of period		29.4			49.8


Balance at end of period	$	26.3		$	17.8


Supplemental disclosures:
Cash paid for:
Interest (including call premium paid)	$	18.1		$	21.3
Income taxes		2.9			23.3
Accrual for capital expenditures		3.8			6.3

~~Senior~~See ~~Secured~~accompanying Notes - On March 24, 2011, we redeemed euro 80 million of our euro 400 million 6.5% Senior Secured Notes at 102.17% of the principal amount for an aggregate of $115.7 million, including a $2.5 million call premium. Following such partial redemption, euro 320 million principal amount of the Senior Notes remain outstanding. We borrowed under our revolving credit facility, as discussed below, in order to ~~fund~~Condensed ~~the~~Consolidated ~~redemption. We~~Financial ~~recognized a $3~~Statements.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 the original issue discount associated with the redeemed Senior Notes.

~~Revolving credit facility~~ - ~~During~~7 the first three months of 2011, we borrowed a net euro 80 million ($113.3 million when borrowed) under our bank credit facility. The average interest rate on these borrowings at March 31, 2011 was 2.39%.-

RestrictionsTable 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 March 31, 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.Contents

~~The~~KRONOS ~~terms~~INTERNATIONAL, ~~of the indenture governing the 6~~INC.5% ~~Senior~~AND ~~Secured~~SUBSIDIARIES Notes limit our 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 $83.0 million.

~~Note~~NOTES 6TO -CONDENSED ~~Income~~CONSOLIDATED ~~taxes:~~FINANCIAL STATEMENTS

	Three months ended March 31,
	2010			2011
	(In millions)
Expected tax expense (benefit), at U.S. federal statutory income tax rate of 35%	$	1.7		$	21.3
Non-U.S. tax rates		(.4	)		(2.1	)
Nondeductible expenses		(.9	)		.4
German tax attribute adjustment		(35.2	)		-
Prior year adjustment		(.7	)		-
Nontaxable income		.3			(.2	)
Other, net		(.1	)		.3
Total	$	(35.3	)	$	19.7

June 30, 2011

~~Tax~~(Unaudited) 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.

-Note 101 -– Organization and basis of presentation:

AsOrganization – We are a ~~consequence~~wholly-owned subsidiary of aKronos ~~European~~Worldwide, ~~Court~~Inc. ~~ruling~~(“Kronos”) ~~that~~(NYSE: ~~resulted~~KRO). We inare aincorporated ~~favorable~~in ~~resolution~~the state of ~~certain~~Delaware, ~~income~~U.S.A., ~~tax~~with ~~issues~~our seat of management in Leverkusen, Germany. At June 30, ~~during~~2011, ~~the~~Valhi, ~~first~~Inc. ~~quarter~~(NYSE: VHI) held approximately 50% of ~~2010~~Kronos’ ~~the~~outstanding ~~German~~common ~~tax~~stock ~~authorities~~and ~~agreed~~NL toIndustries, Inc. (NYSE: NL) held an ~~increase~~additional in30% ~~our~~of ~~German~~Kronos’ ~~net~~common ~~operating~~stock. ~~loss~~Valhi ~~carryforwards~~owns approximately 83% of NL’s outstanding common stock. ~~Accordingly,~~ weApproximately ~~recognized~~94% aof ~~non-cash~~Valhi’s ~~income~~outstanding ~~tax~~common ~~benefit~~stock is held by subsidiaries of ~~$35~~Contran Corporation.2 ~~million~~Substantially inall of Contran’s outstanding voting stock is held by trusts established for the ~~first~~benefit ~~quarter~~of certain children and grandchildren of ~~2010~~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.

~~Note~~Basis 7of presentation – ~~Employee~~The ~~benefit~~unaudited ~~plans:~~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, 2010 that we filed with the Securities and Exchange Commission (“SEC”) on March 4, 2011 (the “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, 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, 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 period ended June 30, 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 2010 Consolidated Financial Statements contained in our 2010 Annual Report.

~~The~~Unless ~~components~~otherwise ofindicated, ~~net~~references ~~periodic~~in ~~defined~~this ~~benefit~~report ~~pension~~to ~~cost~~“we,” ~~are~~“us” ~~presented~~or in“our” ~~the~~refer ~~table~~to ~~below~~Kronos International, Inc. and its subsidiaries taken as a whole.

	Three months ended March 31,
	2010			2011
	(In millions)
Service cost	$	2.1		$	2.0
Interest cost		4.5			4.5
Expected return on plan assets		(3.1	)		(3.0	)
Amortization of prior service cost		.1			.1
Recognized actuarial losses		1.2			1.2
Total	$	4.8		$	4.8

- 8 -

ContributionsTable –of We expect our 2011 contributions for our pension plans to be approximately $22 million.Contents

Note 82 – ~~Other~~Accounts ~~noncurrent~~and ~~liabilities~~other receivables:

	December 31, 2010			March 31, 2011
	December 31,2010			June 30,2011
	(In millions)
Reserve for uncertain tax positions	$	10.6		$	11.1
Trade receivables	$	137.9		$	228.1
Employee benefits		9.7			10.1
Recoverable VAT and other receivables		23.0			31.2
Other		3.9			4.3
Refundable income taxes		.9			—
Total	$	24.2		$	25.5
Receivable from affiliate - Kronos Canada		1.9			2.7
Allowance for doubtful accounts		(2.2	)		(1.4	)
Total	$	161.5		$	260.6

Note 93 – ~~Commitments and contingencies~~Inventories:

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.


	December 31, 2010		June 30, 2011
	(In millions)

Raw materials	$	41.5	$	42.1
Work in process		9.9		8.8
Finished products		107.0		127.6
Supplies		44.5		50.1


Total	$	202.9	$	228.6

~~Please~~Note ~~refer~~4 to– ~~our~~Accounts ~~2010~~payable ~~Annual~~and ~~Report~~accrued ~~for~~liabilities: ~~a discussion of certain other legal proceedings to which we are a party.~~

- 11 -


	December 31, 2010		June 30, 2011
	(In millions)

Accounts payable	$	81.1	$	83.7
Employee benefits		25.0		22.7
Accrued sales discounts and rebates		9.0		9.1
Payable to affiliates:
Kronos (US), Inc.		14.0		7.8
Kronos Canada, Inc.		.2		2.0
Accrued interest		7.4		6.3
Other		15.7		22.4


Total	$	152.4	$	154.0

~~Note 10~~ - ~~Financial~~9 ~~instruments:~~-

TheTable following table summarizes the valuation of our financial instruments recorded on a fair value basis as of December 31, 2010 and March 31, 2011:Contents

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

Note 5 – Long-term debt:

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. At March 31, 2011, we had currency forward contracts to exchange:


	December 31, 2010		June 30, 2011
	(In millions)

Long-term debt:
6.5% Senior Secured Notes	$	532.8	$	455.8
Revolving credit facility		—		49.9
Other		6.8		6.0


Total debt		539.6		511.7
Less current maturities		2.2		2.3


Total long-term debt	$	537.4	$	509.4

·Senior anSecured ~~aggregate~~Notes ~~$10~~– ~~million~~In ~~for~~March an2011, ~~equivalent~~we ~~value~~redeemed euro 80 million of ~~Norwegian~~our ~~kroner~~euro 400 million 6.5% Senior Secured Notes at ~~exchange~~102.17% ~~rates~~of ~~ranging~~the ~~from~~principal ~~kroner~~amount 6for an aggregate of $115.597 tomillion, ~~kroner~~including 6a $2.605 ~~per~~million Ucall premium.S. ~~dollar~~Following such partial redemption, euro 320 million principal amount of the Senior Notes remain outstanding. ~~These~~We ~~contracts~~borrowed ~~with~~under ~~DnB~~our ~~Nor~~revolving ~~Bank~~credit ~~ASA~~facility, ~~mature~~as ~~from~~discussed ~~April~~below, ~~2011~~in ~~through~~order ~~July~~to ~~2011~~fund atthe redemption. We recognized a ~~rate~~$3.3 million pre-tax interest charge related to the prepayment of $2the 6.5% ~~million~~Senior ~~per~~Secured ~~month~~Notes in the first quarter of 2011, consisting of the call premium and the write-off of unamortized deferred financing costs and the original issue discount associated with the redeemed Senior Notes.

·Revolving ancredit ~~aggregate~~facility ~~euro~~– ~~11.8~~During ~~million~~the ~~for~~first ansix ~~equivalent~~months ~~value~~ of ~~Norwegian~~2011, ~~kroner~~we atborrowed ~~exchange~~euro ~~rates~~80 million ~~ranging~~($113.3 ~~from~~million ~~kroner~~when borrowed) ~~8.19~~and tosubsequently ~~kroner~~repaid ~~8.28~~euro ~~per~~45 million ~~euro~~($65.1 ~~These~~million ~~contracts~~when ~~with~~repaid). ~~DnB~~The ~~Nor~~average ~~Bank~~interest ~~ASA~~rate ~~mature~~on ~~from~~these ~~April~~borrowings ~~2011~~at ~~through~~June 30, ~~August~~ 2011 atwas ~~a rate of euro 1.8 million to euro~~ 2.~~5 million per month, subject to early redemption provisions at our option~~82%.

~~The~~Restrictions ~~estimated~~and ~~fair~~other ~~value~~– ofOur ~~such~~credit ~~currency~~facility ~~forward~~described ~~contracts~~above atrequires ~~March~~the ~~31,~~borrower ~~2011~~to ~~was~~maintain aminimum ~~$2.7~~levels ~~million~~of ~~net~~equity, ~~asset~~requires ~~which~~the ismaintenance ~~recognized~~of ascertain ~~part~~financial ofratios, ~~Accounts~~limits dividends and additional indebtedness and contains other ~~receivables~~provisions inand ~~our~~restrictive ~~Consolidated~~covenants ~~Balance~~customary ~~Sheet~~in ~~and~~lending atransactions ~~corresponding~~of $2this type.7 We ~~million~~are ~~currency~~in ~~transaction~~compliance ~~gain~~with inall of our ~~Consolidated~~debt ~~Statements~~covenants ofat ~~Income~~June 30, 2011. We ~~are~~believe ~~not~~we ~~currently~~will ~~using~~be ~~hedge~~able ~~accounting~~to ~~for~~comply with ~~our~~the ~~outstanding~~financial ~~currency~~covenants ~~forward~~contained ~~contracts~~in atour ~~March~~credit ~~31,~~facility ~~2011,~~through ~~and~~the wematurity ~~did~~of ~~not~~the ~~use~~facility; ~~hedge~~however ~~accounting~~if ~~for~~future ~~any~~operating ~~such~~results ~~contracts~~differ materially from our expectations we ~~previously~~may ~~held~~be inunable ~~2010~~to maintain compliance.

-The 12terms -of the indenture governing the 6.5% Senior Secured Notes limit our ability to pay dividends and make other restricted payments. At June 30, 2011, the maximum amount of dividends and other restricted payments that we could make (the “Restricted Payment Basket”) was $140.5 million.

~~The~~- ~~following~~10 ~~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, 2010				March 31, 2011
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In millions)
Cash, cash equivalents and restricted cash	$	51.7	$	51.7	$	50.9	$	50.9
Notes payable and long-term debt:
Fixed rate with market quotes -
6.5% Senior Secured Notes	$	532.8	$	536.0	$	450.5	$	456.3
European credit facility		-		-		112.9		112.9

AtNote ~~December 31, 2010 and March 31, 2011, the estimated market price of the~~ 6~~.5%~~ ~~Notes~~– ~~was~~Income ~~approximately~~taxes: euro 1,004 and euro 1,011 per euro 1,000 principal amount, respectively. The fair value of our 6.5% 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 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.

- 13 -


	Six months ended June 30,
	2010			2011
	(In millions)

Expected tax expense, at U.S. federal statutory income tax rate of 35%	$	7.4		$	57.0
Non-U.S. tax rates		(.8	)		(5.8	)
Nondeductible expenses		.7			1.4
German tax attribute adjustment		(35.2	)		—
Change in reserve for uncertain tax positions		.6			1.5
Prior year adjustment		(.7	)		—
Other, net		(.1	)		(.3	)


Total	$	(28.1	)	$	53.8

~~ITEM~~Tax 2authorities are examining certain of our tax returns and have or may propose tax deficiencies, including penalties and interest. ~~MANAGEMENT'S~~ ~~DISCUSSION~~Because ~~AND~~of ~~ANALYSIS~~the OFinherent ~~FINANCIAL~~uncertainties ~~CONDITION~~involved ~~AND RESULTS~~in OFthe ~~OPERATIONS~~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.

~~RESULTS~~As OFa ~~OPERATIONS:~~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.

~~Business~~Note ~~overview~~7 – Employee benefit plans:

WeThe ~~are~~components ~~a leading global producer and marketer~~ of ~~value-added~~net ~~titanium~~periodic ~~dioxide~~defined ~~pigments~~benefit ~~(“TiO2”). TiO2~~pension iscost ~~used~~are ~~for~~presented ain ~~variety of manufacturing applications, including plastics, paints, paper and other industrial products. For~~ the ~~three~~table ~~months ended March 31, 2011, approximately three-fourths of our sales volumes were into European markets~~below. ~~Our~~ ~~production facilities are located in Europe.~~

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 demand for TiO2 across all markets will grow on average 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 influenced in part by their expectations for future changes in market TiO2 selling prices as well as their expectations for future availability of product. Although certain of our TiO2 grades are considered specialty pigments, the majority of our grades and substantially all of our production are considered commodity pigment products with price and availability being the most significant competitive factors along with quality and customer service.


	Three months ended June 30,						Six months ended June 30,
	2010			2011			2010			2011
	(In millions)

Service cost	$	1.9		$	2.1		$	4.0		$	4.1
Interest cost		4.2			4.7			8.7			9.2
Expected return on plan assets		(2.9	)		(3.3	)		(6.1	)		(6.3	)
Amortization of prior service cost		.1			.2			.3			.3
Amortization of net transition obligations		.1			—			.1			—
Recognized actuarial losses		1.1			1.4			2.3			2.6


Total	$	4.5		$	5.1		$	9.3		$	9.9

~~The~~Contributions ~~factors~~– ~~having~~We ~~the~~expect ~~most~~our ~~impact~~2011 oncontributions for our ~~reported~~pension ~~operating~~plans ~~results~~to ~~are:~~be approximately $22 million.

·- ~~Our~~11 ~~TiO2 sales and production volumes,~~-

·Table TiO2of selling prices,Contents

·Note ~~Currency~~8 ~~exchange~~– ~~rates~~Other ~~(particularly~~noncurrent ~~the~~liabilities: ~~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.


	December 31, 2010		June 30, 2011
	(In millions)

Reserve for uncertain tax positions	$	10.6	$	12.2
Employee benefits		9.7		10.2
Other		3.9		4.3


Total	$	24.2	$	26.7

~~Our~~Note ~~key~~9 ~~performance~~– ~~indicators~~Commitments ~~are our TiO2 average selling prices~~ and ~~our~~contingencies: ~~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.~~

InLitigation ~~addition~~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 ~~effective~~operations. ~~income~~In ~~tax~~certain ~~rate~~cases, we have insurance coverage for these items. We currently believe the disposition of all claims and disputes, individually or in ~~2010~~the ~~was~~aggregate, ~~impacted~~should bynot ~~certain~~have ~~favorable~~a ~~developments~~material adverse effect on our consolidated financial position, asresults ~~discussed~~of ~~further~~operations ~~below~~or liquidity beyond the accruals we have already provided for.

~~Executive~~Please ~~summary~~refer to our 2010 Annual Report for a discussion of certain other legal proceedings to which we are a party.

WeNote ~~reported~~10 ~~net~~– ~~income~~Financial ofinstruments: $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.

-The 14following -table summarizes the valuation of our financial instruments recorded on a fair value basis as of December 31, 2010 and June 30, 2011:

Forward-looking information


	Fair Value Measurements
	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In millions)
December 31, 2010:
Currency forward contracts	$	2.6	$	2.6		—		—

June 30, 2011:
Currency forward contracts		1.0		1.0		—		—

~~This~~Certain ~~report contains forward-looking statements within the meaning~~ of ~~the~~our ~~Private~~sales ~~Securities~~generated ~~Litigation~~by ~~Reform~~our ~~Act~~operations ofare ~~1995,~~denominated asin ~~amended~~U. ~~Statements~~S. indollars. ~~this~~We ~~Quarterly~~periodically ~~Report~~use currency onforward ~~Form~~contracts ~~10-Q~~to ~~that~~manage ~~are~~a ~~not~~very ~~historical~~nominal ~~facts~~portion ~~are~~of ~~forward-looking~~currency inexchange ~~nature~~rate ~~and~~risk ~~represent~~associated ~~management’s~~with ~~beliefs~~trade ~~and~~receivables ~~assumptions~~denominated ~~based on currently available information. Statements~~ in ~~this~~a ~~report~~currency ~~including,~~other ~~but~~than ~~not~~the ~~limited to, statements found in Item 2 - "Management~~holder’s ~~Discussion~~functional ~~and~~currency ~~Analysis~~or ofsimilar ~~Financial~~exchange ~~Condition~~rate ~~and~~risk ~~Results~~associated ofwith future ~~Operations,"~~sales. ~~are~~We ~~forward-looking~~have ~~statements~~not ~~that~~entered ~~represent~~into ~~our~~these ~~management’s~~contracts ~~beliefs~~for ~~and~~trading ~~assumptions~~or ~~based~~speculative onpurposes ~~currently~~in ~~available~~the ~~information. In~~past, ~~some~~nor ~~cases~~do ~~you~~we ~~can~~currently ~~identify~~anticipate ~~forward-looking~~entering ~~statements~~into ~~by the use of words~~ such ascontracts ~~"believes,"~~for ~~"intends,"~~trading ~~"may," "should," "could," "anticipates," "expects"~~ or ~~comparable~~speculative ~~terminology,~~purposes orin bythe ~~discussions~~future. ofDerivatives ~~strategies~~used orto ~~trends. Although~~hedge forecasted wetransactions ~~believe~~and ~~the~~specific ~~expectations~~cash ~~reflected~~flows inassociated ~~forward-looking~~with ~~statements~~financial ~~are~~assets ~~reasonable,~~and weliabilities dodenominated ~~not~~in ~~know~~currencies ifother ~~these~~than ~~expectations~~the ~~will be correct~~U. ~~Such~~S. ~~statements~~dollar byand ~~their~~which ~~nature~~meet ~~involve~~the ~~substantial~~criteria ~~risks~~for ~~and~~hedge ~~uncertainties~~accounting ~~that~~are ~~could~~designated ~~significantly~~as ~~impact~~cash ~~expected~~flow ~~results~~hedges. ~~Actual~~ ~~future~~Consequently, the ~~results~~effective ~~could~~portion ~~differ~~of ~~materially~~gains ~~from~~and ~~those~~losses ~~predicted. The~~is ~~factors~~deferred ~~that~~as ~~could~~a ~~cause~~component ~~our~~of ~~actual~~accumulated ~~future~~other ~~results~~comprehensive toincome ~~differ~~and ~~materially~~is ~~from~~recognized ~~those~~in ~~described~~earnings ~~herein~~at ~~are~~the time the ~~risks~~hedged ~~and~~item ~~uncertainties~~affects ~~discussed~~earnings. inContracts ~~this~~that ~~Quarterly~~do ~~Report~~not ~~and~~meet ~~those~~the ~~described~~criteria ~~from~~for ~~time~~hedge accounting are marked-to-market ~~time~~at ineach ~~our~~balance ~~other~~sheet ~~filings~~date with ~~the~~any ~~SEC~~resulting ~~including,~~gain ~~but~~or ~~are~~loss ~~not~~recognized ~~limited~~in ~~to,~~income ~~the~~currently ~~following:~~as

·- ~~Future~~12 ~~supply and demand for our products~~-

·Table The extent of the dependence of certain of our businesses on certain market sectorsContents

· part of net currency transactions. The ~~cyclicality~~fair value of ~~our~~the ~~businesses~~currency forward contracts is determined using Level 1 inputs based on the currency spot forward rates quoted by banks. At June 30, 2011, we had currency forward contracts to exchange:

·• ~~Changes~~an inaggregate ~~raw~~$2.5 ~~material~~million ~~and~~for ~~other~~an ~~operating~~equivalent ~~costs~~value ~~(such~~of asNorwegian ~~energy~~kroner ~~and~~at ~~ore~~an ~~costs)~~exchange rate of kroner 6.60 per U.S. dollar. This contract with DnB Nor Bank ASA matured in July 2011.

·• ~~Changes~~an inaggregate ~~the~~euro ~~availability~~5 million for an equivalent value of ~~raw~~Norwegian ~~materials~~kroner ~~(such~~at asexchange ~~ore)~~rates ranging from kroner 8.27 to kroner 8.28 per euro. These contracts with DnB Nor Bank ASA mature from July 2011 through August 2011 at a rate of euro 2.5 million per month, subject to early redemption provisions at our option.

·The ~~General~~estimated ~~global~~fair ~~economic~~value ~~and~~of ~~political~~such ~~conditions~~currency ~~(such~~forward contracts at June 30, 2011 was a $1.0 million net asset which is recognized as part ~~changes~~of Accounts and other receivables in ~~the~~our ~~level~~Condensed ofConsolidated ~~gross~~Balance ~~domestic~~Sheet ~~product~~and a corresponding $1.0 million currency transaction gain in ~~various~~our ~~regions~~Condensed Consolidated Statements of ~~the~~Income. ~~world~~We are not currently using hedge accounting for our outstanding currency forward contracts at June 30, 2011, and ~~the~~we ~~impact~~did ofnot use hedge accounting for any such ~~changes~~contracts onwe ~~demand~~previously ~~for~~held ~~TiO2)~~in 2010.

·The ~~Competitive~~following ~~products~~table presents the financial instruments that are not carried at fair value but which require fair value disclosure as of December 31, 2010 and ~~substitute~~June 30, ~~products~~2011.

· Customer and competitor strategies


	December 31, 2010				June 30, 2011
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In millions)

Cash, cash equivalents and restricted cash	$	51.7	$	51.7	$	19.6	$	19.6

Notes payable and long-term debt:
Fixed rate with market quotes - 6.5% Senior Secured Notes	$	532.8	$	536.0	$	455.8	$	462.0
European credit facility		—		—		49.9		49.9

·At ~~Potential~~December 31, ~~consolidation~~2010 and June 30, 2011, the estimated market price of the 6.5% Notes was approximately euro 1,004 and euro 1,012 per euro 1,000 principal amount, respectively. The fair value of our ~~competitors~~6.5% 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 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.

·Note ~~The~~11 ~~impact~~– ofRecent ~~pricing~~accounting ~~and~~standards: ~~production decisions~~

·In ~~Competitive~~May ~~technology~~2011 ~~positions~~the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2011-04, Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in U.S. GAAP and IFRSs. ASU 2011-04 contains technical adjustments and clarifications to more closely align the U.S. GAAP and International Financial Reporting Standards (“IFRS”) for fair value and will be effective for our first quarter 2012 report. We do not believe the adoption of this standard will have a material effect on our Condensed Consolidated Financial Statements.

·- ~~The~~13 ~~introduction of trade barriers~~-

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

·In ~~Fluctuations~~June in2011 ~~currency~~the ~~exchange~~FASB ~~rates~~issued ~~(such~~ASU as2011-05, ~~changes~~Presentation inof Comprehensive Income. ASU 2011-05 will eliminate the ~~exchange~~option ~~rate~~of ~~between~~presenting comprehensive income as a component of the ~~U.S.~~Consolidated ~~dollar~~Statement of Stockholder’s Equity and ~~each~~will instead require comprehensive income to be presented as a component of the Consolidated ~~euro~~Statement ~~and~~of Income or in a separate Consolidated Statement of Comprehensive Income immediately following the ~~Norwegian~~Consolidated ~~krone~~Statement of Income.) This standard will be effective for our first quarter 2012 report. Upon adoption of ASU 2011-05, we intend to present our comprehensive income in a separate Consolidated Statement of Comprehensive Income.

·- ~~Operating~~14 ~~interruptions (including, but not limited to, labor disputes, leaks, natural disasters, fires, explosions, unscheduled or unplanned downtime and transportation interruptions)~~-

·Table Ourof ability to renew or refinance credit facilitiesContents

·ITEM 2. ~~Our~~MANAGEMENT’S ~~ability~~DISCUSSION toAND ~~maintain~~ANALYSIS ~~sufficient~~OF ~~liquidity~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS

·RESULTS ~~The~~OF ~~ultimate~~OPERATIONS: ~~outcome of income tax audits, tax settlement initiatives or other tax matters~~

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

·We ~~Environmental~~are ~~matters~~a ~~(such~~leading asglobal ~~those~~producer ~~requiring~~and marketer ~~compliance~~of ~~with~~value-added ~~emission~~titanium ~~and~~dioxide ~~discharge~~pigments (“TiO2”). ~~standards~~TiO2 is used for ~~existing~~a variety of manufacturing applications, including plastics, paints, paper and ~~new~~other industrial products. For the six months ended June 30, 2011, approximately three-fourths of our sales volumes were into European markets. Our production facilities) are located in Europe.

·We ~~Government~~consider ~~laws~~TiO2 to be a “quality of life” product, with demand affected by gross domestic product (or “GDP”) and overall ~~regulations~~economic conditions in our markets located in various regions of the world. Over the long-term, we expect demand for TiO2 across all markets will grow on average by 2% to 3% per year, consistent with our expectations for the long-term growth in GDP. However, even if we and ~~possible~~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 ~~therein~~in the TiO2 inventory levels of our customers. We believe our customers’ inventory levels are influenced in part by their expectations for future changes in market TiO2 selling prices as well as their expectations for future availability of product. Although certain of our TiO2 grades are considered specialty pigments, the majority of our grades and substantially all of our production are considered commodity pigment products with price and availability being the most significant competitive factors along with quality and customer service.

· The ~~ultimate~~factors ~~resolution~~having ofthe ~~pending~~most ~~litigation;~~impact ~~and~~on our reported operating results are:

·• ~~Possible~~Our ~~future~~TiO2 ~~litigation.~~sales and production volumes,

-• 15TiO2 -selling prices,

~~Should~~• ~~one~~Currency orexchange ~~more~~rates ~~of these risks materialize~~ (orparticularly the ~~consequences~~exchange ofrate ~~such~~for ~~a development worsen), or should~~ the ~~underlying assumptions prove incorrect, actual results could differ materially from those forecasted or expected~~U. WeS. ~~disclaim~~dollar ~~any~~relative ~~intention or obligation~~ to ~~update~~the oreuro ~~revise~~and ~~any~~the ~~forward-looking~~Norwegian ~~statement~~krone) ~~whether as a result of changes in information, future events or otherwise.~~and

~~Results~~• ofManufacturing ~~operations~~costs, particularly raw materials, maintenance and energy-related expenses.

~~Quarter~~Our ~~ended~~key ~~March~~performance ~~31,~~indicators ~~2010~~are ~~compared~~our toTiO2 ~~the~~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.

~~Quarter~~In ~~ended~~addition, ~~March~~our 31effective income tax rate in 2010 was impacted by certain favorable developments, ~~2011~~as discussed -further below.

	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	%

Executive summary

~~________________________________~~We reported net income of $67.8 million in the second quarter of 2011 as compared to net income of $9.0 million in the second quarter of 2010. For the first six months of 2011, we reported net income of $108.9 million compared to net income of $49.3 million in the first six months of 2010. Our net income for the second quarter and first six months of 2011, as compared to the same periods of 2010, is higher principally due to higher income from operations resulting principally from higher average selling prices and production volumes in 2011. In addition, our results of operations in 2010 include a first quarter non-cash income tax benefit of $35.2 million related to a European Court ruling that resulted in a favorable resolution of certain income tax issues in Germany.

*- ~~Thousands~~15 ~~of metric tons~~-

CurrentTable industry conditions– Throughout 2010 and continuing into 2011, global 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 TiO2 industry remain at historically low levels despite efforts of major TiO2 producers to operate their facilities at near full capacity. As a result, we increased TiO2 selling prices throughout 2010 and the first quarter of 2011 that resulted in increased profitability and cash flows. Even with such increased profitability, we believe profit margins are currently at a level which does not reasonably justify greenfield or other major expansions of TiO2 capacity. Provided global demand for TiO2 products remains strong, we expect the low level of worldwide TiO2 inventories to continue for several years due to the constraints of adding significant new production capacity, especially for premium grades of TiO2 products through the chloride process. Given these current dynamics in the TiO2 industry, as well as the expectation for increases in our manufacturing costs discussed below, we anticipate further implementation of TiO2 selling price increases. Overall, based on positive market dynamics in the TiO2 industry, we expect our profitability and cash flows to significantly increase in 2011 and the foreseeable future.Contents

Forward-looking 16information -

~~Net~~This ~~sales~~report –contains ~~Net~~forward-looking ~~sales~~statements inwithin the ~~first~~meaning ~~quarter~~ of ~~2011~~the ~~increased~~Private ~~31%~~Securities Litigation Reform Act of 1995, oras ~~$69~~amended.9 ~~million,~~Statements ~~compared~~in tothis ~~the~~Quarterly ~~first~~Report ~~quarter~~on ofForm ~~2010~~10-Q ~~primarily~~that ~~due~~are tonot historical afacts ~~35%~~are ~~increase~~forward-looking in ~~average~~nature ~~TiO2~~and ~~selling~~represent ~~prices. TiO2~~management’s ~~selling~~beliefs ~~prices~~and ~~will~~assumptions ~~increase~~based oron ~~decrease~~currently ~~generally~~available asinformation. aStatements ~~result~~in ofthis ~~competitive~~report ~~market~~including, ~~pressures~~but not limited to, ~~changes~~statements found in ~~the~~Item 2 ~~relative~~– “Management’s ~~level~~Discussion and Analysis of ~~supply~~Financial Condition and ~~demand~~Results asof ~~well~~Operations,” asare ~~changes~~forward-looking instatements ~~raw~~that ~~material~~represent our management’s beliefs and ~~other~~assumptions ~~manufacturing~~based ~~costs~~on currently available information. ~~Based~~ onIn ~~current~~some cases ~~conditions~~you incan identify forward-looking statements by the ~~TiO2~~use ~~industry,~~of aswords ~~well~~such as ~~the~~“believes,” ~~expectation~~“intends,” ~~for~~“may,” ~~increases~~“should,” in“could,” ~~our~~“anticipates,” ~~manufacturing~~“expects” ~~costs~~or ~~discussed~~comparable ~~below~~terminology, or weby ~~currently~~discussions ~~expect~~of ~~average~~strategies ~~selling~~or ~~prices~~trends. inAlthough we believe the ~~remainder~~expectations ofreflected ~~2011~~in toforward-looking ~~continue~~statements toare reasonable, we do not know if these expectations will be correct. Such statements by their nature involve substantial risks and uncertainties that could significantly ~~higher~~impact ~~than~~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 ~~comparable~~and ~~periods~~uncertainties discussed in ~~2010.~~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:

~~Sales~~• ~~volumes~~Future insupply ~~the first quarter of 2011 were comparable to the first quarter of 2010 as higher sales volumes in Europe were offset by lower sales volumes in the export~~ and ~~North American markets. We expect~~ demand ~~will improve and remain strong~~ for ~~the remainder of the year. In addition, we estimate the unfavorable effect of changes in currency exchange rates decreased~~ our ~~net sales by approximately $5 million, or 2%, as compared to the first quarter of 2010.~~products

~~Cost~~• ofThe ~~sales~~extent ~~- Cost~~ of ~~sales increased $6.8 million or 4% in~~ the ~~first~~dependence ~~quarter~~ of ~~2011~~certain ~~compared to 2010 due to the net impact~~ of aour ~~10%~~businesses ~~increase~~on incertain ~~TiO2~~market production volumes, higher raw material costs of $10.0 million (primarily feedstock ore and petroleum coke), an increase in maintenance costs of $3.0 million which is consistent with the increased production volumes and currency fluctuations (primarily the euro). Cost of sales as a percentage of net sales decreased to 65% in the first quarter of 2011 compared to 82% in the first quarter of 2010 primarily due to the higher selling prices and higher production volumes in the first quarter of 2011.sectors

~~Income~~• ~~from~~The ~~operations~~cyclicality ~~– Income from operations increased by $58.2 million from $15.1 million in the first quarter~~ of 2010 to $73.3 million in the first quarter of 2011. Income from operations as a percentage of net sales increased to 25% in the first quarter of 2011 from 7% in the same period for 2010. This increase was driven by the improvement in gross margin, which increased to 35% for the first quarter of 2011 compared to 18% for the first quarter of 2010. Our gross margin has increased primarily because of higher selling prices and higher production volumes which more than offset the impact of higher manufacturing costs (primarily raw materials and maintenance). Additionally, changes in currency exchange rates have negatively affected our gross margin and income from operations. We estimate that changes in currency exchange rates decreased income from operations by approximately $7 million in the first quarter of 2011 as compared to the same period in 2010.businesses

~~Other~~• ~~non-operating~~Changes 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~~raw tomaterial 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~~other ~~write-off~~operating ofcosts ~~unamortized~~(such ~~deferred~~as ~~financing~~energy ~~costs~~ and ~~original~~ore ~~issue discount associated with the redeemed Senior Notes. See Note 5 to our Condensed Consolidated Financial Statements.~~costs)

~~Interest~~• ~~expense~~Changes ~~decreased $.8 million from $10.1 million~~ in the ~~first~~availability ~~quarter~~ of ~~2010~~raw tomaterials ~~$9.3~~(such ~~million~~as 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.ore)

-• 17General -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)

~~Income~~• ~~tax~~Competitive ~~provision~~products (benefit) – 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 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 ansubstitute 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.products

We• ~~have~~Customer ~~substantial net operating loss carryforwards in Germany (the equivalent of $952 million for German corporate purposes~~ and ~~$349~~competitor 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.strategies

~~Effects~~• ofPotential ~~Currency~~consolidation ~~Exchange~~of ~~Rates~~our competitors

We• ~~have substantial operations and assets located outside the United States (primarily in Germany, Belgium and Norway).~~ The ~~majority~~impact of ~~our~~pricing ~~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.decisions

~~Overall,~~• weCompetitive ~~estimate~~technology ~~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.~~positions

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
	(In millions)
Impact on:
Net sales	$	-	$	-	$	-		$	(5	)	$	(5	)
Income from operations		2		-		(2	)		(5	)		(7	)

•

The introduction of trade barriers

-• 18Possible -disruption of our business or increases in the cost of doing business resulting from terrorist activities or global conflicts

~~Outlook~~• 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.)

~~During~~• ~~the~~Operating ~~first~~interruptions ~~quarter of 2011 we operated our production facilities at near full practical capacity levels~~(including, ~~consistent~~but ~~with~~not ~~our~~limited ~~operating rates throughout 2010. We currently expect~~ to, ~~continue~~labor todisputes, ~~operate~~leaks, ~~our~~natural ~~facilities~~disasters, atfires, ~~near full practical capacity levels throughout the remainder of 2011. While we will continue to work on debottlenecking projects in 2011 to increase our production capacity~~explosions, weunscheduled ~~believe~~or ~~such~~unplanned ~~debottlenecking~~downtime ~~projects will produce relatively nominal increases in our capacity~~ and astransportation ~~a result our overall production volumes in 2011 will not increase significantly as compared to 2010.~~interruptions)

~~The~~• ~~overall~~Our ~~strong~~ability ~~global demand for TiO2 we experienced in the first quarter of 2011 is expected~~ to ~~continue~~renew ~~through~~or ~~the~~refinance ~~remainder~~credit of the year and inventory levels throughout the TiO2 industry are expected to remain at historically low levels. As a result, in 2011 we expect our sales of TiO2 to approximately match our production. Given our expectations for the level of our increased production capacity in 2011 discussed above, we similarly expect our sales volumes in 2011 will not increase significantly as compared to 2010.facilities

We• ~~implemented significant increases in TiO2 selling prices throughout 2010 and the first quarter of 2011.~~ Our ~~average~~ability ~~TiO2 selling prices were 35% higher in the first quarter of 2011 as compared~~ to ~~the~~maintain ~~first~~sufficient 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.liquidity

~~During~~• ~~2011,~~The weultimate ~~expect~~outcome to see significantly higher feedstock ore costs driven by tight ore supplies, and higher than historical increases in petroleum coke, energy and freight which are being driven in part by escalating worldwide fuel prices. Overall, we currently expect our per metric ton cost of ~~TiO2~~income wetax ~~produce will increase approximately 10% to 15% in 2011 as compared to 2010~~audits, ~~which~~tax issettlement ~~slightly~~initiatives ~~higher~~or ~~than~~other ~~our~~tax previous expectations due primarily to increases in our raw material costs. Given that the current conditions for the TiO2 industry discussed above are not expected to change over the year, we believe we should be able to recoup such higher costs through additional selling price increases.matters

~~Overall,~~• weOur ~~expect~~ability ~~income from operations will continue~~ to beutilize ~~significantly~~income ~~higher~~tax inattributes, the ~~remainder~~benefits of ~~2011~~which ashave ~~compared~~been torecognized ~~the~~under ~~same periods of 2010, as~~ the ~~favorable effect of higher selling prices will~~ more -likely-than-not ~~offset~~recognition ~~the impact of higher production costs.~~criteria

~~Our~~• ~~expectations~~Environmental asmatters to(such ~~the~~as ~~future~~those ofrequiring ~~the~~compliance ~~TiO2~~with ~~industry~~emission ~~are~~and ~~based~~discharge ~~upon~~standards afor ~~number~~existing of factors beyond our control, including worldwide growth of gross domestic product, competition in the marketplace, continued operation of competitors, unexpected or earlier than expected capacity additions or reductions and ~~technological~~new ~~advances. If actual developments differ from our expectations, our results of operations could be unfavorably affected.~~facilities)

~~LIQUIDITY~~- ~~AND~~16 ~~CAPITAL RESOURCES~~-

ConsolidatedTable cashof flowsContents

~~Operating~~• ~~activities~~Government laws and regulations and possible changes therein

~~Trends~~• inThe ~~cash~~ultimate ~~flows~~resolution ~~as a result~~ of ~~our~~pending ~~operating~~litigation; ~~activities (excluding the impact of significant asset dispositions~~ and ~~relative changes in assets and liabilities) are generally similar to trends in our earnings.~~

-• 19Possible -future litigation.

~~Our~~Should ~~cash~~one ~~provided~~or bymore ~~operating~~of ~~activities~~these ~~was~~risks ~~$10.1~~materialize ~~million~~(or in the ~~first~~consequences ~~three~~of ~~months~~such ofa ~~2011~~development worsen), ~~compared~~or toshould ~~$13.2~~the ~~million~~underlying ofassumptions ~~cash~~prove ~~used~~incorrect, inactual ~~operating~~results ~~activities~~could indiffer ~~the~~materially ~~first~~from ~~three~~those forecasted ~~months~~or ~~of 2010~~expected. ~~This~~ ~~$23.3~~We ~~million~~disclaim ~~increase~~any ~~was~~intention ~~primarily~~or ~~due~~obligation to ~~the~~update ~~net~~or ~~effects~~revise any forward-looking statement whether as a result of ~~the~~changes ~~following:~~in information, future events or otherwise.

·Results ~~Higher~~of ~~income from~~ operations ~~in 2011 of $58.2 million;~~

·Quarter ~~Higher~~ended ~~net cash used from relative changes in our inventories~~June 30, ~~receivables,~~2010 ~~payables and accruals of $21.4 million in the first three months of 2011 as~~ compared to the ~~first three months of 2010;~~

·Quarter ~~Higher~~ended ~~cash~~June 30, ~~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.


	Three months ended June 30,
	2010				2011
	(Dollars in millions)
Net sales	$	256.6	100	%	$	404.0		100	%
Cost of sales		201.6	79			255.9		63

Gross margin		55.0	21			148.1		37
Other operating income and expenses, net		29.3	11			37.7		10

Income from operations	$	25.7	10	%	$	110.4		27	%


							% Change
TiO₂ operating statistics:
Sales volumes*		97				102		5	%
Production volumes*		89				96		8	%

Percent change in net sales:
TiO₂ product pricing								43	%
TiO₂ sales volumes								5
TiO₂ product mix								(4	)
Changes in currency exchange rates								13


Total								57	%

~~Changes~~* inThousands ~~working~~of ~~capital~~metric ~~were affected by accounts receivable and inventory changes. As shown below:~~tons

·Current ~~Our~~industry ~~average~~conditions ~~days~~– ~~sales~~Throughout ~~outstanding~~2010 ~~(“DSO”)~~and ~~increased~~continuing ~~from~~into ~~December~~2011, 31global customer demand for our TiO2 products continued to strengthen, ~~2010~~and our production facilities operated at near full practical capacity rates. We believe inventories throughout the TiO2 industry remain at very low levels despite efforts of major TiO2 producers to ~~March~~operate their 31facilities at near full capacity. As a result, we increased TiO2 selling prices throughout 2010 and the first six months of 2011 resulting in increased profitability and cash flows. Even with our increased profitability, we believe profit margins are not currently at a level which reasonably justifies greenfield or other major expansions of TiO2 capacity. Provided global demand for TiO2 products remains strong, we expect the overall level of worldwide TiO2 inventories to remain low for several years due to the constraints ~~timing~~of adding significant new production capacity, especially for premium grades of ~~collections~~TiO2 products through the chloride process. Given these current dynamics in the TiO2 industry, as well as the expectation for increases in our manufacturing costs discussed below, we anticipate further implementation of TiO2 selling price increases. Overall, based on ~~receivable~~positive ~~balances;~~market ~~and~~dynamics in the TiO2 industry, we expect our

·- ~~Our~~17 ~~average days sales in inventory (“DSI”) increased from December 31, 2010 to March 31, 2011 as we were building inventory for the spring painting season.~~-

ForTable comparativeof purposes, we have also provided comparable prior years numbers below:Contents

	December 31,	March 31,	December 31,	March 31,
	2009	2010	2010	2011
DSO	55 days	62 days	54 days	62 days
DSI	46 days	47 days	50 days	62 days

profitability and cash flows to significantly increase in 2011 and the foreseeable future.

~~Investing~~Net ~~activities~~sales – Net sales in the second quarter of 2011 increased 57%, or $147.4 million, compared to the second quarter of 2010 primarily due to a 43% increase in average TiO2 selling prices. TiO2 selling prices will increase or decrease generally as a result of competitive market pressures, changes in the relative level of supply and demand as well as changes in raw material and other manufacturing costs. Based on current conditions in the TiO2 industry, as well as the expectation for increases in our manufacturing costs discussed below, we currently expect average selling prices in the remainder of 2011 to continue to be significantly higher than the comparable periods in 2010.

Our ~~capital~~5% ~~expenditures~~increase in sales volumes in the second quarter of ~~$7.2~~2011 ~~million~~is ~~and~~due ~~$13~~to increased availability of product through higher production volumes.0 ~~million~~We inexpect overall demand will continue to remain high for the remainder ~~three~~of ~~months~~the ~~ended~~year. ~~March~~Our ~~31,~~TiO2 ~~2010~~sales ~~and~~volumes ~~2011,~~in ~~respectively,~~the ~~were~~second quarter ~~primarily~~of ~~for~~2011 ~~improvements~~were ~~and~~a ~~upgrades~~new tosecond ~~existing~~quarterly ~~facilities~~record for us.

~~Financing~~In ~~activities~~addition to the factors discussed above, we estimate the favorable effect of changes in currency exchange rates increased our net sales by approximately $33 million, or 13%, as compared to the second quarter of 2010, while relative changes in mix of our various grades of our products sold decreased our net sales by approximately $10 million, or 4%.

~~During~~Cost of sales – Cost of sales increased $54.3 million or 27% in the ~~three~~second ~~months~~quarter ~~ended~~of ~~March~~2011 31compared to 2010 due to the net impact of an 8% increase in TiO2 production volumes, ~~2011~~higher raw material costs of $15.6 million (primarily feedstock ore and petroleum coke), ~~we:~~an increase in maintenance costs of $3.4 million (consistent with the increase in production volumes) and currency fluctuations (primarily the euro). Cost of sales as a percentage of net sales decreased to 63% in the second quarter of 2011 compared to 79% in the second quarter of 2010 primarily due to the effects of higher selling prices and the benefit of higher production volumes in 2011. Our TiO2 production volumes in the second quarter of 2011 were a new quarterly record for us.

·Income ~~had~~from ~~net~~operations ~~borrowings~~– ofIncome ~~euro~~from 80operations increased by $84.7 million (from $~~113~~25.37 million ~~when~~in ~~borrowed~~the second quarter of 2010 to $110.4 million in the second quarter of 2011. Income from operations as a percentage of net sales increased to 27% in the first quarter of 2011 from 10% in the same period for 2010. This increase was driven by the improvement in gross margin, which increased to 37% for the second quarter of 2011 compared to 21% for the second quarter of 2010. Our gross margin has increased primarily because of the effect of higher selling prices and the benefit of higher production volumes, both of which more than offset the impact of higher manufacturing costs (primarily raw materials and maintenance). onAdditionally, ~~our~~changes ~~European~~in ~~credit~~currency ~~facility;~~exchange rates have positively affected our gross margin and income from operations. We estimate that changes in currency exchange rates increased income from operations by approximately $7 million in the second quarter of 2011 as compared to the same period in 2010.

·Other ~~redeemed~~non-operating ~~euro~~income (expense) 80– Interest expense decreased $1.0 million from $9.5 million in the second quarter of ~~our~~2010 ~~euro~~to ~~400~~$8.5 million in the second quarter of 2011 due to the net effects of the prepayment of a portion of the 6.5% Senior Secured Notes atin ~~102.17%~~the first quarter of ~~the~~2011 ~~face~~and ~~value~~changes ~~for~~in ancurrency ~~aggregate~~exchange ~~of $115~~rates.7 ~~million,~~See ~~including~~Note a5 $2to our Condensed Consolidated Financial Statements.5 ~~million~~The ~~call~~interest ~~premium~~expense onwe ~~March~~recognize ~~24,~~will ~~2011~~vary with fluctuations in the euro exchange rate.

~~Outstanding~~Income ~~debt~~tax ~~obligations~~provision – Our income tax provision was $34.1 million in the second quarter of 2011 compared to $7.2 million in the same period last year.

At- ~~March~~18 ~~31, 2011, our consolidated debt was comprised of:~~-

·Table euro 320 million principal amount of our 6.5% Senior Secured Notes ($450.5 million) due in 2013; andContents

· This ~~euro~~increase 80in ~~million~~provision ~~($112.9~~for ~~million)~~income ~~under~~taxes ~~our~~was ~~revolving~~primarily ~~credit~~due ~~facility~~to ~~which~~improved ~~matures~~income from operations in ~~October~~the ~~2013;~~second ~~and~~quarter of 2011 compared to the second quarter of 2010. See Note 6 to our Condensed Consolidated Financial Statements.

·We ~~approximately~~have substantial net operating loss carryforwards in Germany (the equivalent of $~~6.4~~952 million for German corporate purposes and $349 million for German trade tax purposes at December 31, 2010). At June 30, 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 ~~other~~such ~~indebtedness~~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 at 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.

-Six 20months -ended June 30, 2010 compared to the

~~Our~~Six ~~revolving~~months ~~credit~~ended facility described above contains provisions which could result in the acceleration of indebtedness prior to their stated maturity for reasons other than defaults for failure to comply with applicable covenants. For exampleJune 30, certain credit agreements allow the lender to accelerate the maturity of the indebtedness upon a change of control (as defined in the agreement) of the borrower. In addition, certain credit agreements could result in the acceleration of all or a portion of the indebtedness following a sale of assets outside the ordinary course of business. We are in compliance with all of our debt covenants at March 31, 2011~~. See~~ ~~Note~~- ~~5 to our Consolidated Financial Statements.~~

Our assets 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.


	Six months ended June 30,
	2010				2011
	(Dollars in millions)
Net sales	$	485.4	100	%	$	702.7		100	%
Cost of sales		389.2	80			450.3		64

Gross margin		96.2	20			252.4		36
Other operating income and expenses, net		55.5	11			68.7		10

Income from operations	$	40.7	9	%	$	183.7		26	%


							% Change
TiO₂ operating statistics:
Sales volumes*		180				186		3	%
Production volumes*		172				185		8	%

Percent change in net sales:
TiO₂ product pricing								39	%
TiO₂ sales volumes								3
TiO₂ product mix								(3	)
Changes in currency exchange rates								6


Total								45	%

~~Future~~* ~~cash~~Thousands ~~requirements~~of metric tons

~~Liquidity~~Net sales – Net sales increased 45%, or $217.3 million, compared to the six months ended June 30, 2010 primarily due to a 39% increase in average TiO2 selling prices. TiO2 selling prices will increase or decrease generally as a result of competitive market pressures, changes in the relative level of supply and demand as well as changes in raw material and other manufacturing costs.

Our ~~primary~~3% ~~source~~increase ofin ~~liquidity~~sales onvolumes anin ~~ongoing~~the ~~basis~~first issix ~~cash~~months ~~flows~~of ~~from~~2011 ~~operating activities which~~ is ~~generally~~due ~~used~~ to ~~(i)~~increased ~~fund~~availability ~~working~~of ~~capital~~product ~~expenditures,~~through ~~(ii)~~higher ~~repay~~production ~~any short-term indebtedness incurred for working capital purposes and (iii) provide for the payment of dividends~~volumes. ~~From~~ ~~time-to-time~~We weexpect ~~will~~overall ~~incur~~demand 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~~continue ~~from time-~~to~~-time~~ ~~sell~~remain ~~assets~~high ~~outside~~ for the ~~ordinary~~remainder ~~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~~19 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.-

WeTable 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.Contents

- year. 21Our -TiO2 sales volumes in the first half of 2011 were a new first half record for us.

AtIn addition ~~March~~to ~~31,~~the ~~2011~~factors discussed above, we ~~had~~estimate ~~borrowed~~ the ~~full~~favorable ~~euro~~effect 80of ~~million~~changes ~~under~~in ~~our~~currency ~~European~~exchange ~~credit~~rates ~~facility. Based~~increased ~~upon~~ our ~~expectation~~net ~~for~~sales ~~the~~by ~~TiO2~~approximately ~~industry~~$28 ~~and~~million, ~~anticipated~~or ~~demands on cash resources~~6%, weas ~~expect~~compared to ~~have sufficient liquidity to meet our short term obligations (defined as~~ the ~~twelve-month~~first ~~period~~six ~~ending~~months ~~March~~of 312010, ~~2012)~~while ~~and~~relative ~~our~~changes ~~long-term~~in ~~obligations~~mix of ~~(defined~~our asvarious ~~the~~grades ~~five-year~~of ~~period~~our ~~ending~~products ~~March~~sold ~~31,~~decreased ~~2016,~~ our ~~time~~net ~~period~~sales ~~for~~by ~~long-term~~approximately ~~budgeting). If~~$14 ~~actual developments differ from our expectations~~million, ~~our~~or ~~liquidity could be adversely affected~~3%.

~~Capital~~Cost ~~expenditures~~of sales – Cost of sales increased $61.1 million or 16% in the six months ended June 30, 2011 compared to this same period in 2010 due to the net impact of an 8% increase in TiO2 production volumes, higher raw material costs of $25.6 million (primarily feedstock ore and petroleum coke), an increase in maintenance costs of $6.3 million (consistent with the increase in production volumes) and currency fluctuations (primarily the euro). Cost of sales as a percentage of net sales decreased to 64% in the first six months of 2011 compared to 80% in the same period in 2010 primarily due to the effects of higher selling prices and the benefit of higher production volumes in 2011. Our TiO2 production volumes in the first half of 2011 were a new first half record for us.

WeIncome ~~currently~~from ~~estimate~~operations ~~that~~– weIncome ~~will~~from ~~invest~~operations ~~approximately~~increased by $62143.0 million from $40.7 million in ~~capital~~the ~~expenditures~~first six months of 2010 to $183.7 million in the first six months of 2011. Income from operations as a percentage of net sales increased to 26% in the first six months of 2011 from 9% in the same period for ~~major~~2010. ~~improvements~~This ~~and~~increase ~~upgrades~~was driven by the improvement in gross margin, which increased to ~~our~~36% ~~existing~~for ~~facilities~~the ~~during~~first six months of 2011 compared to 20% for the same period in 2010. Our gross margin has increased primarily because of the effects of higher selling prices and the benefit of higher production volumes, ~~including~~both of which more than offset the ~~$13~~impact of higher manufacturing costs (primarily raw materials and maintenance).0 ~~million~~Additionally, we estimate that changes in currency exchange rates did not have ~~spent~~a ~~through~~significant ~~March~~impact ~~31,~~on our gross margin and income from operations in the first six months of 2011 as compared to the same period in 2010.

~~Off~~Other non-~~balance~~operating ~~sheet~~income (expense) – In March 2011, we redeemed euro 80 million of our 6.5% Senior Secured Notes and borrowed under our European revolving credit facility 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. The average rate on our outstanding borrowings under our revolving credit facility was 2.82% at June 30, 2011.

WeInterest expense dodecreased ~~not~~$1.7 ~~have~~million ~~any~~from ~~off-balance~~$19.5 ~~sheet~~million ~~financing~~in ~~agreements~~the ~~other~~six ~~than~~months ended June 30, 2010 to $17.8 million in the ~~operating~~six ~~leases~~months ~~discussed~~ended June 30, 2011 due to the net effects of the prepayment of a portion of the 6.5% Senior Secured Notes in the first quarter of 2011 and changes in currency exchange rates. See Note 5 to our ~~2010~~Condensed ~~Annual~~Consolidated ~~Report~~Financial Statements. The interest expense we recognize will vary with fluctuations in the euro exchange rate.

~~Commitments~~Income tax provision – Our income tax provision was $53.8 million in the first six months of 2011 compared to an income tax benefit of $28.1 million in the same period last year. This increase in provision for income taxes was primarily due to improved income from operations in the first six months of 2011 compared to the same period in 2010. In addition, our income tax benefit in 2010 includes a first quarter income tax benefit of $35.2 million related to a European Court ruling that resulted in the favorable resolution of certain income tax issues in Germany and ~~contingencies~~an increase in the amount of our

~~See~~- ~~Notes~~20 ~~6 and 9 to the Condensed Consolidated Financial Statements for a description of certain income tax examinations currently underway and legal proceedings.~~-

RecentTable accountingof pronouncementsContents

~~There~~ German ~~have~~corporate ~~been~~and notrade ~~recent~~tax ~~accounting~~net ~~pronouncements~~operating ~~for~~loss ~~the~~carryforwards. ~~period~~See ~~ended~~Note ~~March~~6 ~~31,~~to ~~2011~~our Condensed Consolidated Financial Statements.

~~Critical~~- ~~accounting~~21 ~~policies~~-

ForTable 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 2010 Annual Report. There have been no changes in our critical accounting policies during the first three months of 2011.Contents

~~ITEM~~Effects ~~3. QUANTITATIVE~~of ~~AND~~Currency ~~QUALITATIVE~~Exchange ~~DISCLOSURE~~Rates ~~ABOUT MARKET RISK~~

WeOur operations and assets are ~~exposed~~located tooutside ~~market~~the ~~risk~~United States (primarily in Germany, ~~including~~Belgium ~~currency~~and ~~exchange~~Norway). ~~rates~~The majority of our sales are denominated in currencies other than the U.S. dollar, ~~interest~~principally ~~rates~~the euro and ~~raw~~other ~~material~~major ~~prices~~European currencies. ~~For~~ aA ~~discussion~~portion of ~~such~~our ~~market~~sales ~~risk~~are ~~items,~~denominated ~~refer~~in tothe ~~Part~~U.S. Idollar. Certain raw materials used worldwide, ~~Item~~primarily 7Atitanium-containing feedstocks, are purchased in U.S. -dollars, ~~“Quantitative~~while labor and ~~Qualitative~~other ~~Disclosure~~production ~~About~~costs ~~Market~~are ~~Risk”~~purchased primarily in ~~our~~local ~~2010~~currencies. ~~Annual~~Consequently, ~~Report~~the translated U. ~~There~~S. ~~have~~dollar ~~been~~value noof ~~material~~our ~~changes~~sales inand ~~these~~operating ~~market~~results ~~risks~~are ~~during~~subject to currency exchange rate fluctuations which may favorably or adversely impact reported earnings and may affect the ~~first~~comparability ~~three~~of ~~months~~period-to-period operating results. In addition to the impact of ~~2011~~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.

~~Our~~Overall, ~~operations~~we ~~are~~estimate ~~located~~that ~~outside~~fluctuations ~~the~~in ~~United States and our functional~~ currency isexchange ~~not~~rates ~~the~~had ~~U.S. dollar. As a result,~~ the ~~reported~~following ~~amounts~~effects ofon our ~~assets~~sales and ~~liabilities~~income from ~~related to our~~ operations, ~~and~~for ~~therefore~~the ~~our~~periods ~~consolidated net assets, will fluctuate based upon changes in currency exchange rates~~indicated.

ITEM 4. CONTROLS AND PROCEDURES


Impact of changes in currency exchange rates Three months ended June 30, 2010 vs. June 30, 2011
	Transaction gains/(losses) recognized							Translation gain/loss– impact of rate changes		Total currency impact 2010 vs. 2011
	2010			2011		Change				Total currency impact 2010 vs. 2011
	(In millions)
Impact on:
Net sales	$	—		$	—	$	—	$	33	$	33
Income from operations		(2	)		—		2		5		7

Impact of changes in currency exchange rates Six months ended June, 2010 vs. June 30, 2011
	Transaction gains/(losses) recognized							Translation gain/loss– impact of rate changes		Total currency impact 2010 vs. 2011
	2010			2011		Change				Total currency impact 2010 vs. 2011
	(In millions)
Impact on:
Net sales	$	—		$	—	$	—	$	28	$	28
Income from operations		—			—		—		—		—

~~Evaluation~~Outlook ~~of Disclosure Controls and Procedures~~

WeDuring ~~maintain~~the afirst ~~system~~six months of ~~disclosure~~2011 ~~controls~~we ~~and~~operated ~~procedures. The~~our ~~term~~production ~~"disclosure~~facilities ~~controls~~at ~~and~~near ~~procedures,"~~full aspractical ~~defined~~capacity bylevels, ~~Exchange~~consistent ~~Act~~with ~~Rule~~our ~~13a–15(e),~~operating ~~means~~rates ~~controls~~throughout ~~and~~2010. ~~other~~We ~~procedures~~currently ~~that~~expect ~~are designed~~ to ~~ensure~~continue ~~that information required~~ to operate beour ~~disclosed~~facilities inat ~~the~~near ~~reports~~full ~~that~~practical wecapacity ~~file~~levels orthroughout ~~submit to~~ the ~~SEC~~remainder ~~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~~2011. ~~Disclosure~~ ~~controls~~While ~~and~~we ~~procedures~~will ~~include,~~continue ~~without limitation, controls and procedures designed~~ to ~~ensure~~work ~~that~~on ~~information~~debottlenecking weprojects ~~are required to disclose~~ in ~~the~~2011 ~~reports we file or submit~~ to ~~the~~increase ~~SEC under the Exchange Act is accumulated and communicated to~~ our ~~management,~~production ~~including our principal executive officer and our principal financial officer~~capacity, orwe ~~persons~~believe ~~performing~~such ~~similar~~debottlenecking ~~functions,~~projects aswill produce ~~appropriate~~relatively tonominal ~~allow~~increases ~~timely~~in ~~decisions to be made regarding required disclosure. Each of Steven L. Watson,~~ our ~~Chief~~capacity ~~Executive Officer,~~ and ~~Gregory~~as M.a ~~Swalwell,~~result our ~~Vice~~overall ~~President,~~production ~~Finance~~volumes ~~and~~in ~~Chief Financial Officer, have evaluated the design and operating effectiveness of our disclosure controls and procedures as of March 31,~~ 2011~~. Based~~ ~~upon~~will ~~their~~not ~~evaluation,~~be ~~these~~increased ~~executive~~significantly ~~officers have concluded that our disclosure controls and procedures are effective~~ as ofcompared ~~March~~to ~~31, 2011~~2010.

- 22 -

InternalTable Controlof over Financial ReportingContents

WeThe ~~also~~overall ~~maintain~~strong ~~internal~~demand ~~control~~for ~~over~~TiO2 ~~financial~~we ~~reporting. The~~experienced ~~term~~in ~~“internal~~the ~~control~~first ~~over~~six ~~financial~~months ~~reporting,”~~of as2011 ~~defined~~is byexpected ~~Exchange~~to ~~Act~~continue through ~~Rule~~the ~~13a–15(f),~~remainder ~~means~~of athe ~~process~~year ~~designed~~and ~~by,~~inventory orlevels ~~under~~throughout the ~~supervision~~TiO2 ~~of,~~industry ~~our~~are ~~principal~~expected ~~executive~~to ~~and~~remain ~~principal~~at ~~financial~~very ~~officers,~~low orlevels. ~~persons~~As ~~performing~~a ~~similar functions~~result, ~~and~~in ~~effected~~2011 bywe expect our ~~board~~sales volumes of ~~directors,~~TiO2 ~~management~~to ~~and~~be ~~other~~marginally ~~personnel,~~lower tothan ~~provide~~our ~~reasonable~~production ~~assurance~~volume. ~~regarding~~Given our expectations for the ~~reliability~~level of ~~financial~~our ~~reporting~~increased ~~and~~production capacity ~~the~~in ~~preparation~~2011 ofdiscussed ~~financial~~above, ~~statements~~we ~~for~~similarly ~~external~~expect ~~purposes~~our sales volumes in ~~accordance~~2011 ~~with~~will ~~GAAP,~~not ~~and~~increase ~~includes~~significantly ~~those~~as ~~policies~~compared ~~and~~to ~~procedures~~2010. ~~that:~~

·We ~~Pertain~~implemented tosignificant increases in TiO2 selling prices throughout 2010 and the ~~maintenance~~first six months of ~~records~~2011. ~~that~~Our average TiO2 selling prices were 43% higher in ~~reasonable~~the ~~detail~~second ~~accurately~~quarter of 2011 as compared to the second quarter of 2010, and ~~fairly~~our ~~reflect~~average selling prices at the ~~transactions~~end of the second quarter of 2011 were 10% higher as compared to the end of the first quarter of 2011 and ~~dispositions~~21% higher as compared to the end of 2010. As a result, and based on expected continuation of strong demand levels and increases in our ~~assets~~manufacturing costs discussed below, we anticipate our average selling prices will continue to increase significantly during the remainder of 2011.

·During ~~Provide~~2011, ~~reasonable~~we ~~assurance~~expect ~~that~~to ~~transactions~~see ~~are~~significantly ~~recorded~~higher asfeedstock ~~necessary~~ore tocosts ~~permit~~driven ~~preparation~~by oftight ~~financial~~ore ~~statements~~supplies inand higher-than-historical ~~accordance~~increases ~~with~~in ~~GAAP~~petroleum coke, energy and ~~that~~freight costs which are being driven in part by escalating worldwide fuel prices. Overall, we currently expect our ~~receipts~~per ~~and~~metric ~~expenditures~~ton ~~are~~cost ~~being~~of ~~made~~TiO2 ~~only~~we produce will increase approximately 10% to 15% in ~~accordance~~2011 ~~with~~as ~~authorizations~~compared ofto 2010. ~~our~~Given ~~management~~that ~~and~~the ~~directors~~current conditions for the TiO2 industry discussed above are not expected to change over the year, ~~and~~we believe we should be able to recoup such higher costs through additional selling price increases.

·Overall, ~~Provide~~we ~~reasonable~~expect ~~assurance~~income ~~regarding~~from ~~prevention~~operations orwill ~~timely~~continue ~~detection~~to be significantly higher in the remainder of an2011 ~~unauthorized~~as ~~acquisition,~~compared ~~use~~to orthe ~~disposition~~same periods of ~~our~~2010, ~~assets~~as ~~that~~the ~~could~~favorable ~~have~~effect aof ~~material~~higher ~~effect~~selling onprices ~~our~~will more ~~Condensed~~than ~~Consolidated~~offset ~~Financial~~the ~~Statements~~impact of higher production costs.

AsOur ~~permitted~~expectations byas to the ~~SEC,~~future ~~our~~of ~~assessment~~the TiO2 industry are based upon a number of ~~internal~~factors beyond our control, ~~over~~including ~~financial~~worldwide ~~reporting~~growth ~~excludes~~of ~~(i)~~gross ~~internal~~domestic ~~control~~product, ~~over~~competition ~~financial~~in ~~reporting~~the marketplace, continued operation of ~~our~~competitors, ~~equity~~unexpected ~~method~~or ~~investees~~earlier ~~and~~than ~~(ii)~~expected ~~internal~~capacity ~~control~~additions ~~over~~or ~~the~~reductions ~~preparation~~and oftechnological ~~our~~advances. ~~financial~~If ~~statement~~actual developments ~~schedules~~differ ~~required~~from byour ~~Article~~expectations, 12our results of ~~Regulation~~operations ~~S-X~~could be unfavorably affected.

~~Changes~~LIQUIDITY inAND ~~Internal~~CAPITAL ~~Control over Financial Reporting~~RESOURCES

~~There~~Consolidated ~~has~~cash ~~been~~flows no change to our internal control over financial reporting during the quarter ended March 31, 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

-Operating 23activities -

~~Part~~Trends ~~II.~~in ~~OTHER~~cash ~~INFORMATION~~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.

~~Item~~Our cash provided by operating activities was $59.9 million in the first six months of 2011, compared to $1. ~~Legal~~9 million ~~Proceedings~~of cash provided by operating activities in the first six months of 2010. This $58.0 million increase was primarily due to the net effects of the following:

~~Refer~~• toHigher ~~Note~~income 9from ofoperations ~~the~~in ~~Condensed~~2011 ~~Consolidated Financial Statements and to our 2010 Annual Report for descriptions~~ of ~~certain legal proceedings~~$143.0 million;

~~Item~~• 1AHigher net cash used from relative changes in our inventories, receivables, payables and accruals of $59. ~~Risk~~5 ~~Factors~~million;

~~For~~• aHigher ~~discussion~~cash ofpaid ~~the~~for ~~risk~~income ~~factors~~taxes ~~related to our businesses, refer to Part I, Item 1A., “Risk Factors,”~~ in ~~our~~2011 ~~2010~~of ~~Annual report~~$20. ~~There~~4 ~~have~~million ~~been~~due ~~no material changes~~ to ~~such~~our ~~risk~~improved ~~factors~~earnings; ~~during the three months ended March 31, 2011.~~and

~~Item~~- ~~6. Exhibits~~23 -

31.1Table -of CertificationContents

31• Higher cash paid for interest in 2011 of $3.2 -million, ~~Certification~~primarily due 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.

32Changes in working capital were affected by accounts receivable and inventory changes.1 -As ~~Certification~~shown below:

-• 24Our -average days sales outstanding (“DSO”) increased from December 31, 2010 to June 30, 2011 primarily due to higher sales resulting from increases in our average selling prices implemented during the first six months of 2011; and

~~SIGNATURES~~• Our average days sales in inventory (“DSI”) decreased from December 31, 2010 to June 30, 2011.

~~Pursuant~~For tocomparative ~~the requirements of the Securities Exchange Act of 1934~~purposes, ~~the~~we ~~Registrant~~have ~~has~~also ~~duly~~provided ~~caused~~comparable ~~this~~prior ~~report~~years tonumbers bebelow: ~~signed on its behalf by the undersigned thereunto duly authorized.~~

KRONOS INTERNATIONAL, INC.


	December 31,	June 30,	December 31,	June 30,
	2009	2010	2010	2011
DSO	55 days	60 days	54 days	57 days
DSI	46 days	44 days	50 days	45 days

~~(Registrant)~~Investing activities

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

Our capital expenditures of $11.9 million and $23.1 million in the six months ended June 30, 2010 and 2011, respectively, were primarily for improvements and upgrades to existing facilities.

-Financing 25activities -

During the six months ended June 30, 2011, we:

•

redeemed 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, and

•

borrowed euro 80 million ($113.3 million when borrowed) under our European credit facility in order to fund the euro 80 million redemption of our Senior Secured Notes and subsequently repaid euro 45 million ($65.1 million when repaid).

Outstanding debt obligations

At June 30, 2011, our consolidated debt was comprised of:

•

euro 320 million principal amount of our 6.5% Senior Secured Notes ($455.8 million) due in 2013; and

•

euro 35 million ($49.9 million) under our revolving credit facility which matures in October 2013; and

•

approximately $6.0 million of other indebtedness.

Our revolving credit facility described above contains provisions which could result in the acceleration of indebtedness prior to their stated maturity for reasons other than defaults for failure to comply with applicable covenants. For example, certain credit agreements allow the lender to accelerate the maturity of the indebtedness upon a change of control (as defined in the agreement) of the borrower. In addition, certain credit agreements could result in the acceleration of all or a portion of the indebtedness following a sale of assets outside the ordinary course of

- 24 -

business. We are in compliance with all of our debt covenants at June 30, 2011. See Note 5 to our Consolidated Financial Statements.

Our assets 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 June 30, 2011, the maximum amount of dividends and other restricted payments that we could make (the “Restricted Payment Basket”) was approximately $140.5 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 June 30, 2011, we had aggregate cash, cash equivalents and restricted cash of $19.6 million, and the unused credit available under our existing revolving credit facility was approximately $64.2 million. Based upon our expectation for the TiO₂industry 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 June 30, 2012) and our long-term obligations (defined as the five-year period ending June 30, 2016, our time

- 25 -

period for long-term budgeting). If actual developments differ from our expectations, our liquidity could be adversely affected.

- 26 -

Capital expenditures

We currently estimate that we will invest approximately $65 million in capital expenditures for major improvements and upgrades to our existing facilities during 2011, including the $23.1 million we have spent through June 30, 2011.

Off-balance sheet financing

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

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

See Note 11 to the Condensed Consolidated Financial Statements.

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 2010 Annual Report. There have been no changes in our critical accounting policies during the first six months of 2011.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We are exposed to market risk, including currency exchange rates, interest rates and raw material prices. There have been no material changes in these market risks since we filed our 2010 annual report, and refer you to Part I, Item 7A. - “Quantitative and Qualitative Disclosure About Market Risk” in our 2010 Annual Report.

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 regulations of the SEC, 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

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Vice President, Finance and Chief Financial Officer, have evaluated the design and operating effectiveness of our disclosure controls and procedures as of June 30, 2011. Based upon their evaluation, these executive officers have concluded that our disclosure controls and procedures are effective as of June 30, 2011.

Internal Control over Financial Reporting

We also maintain internal control over financial reporting. The term “internal control over financial reporting,” as defined by regulations of the SEC, 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 June 30, 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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Part II. OTHER INFORMATION

Item 1.

Legal Proceedings

Refer to Note 9 of the Condensed Consolidated Financial Statements and to our 2010 Annual Report for descriptions of certain legal 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 2010 Annual report. There have been no material changes to such risk factors during the six months ended June 30, 2011.

Item 6.

Exhibits


31.1		Certification

31.2		Certification

32.1		Certification

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.DEF		XBRL Taxonomy Extension Definition Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase

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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: August 2, 2011		/s/ Gregory M. Swalwell
		Gregory M. Swalwell
		Vice President, Finance and Chief Financial Officer (Principal Financial Officer)

Date: August 2, 2011		/s/ Tim C. Hafer
		Tim C. Hafer
		Vice President and Controller (Principal Accounting Officer)

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Table of Contents

CommitmentsTable andof contingencies (Notes 6 and 9)Contents

Table of Contents

(InTable millions)of Contents

SeeTable accompanyingof Notes to Condensed Consolidated Financial Statements.Contents

NoteTable 4of – Accounts payable and accrued liabilities:Contents

ContributionsTable –of We expect our 2011 contributions for our pension plans to be approximately $22 million.Contents

TheTable following table summarizes the valuation of our financial instruments recorded on a fair value basis as of December 31, 2010 and March 31, 2011:Contents

Table of Contents

·Table TiO2of selling prices,Contents

·Table The extent of the dependence of certain of our businesses on certain market sectorsContents

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

·Table Ourof ability to renew or refinance credit facilitiesContents

ConsolidatedTable cashof flowsContents

ForTable comparativeof purposes, we have also provided comparable prior years numbers below:Contents

·Table euro 320 million principal amount of our 6.5% Senior Secured Notes ($450.5 million) due in 2013; andContents

RecentTable accountingof pronouncementsContents

InternalTable Controlof over Financial ReportingContents

31.1Table -of CertificationContents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Filing Compare · KRONOS INTERNATIONAL INC