UNITED STATES ~~SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549~~

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15~~(dMark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~March 3031, ~~2008~~ 2012

~~Commission~~OR ~~file number 1-32669~~

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

TRONOX LIMITED

(ACN 153 348 111)

TRONOX INCORPORATED

(Exact ~~Name~~name of ~~Registrant~~registrant as ~~Specified~~ specified in its ~~Charter)~~ charter)

Western Australia, Australia

98-1026700

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification Number)

Delaware

20-2868245

(State or Other Jurisdiction of

Incorporation or Organization)

(I.R.S. Employer

Identification Number)

~~One~~3301 ~~Leadership~~N.W. ~~Square,~~150th ~~Suite 300~~ Street

~~211 N. Robinson Ave,~~ Oklahoma City, Oklahoma ~~73102~~ 73134

(Address of principal executive offices)

Registrant’s telephone number, including area code: (405) 775-5000

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (~~405~~or for such shorter period that the Registrant was required to file such reports), and (2) ~~775-5000~~has been subject to such filing requirements for the past 90 days. Yes ¨ No x

Indicate by check mark whether the registrant ~~(1)~~ has ~~filed~~submitted electronically and posted on its corporate Website, if any, every Interactive ~~all~~Data ~~reports~~File required to be ~~filed~~submitted byand ~~Section 13~~posted orpursuant ~~15(d)~~to Rule 405 of ~~the~~ ~~Securities~~Regulation ~~Exchange~~S-T ~~Act~~(§232.405 of ~~1934~~this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to ~~file~~submit ~~such reports),~~ and ~~(2) has~~post ~~been subject to~~ such ~~filing requirement for the past~~ ~~90 days~~files). Yes þ x No o ¨

Indicate by check mark whether the ~~registrant~~Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o¨ Accelerated filer þ¨ Non-accelerated filer ox Smaller reporting company o¨

~~(Do not~~Indicate by check ifmark awhether ~~smaller~~the ~~reporting~~Registrant is a shell company) (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

~~Indicate~~As byof ~~check~~April ~~mark~~30, ~~whether~~2012, ~~the~~there ~~registrant~~were is15,093,378 ashares ~~shell~~of ~~company (as~~the ~~defined~~Registrant’s ~~in Rule~~Class ~~12b-2 of~~A ~~the~~common ~~Exchange Act)~~stock outstanding. ~~Yes o No þ~~

As of July 31, 2008, 18,791,874 shares of the company’s Class A common stock and 22,889,431 shares of the company’s Class B common stock were outstanding.

Tronox Incorporated

Form 10-Q

Table of Contents

			Page
PART I — FINANCIAL INFORMATION
	Item 1.	Financial Statements (Unaudited)
		Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2008 and 2007		1
		Condensed Consolidated Balance Sheets at June 30, 2008, and December 31, 2007		2
		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2008 and 2007		3
		Notes to Condensed Consolidated Financial Statements		4
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		31
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		42
	Item 4.	Controls and Procedures		43
PART II — OTHER INFORMATION
	Item 1.	Legal Proceedings		44
	Item 1A.	Risk Factors		46
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		47
	Item 3.	Defaults Upon Senior Securities		47
	Item 4.	Submission of Matters to a Vote of Security Holders		47
	Item 5.	Other Information		48
	Item 6.	Exhibits		48
Signatures				49
Executive Employment Agreement
Certification Pursuant to Section 302
Certification Pursuant to Section 302
Certification Pursuant to Section 906
Certification Pursuant to Section 906

~~PART I — FINANCIAL~~Table ~~INFORMATION~~ of Contents

Item 1. Financial Statements


	Page
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)		2
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		30
Item 3. Quantitative and Qualitative Disclosures About Market Risk		42
Item 4. Controls and Procedures		43

PART II – OTHER INFORMATION
Item 1. Legal Proceedings		43
Item 1A. Risk Factors		43
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		44
Item 3. Defaults Upon Senior Securities		44
Item 4. Mine Safety Disclosures		44
Item 5. Other Information		44
Item 6. Exhibits		44

Signatures		46

TRONOX INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share data) (Unaudited)

	Three Months						Six Months
	Ended June 30,						Ended June 30,
	2008			2007			2008			2007
Net sales	$	403.8		$	366.5		$	752.9		$	705.6
Cost of goods sold		403.6			336.5			727.2			638.4
Gross margin		0.2			30.0			25.7			67.2
Selling, general and administrative expenses		27.2			30.0			54.8			65.0
Gain on land sales		(12.4	)		—			(17.7	)		—
Impairment of goodwill		13.5			—			13.5			—
Restructuring charges		4.2			—			4.2			—
Provision for environmental remediation and restoration, net of reimbursements		0.5			1.5			0.5			1.7
		(32.8	)		(1.5	)		(29.6	)		0.5
Interest and debt expense		(12.7	)		(12.4	)		(25.0	)		(24.7	)
Other income, net		0.7			0.7			6.8			2.4
Loss from continuing operations before income taxes		(44.8	)		(13.2	)		(47.8	)		(21.8	)
Income tax benefit (provision)		14.9			(6.8	)		16.5			(7.2	)
Loss from continuing operations		(29.9	)		(20.0	)		(31.3	)		(29.0	)
Loss from discontinued operations, net of income tax benefit of nil, $0.8, nil and $1.0, respectively		(4.5	)		(1.2	)		(3.3	)		(1.6	)
Net loss	$	(34.4	)	$	(21.2	)	$	(34.6	)	$	(30.6	)
Loss per common share:
Basic —
Continuing operations	$	(0.73	)	$	(0.49	)	$	(0.76	)	$	(0.71	)
Discontinued operations		(0.11	)		(0.03	)		(0.08	)		(0.04	)
Net loss	$	(0.84	)	$	(0.52	)	$	(0.84	)	$	(0.75	)
Diluted —
Continuing operations	$	(0.73	)	$	(0.49	)	$	(0.76	)	$	(0.71	)
Discontinued operations		(0.11	)		(0.03	)		(0.08	)		(0.04	)
Net loss	$	(0.84	)	$	(0.52	)	$	(0.84	)	$	(0.75	)
Dividends declared per common share	$	—		$	—		$	—		$	0.05
Weighted average shares outstanding:
Basic		41.0			40.7			41.0			40.7
Diluted		41.0			40.7			41.0			40.7

The accompanying notes are an integral part of these financial statements.

~~TRONOX INCORPORATED CONDENSED~~PART ~~CONSOLIDATED~~I. ~~BALANCE~~FINANCIAL ~~SHEETS (In~~INFORMATION ~~millions, except share data) (Unaudited)~~

	June 30,			December 31,
	2008			2007
ASSETS
Current assets:
Cash and cash equivalents	$	23.3		$	21.0
Accounts receivable, net		289.9			290.5
Inventories, net		344.8			350.0
Prepaid and other assets		34.9			23.6
Income tax receivable		7.9			4.3
Deferred income taxes		2.7			3.7
Total current assets		703.5			693.1
Property, plant and equipment, net		830.9			848.9
Goodwill		—			12.7
Other long-term assets		176.4			168.7
Total assets	$	1,710.8		$	1,723.4
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	201.9		$	234.9
Accrued liabilities		187.2			197.7
Long-term debt due within one year		10.3			9.2
Income taxes payable		8.6			6.4
Long-term debt classified as current		529.8			—
Total current liabilities		937.8			448.2
Noncurrent liabilities:
Deferred income taxes		50.9			57.2
Environmental remediation and/or restoration		91.8			93.9
Long-term debt		—			475.6
Other		194.2			218.9
Total noncurrent liabilities		336.9			845.6
Commitments and contingencies (Notes 13 and 14)
Stockholders’ equity
Class A common stock, par value $0.01 — 100,000,000 shares authorized, 19,036,117 and 18,746,329 shares, respectively, issued and outstanding		0.2			0.2
Class B common stock, par value $0.01 — 100,000,000 shares authorized, 22,889,431 shares issued and outstanding		0.2			0.2
Capital in excess of par value		493.3			490.8
Accumulated deficit		(171.4	)		(136.8	)
Accumulated other comprehensive income		117.5			78.2
Treasury stock, at cost — 303,927 shares and 210,638 shares, respectively		(3.7	)		(3.0	)
Total stockholders’ equity		436.1			429.6
Total liabilities and stockholders’ equity	$	1,710.8		$	1,723.4

Item 1. Financial Statements (Unaudited)

The accompanying notes are an integral part of these financial statements.


	Page
Condensed Consolidated Balance Sheets as of March 31, 2012 (Successor) and December 31, 2011 (Successor)		3
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2012 (Successor), Two Months Ended March 31, 2011 (Successor) and One Month Ended January 31, 2011 (Predecessor)		4
Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2012 (Successor), Two Months Ended March 31, 2011 (Successor) and One Month Ended January 31, 2011 (Predecessor)		5
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2012 (Successor), Two Months Ended March 31, 2011 (Successor) and One Month Ended January 31, 2011 (Predecessor)		6
Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2012 (Successor), Two Months Ended March 31, 2011 (Successor) and One Month Ended January 31, 2011 (Predecessor)		7
Notes to Condensed Consolidated Financial Statements		8

On September 25, 2011, Tronox Incorporated entered into a definitive agreement (the “Transaction Agreement”) with Exxaro Resources Limited (“Exxaro”) and certain of its affiliated companies, to acquire 74% of its South African mineral sands operations, including its Namakwa and KZN Sands mines, separation facilities and slag furnaces, along with Exxaro’s 50% share of the Tiwest Joint Venture in Western Australia (together “Exxaro Mineral Sands”), which is referred to as the Transaction (the “Transaction”).

Pursuant to a Registration Statement on Form S-4 (File No. 333-178835) declared effective by the Securities and Exchange Commission (the “SEC”) on May 4, 2012 (the “Registration Statement”) for the initial public offering of shares of Tronox Limited’s Class A common stock, par value $0.01 per share (“New Common Stock”), Tronox Limited will issue 16,445,827 shares of its Class A common stock in a registered initial public offering (the “Equity Public Offering”). On May 30, 2012, the Company will hold a special meeting of the stockholders of Tronox Incorporated to adopt the Transaction Agreement for the purpose of approving the Transaction, and therefore become subject to the Constitution of Tronox Limited and applicable provisions of Australian law.

In the Transaction, the existing business of Tronox Incorporated will be combined with the Exxaro Mineral Sands business under a new Australian holding company, Tronox Limited. The Transaction will be effectuated in two primary steps. In the first step, Tronox Incorporated will become a subsidiary of Tronox Limited, with Tronox Incorporated stockholders receiving one Class A Share and $12.50 in cash for each share of Tronox Incorporated common stock, unless the holder elects to receive an exchangeable share of Tronox Limited (subject to proration), which will be exchangeable for one Class A Share of Tronox Limited and an amount in cash equal to $12.50 without interest (the “Exchangeable Shares”). The Exchangeable Shares will not be transferable until after December 31, 2012, but the Tronox Limited Class A Shares, including those delivered upon the exchange of an Exchangeable Share, will be transferable. In the second step, Tronox Limited will acquire Exxaro Mineral Sands in exchange for issuance of Class B Shares to Exxaro and one of its subsidiaries. Upon completion of the Transaction, assuming no Tronox Incorporated stockholders elect to receive Exchangeable Shares, former Tronox Incorporated stockholders and Exxaro will hold 15,238,612 Class A Shares and 9,950,856 Class B Shares, respectively, representing approximately 61.5% and 38.5%, respectively, of the voting power in Tronox Limited.

At March 31, 2012, Tronox Limited had no assets, no operations and only nominal capitalization. The historical condensed consolidated financial statements herein reflect the historical results of operations and financial position of Tronox Incorporated, for all periods presented.

TRONOX INCORPORATED ~~CONDENSED~~ ~~CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited)~~

	Six Months
	Ended
	June 30,
	2008			2007
Cash flows from operating activities
Net loss	$	(34.6	)	$	(30.6	)
Adjustments to reconcile net cash flows from operating activities —
Depreciation and amortization		57.5			55.8
Deferred income taxes		(15.1	)		(0.3	)
Impairment of goodwill		13.5			—
Gain on sales of land		(17.7	)		—
Provision for environmental remediation and restoration, net of reimbursement receivables		0.7			2.0
Other noncash items affecting net loss		9.8			15.9
Changes in assets and liabilities		(52.7	)		(28.7	)
Net cash flows from operating activities		(38.6	)		14.1
Cash flows from investing activities
Capital expenditures		(15.6	)		(33.8	)
Proceeds from sale of assets		17.9			—
Net cash flows from investing activities		2.3			(33.8	)
Cash flows from financing activities
Proceeds from borrowings		69.0			—
Repayment of debt		(13.8	)		(12.0	)
Debt costs		(2.1	)		(0.3	)
Stock option exercises		—			1.4
Dividends paid		(4.2	)		(4.1	)
Net cash flows from financing activities		48.9			(15.0	)
Effects of exchange rate changes on cash and cash equivalents		(10.3	)		(2.2	)
Net change in cash and cash equivalents		2.3			(36.9	)
Cash and cash equivalents at beginning of period		21.0			76.6
Cash and cash equivalents at end of period	$	23.3		$	39.7

CONDENSED CONSOLIDATED BALANCE SHEETS

~~The~~(Unaudited) ~~accompanying notes are an integral part of these financial statements.~~

(Millions of dollars, except share and per share data)


	Successor
	March 31, 2012			December 31, 2011
ASSETS
Current Assets
Cash and cash equivalents	$	222.7		$	154.0
Accounts receivable:
Third party, net of allowance for doubtful accounts of $0.7 and $0.4		348.4			270.9
Related party		1.7			6.9
Inventories		404.4			311.2
Prepaid and other assets		18.0			21.7
Deferred income taxes		4.3			4.3

Total Current Assets		999.5			769.0
Property, Plant and Equipment, Net		558.8			554.5
Intangible Assets, Net		307.4			313.3
Other Long-Term Assets		37.3			20.6

Total Assets	$	1,903.0		$	1,657.4

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable:
Third party	$	134.3		$	126.9
Related party		72.6			74.8
Accrued liabilities		41.5			45.7
Long-term debt due within one year		4.4			5.9
Income taxes payable		42.6			27.6

Total Current Liabilities		295.4			280.9

Noncurrent Liabilities
Long-term debt		551.9			421.4
Pension and postretirement healthcare benefits		142.2			142.7
Deferred income taxes		18.4			19.1
Other		47.1			41.0

Total Noncurrent Liabilities		759.6			624.2

Contingencies and Commitments (Note 13)
Stockholders’ Equity
Common stock, par value $0.01 — 100,000,000 shares authorized, 15,420,567 shares issued and 15,088,815 shares outstanding at March 31, 2012 and 100,000,000 shares authorized, 15,406,803 shares issued and 15,076,691 shares outstanding at December 31, 2011		0.1			0.1
Capital in excess of par value		582.6			579.2
Retained earnings		327.8			241.5
Accumulated other comprehensive loss		(50.3	)		(57.0	)
Treasury stock, at cost — 98,303 shares and 94,513 shares at March 31, 2012 and December 31, 2011, respectively		(12.2	)		(11.5	)

Total Stockholders’ Equity		848.0			752.3

Total Liabilities and Stockholders’ Equity	$	1,903.0		$	1,657.4

See notes to condensed consolidated financial statements.

TRONOX INCORPORATED

~~NOTES TO~~ CONDENSED CONSOLIDATED ~~FINANCIAL~~ STATEMENTS OF OPERATIONS

1.(Unaudited) ~~The Company~~

~~Tronox Incorporated~~ (~~the~~Millions ~~“company”), a Delaware Corporation was formed on May 17, 2005, in preparation for the contribution and transfer by Kerr-McGee Corporation (“Kerr-McGee”)~~ of ~~certain entities~~dollars, ~~including~~except ~~those comprising~~share substantially all of its chemical business (the “Contribution”). The company has one reportable segment representing the company’s pigment business. The pigment segment primarily produces and ~~markets~~per ~~titanium~~share ~~dioxide pigment (“TiO2”~~data) ~~and~~ has production facilities in the United States, Australia, Germany and The Netherlands. The pigment segment also includes heavy minerals production operated through our joint venture. The heavy minerals production is integrated with our Australian pigment plant, but also has third-party sales of minerals not utilized by the company’s pigment operations. Electrolytic and other chemical products (which does not constitute a reportable segment) represents the company’s other operations which are comprised of electrolytic manufacturing and marketing operations, all of which are located in the United States. The company has in the past operated or held businesses or properties, or currently holds properties, that do not relate to the current chemical business.

The terms “Tronox” or “the company” are used interchangeably in these condensed consolidated financial statements to refer to the consolidated group or to one or more of the companies that are part of the consolidated group.


	Successor						Predecessor
	Three Months			Two Months			One Month
	Ended March 31,			Ended March 31,			Ended January 31,
	2012			2011			2011
Net Sales	$	433.6		$	267.1		$	107.6
Cost of goods sold		(276.3	)		(229.8	)		(82.3	)

Gross Margin		157.3			37.3			25.3
Selling, general and administrative expenses		(44.3	)		(19.5	)		(5.4	)

Income from Operations		113.0			17.8			19.9
Interest and debt expense		(7.9	)		(5.3	)		(2.9	)
Other income (expense)		(1.4	)		1.0			1.6
Reorganization income		—			—			613.6

Income from Continuing Operations before Income Taxes		103.7			13.5			632.2
Income tax provision		(17.4	)		(3.3	)		(0.7	)

Income from Continuing Operations		86.3			10.2			631.5
Loss from discontinued operations, net of income tax benefit of nil, nil and nil		—			—			(0.2	)

Net Income	$	86.3		$	10.2		$	631.3

Income (Loss) per Share, Basic and Diluted:
Basic —
Continuing operations	$	5.72		$	0.68		$	15.29
Discontinued operations		—			—			(0.01	)

Net income per share	$	5.72		$	0.68		$	15.28

Diluted —
Continuing operations	$	5.48		$	0.65		$	15.25
Discontinued operations		—			—			—

Net income per share	$	5.48		$	0.65		$	15.25

Weighted Average Shares Outstanding (in thousands):
Basic		15,078			14,924			41,311
Diluted		15,733			15,793			41,399

~~Formation~~ See notes to condensed consolidated financial statements.

The Contribution was completed in November 2005, along with the recapitalization of the company, whereby common stock held by Kerr-McGee converted into approximately 22.9 million shares of Class B common stock. An initial public offering (“IPO”) of Class A common stock was completed on November 28, 2005. On March 8, 2006, Kerr-McGee’s Board of Directors declared a dividend of the company’s Class B common stock owned by Kerr-McGee to its stockholders (the “Distribution”). The Distribution was completed on March 30, 2006, resulting in Kerr-McGee having no ownership or voting interest in the company.

2. Basis of Presentation and Accounting Policies

These statements should be read in conjunction with the audited consolidated and combined financial statements and the related notes which are included in the company’s annual report on Form 10-K for the year ended December 31, 2007. The interim condensed consolidated financial information furnished herein is unaudited. The information reflects all adjustments (which include normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the periods included in the report. These adjustments also include those made to record an impairment of goodwill (see Note 4) and to classify debt as current (see Note 7).

Certain prior-year amounts have been reclassified to conform to the current-year presentation. Railcar expenses previously accounted for as selling, general and administrative expenses were subsequently reclassified as cost of goods sold in the company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007. In the current-year presentation, the three month period ended June 30, 2007, is revised to reflect reclassification of amounts attributable only to that period. Therefore, the current-year presentation reflects a decrease in cost of goods sold and a corresponding increase in selling, general and administrative expenses of $0.6 million for the three month period ended June 30, 2007. The reclassification had no impact on income from continuing operations or net income.

In July 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48 (“FIN No. 48”), “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109, Accounting for Income Taxes” (“SFAS No. 109”). The company adopted FIN No. 48 as of January 1, 2007. FIN No. 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements. FIN No. 48 also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim

TRONOX INCORPORATED

~~NOTES TO~~ CONDENSED CONSOLIDATED ~~FINANCIAL~~ STATEMENTS ~~— (Continued)~~ COMPREHENSIVE INCOME

~~periods, disclosure and transition. The guidance required application through recognition of a cumulative effect adjustment to opening retained earnings in the period of adoption~~ (~~2007~~Unaudited), with no charge to current earnings for prior periods. As a result of the adoption of FIN No. 48, the company recognized a $9.3 million charge to the January 1, 2007, balance of retained earnings. The total amount of unrecognized tax positions at January 1, 2007, was $46.5 million. Adoption of FIN 48 did not have a material impact on the company’s loss from continuing operations or net loss for the three months and six months ended June 30, 2007.

~~In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”~~ (~~“SFAS No. 157”).~~Millions SFAS No. 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. This statement was effective for financial statements issued for fiscal years beginning after November 15, 2007. In February 2008, the FASB issued Staff Position (“FSP”) FAS 157-2 “Effective Date of FASB Statement No. 157” which amends SFAS No. 157 to defer its effective date to fiscal years beginning after November 15, 2008, and for interim periods within such years. The delayed effective date applies to all assets and liabilities except financial assets or financial liabilities (as defineddollars). The company has adopted the provisions of SFAS No. 157 for its financial assets and liabilities effective January 2008 with no material impact on its condensed consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — including an Amendment of FASB Statement No. 115, Accounting for Certain Investments in Debt and Equity Securities” (“SFAS No. 159”). The company did not elect to adopt the provisions of this statement.


	Successor				Predecessor
	Three Months Ended March 31,		Two Months Ended March 31,		One Month Ended January 31,
	2012		2011		2011
Net Income	$	86.3	$	10.2	$	631.3

Foreign currency translation adjustments		6.7		1.3		0.9
Retirement and postretirement plans:
Amortization of actuarial gain, net of taxes of nil, nil, and nil		—		—		0.5
Amortization of prior service cost, net of taxes of nil, nil, and nil		—		—		(1.1	)

Other comprehensive income		6.7		1.3		0.3

Total comprehensive income	$	93.0	$	11.5	$	631.6

InSee ~~December~~notes ~~2007, the FASB issued SFAS No. 141 (Revised 2007), “Business Combinations” which will change the accounting for business combinations such that an acquiring entity will be required~~ to ~~recognize~~condensed ~~all~~consolidated ~~the~~financial ~~assets acquired and liabilities assumed in a transaction, at the acquisition date fair value with limited exceptions~~statements. ~~SFAS No. 141~~ also changes the accounting treatment for certain specific items such as expensing acquisition costs versus capitalizing them, recording in process research and development as an indefinite lived intangible asset and expensing restructuring costs after the acquisition date. SFAS No. 141 also includes additional disclosure requirements. The statement applies prospectively to business combinations for which the acquisition date is on or after January 1, 2009.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an Amendment of ARB No. 51” (“SFAS No. 160”). SFAS No. 160 establishes accounting and reporting standards pertaining to ownership interests in subsidiaries held by parties other than the parent, the amount of net income attributable to the parent and to the noncontrolling interest, changes in a parent’s ownership interest, and the valuation of any retained noncontrolling equity investment when a subsidiary is deconsolidated. This statement also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS No. 160 is effective for fiscal years beginning on or after December 15, 2008. The company does not expect the provisions of SFAS No. 160 to have a material impact on its condensed consolidated financial statements.

TRONOX INCORPORATED

~~NOTES TO~~ CONDENSED CONSOLIDATED ~~FINANCIAL~~ STATEMENTS ~~— (Continued)~~ OF CASH FLOWS

3.(Unaudited) ~~Statement of Operations Data~~

~~The~~(Millions ~~components~~ of ~~other~~dollars) ~~income, net are as follows:~~

	Three Months						Six Months
	Successor						Predecessor
	Ended						Ended
	Three Months Ended March 31,			Two Months Ended March 31,			One MonthEndedJanuary 31,
	June 30,						June 30,
	2012			2011			2011
	2008			2007			2008			2007
Cash Flows from Operating Activities
	(In millions)
Net income	$	86.3		$	10.2		$	631.3
Net foreign currency transaction gain (loss)	$	0.8		$	(1.2	)	$	7.8		$	(1.5	)
Adjustments to reconcile net income to net cash used in operating activities:
Equity in net earnings of equity method investees		(0.1	)		1.3			(0.4	)		2.0
Depreciation, depletion and amortization		22.1			13.1			4.1
Loss on sale of accounts receivable (1)		(0.7	)		—			(1.5	)		—
Deferred income taxes		0.1			(1.6	)		0.8
Interest income		0.1			0.5			0.3			1.3
Amortization of debt issuance costs		0.8			0.1			0.3
Other income, net		0.6			0.1			0.6			0.6
Pension and postretirement healthcare benefit (income) expense, net		1.3			0.8			(0.4	)
Total	$	0.7		$	0.7		$	6.8		$	2.4
Stock compensation expense		6.7			2.9			—
Other noncash items affecting net income		2.3			3.4			(0.2	)
Reorganization items:
Noncash reorganization items		—			—			(636.6	)
Environmental settlement funding		—			—			(270.0	)
Claims paid with cash		—			—			(18.6	)
Tort settlement funding		—			—			(16.5	)
Professional and legal fees		—			—			(12.0	)
Changes in assets and liabilities:
(Increase) decrease in trade accounts receivable		(77.5	)		(59.5	)		(8.1	)
(Increase) decrease in related parties accounts receivable		5.2			(1.6	)		(2.1	)
(Increase) decrease in inventories		(93.2	)		33.5			(15.3	)
(Increase) decrease in prepaids and other assets		(0.4	)		(0.3	)		35.4
Increase (decrease) in accounts payable and accrued liabilities		7.6			(58.5	)		23.1
Increase (decrease) in related parties accounts payable		(2.2	)		17.5			0.5
Increase (decrease) in taxes payable		15.3			4.3			0.2
Other, net		(0.2	)		31.5			1.0
Cash used in operating activities		(25.8	)		(4.2	)		(283.1	)
Cash Flows from Investing Activities:
Capital expenditures		(20.7	)		(8.3	)		(5.5	)
Proceeds from sale of assets		—			—			—
Cash used in investing activities		(20.7	)		(8.3	)		(5.5	)
Cash Flows from Financing Activities
Reductions of debt		(421.1	)		(1.1	)		—
Proceeds from borrowings		550.0			14.0			25.0
Debt issuance costs and commitment fees		(19.0	)		—			(2.4	)
Other equity, net		0.3			—			—
Proceeds from rights offering		—			—			185.0
Cash provided by financing activities		110.2			12.9			207.6
Effects of Exchange Rate Changes on Cash and Cash Equivalents		5.0			0.4			0.3
Net Increase (Decrease) in Cash and Cash Equivalents		68.7			0.8			(80.7	)
Cash and Cash Equivalents at Beginning of Period		154.0			61.0			141.7
Cash and Cash Equivalents at End of Period	$	222.7		$	61.8		$	61.0

~~(1) Includes interest income accreted on collections of securitized receivables.~~ See ~~discussion~~notes ofto ~~accounts~~condensed ~~receivable~~consolidated ~~program~~financial ~~in Note 4~~statements.

The following tables set forth the computation of basic and diluted earnings per share from continuing operations for the periods indicated.

	Three Months								Three Months
	Ended								Ended
	June 30, 2008								June 30, 2007
	Loss								Loss
	from					Per-			from					Per-
	Continuing					Share			Continuing					Share
	Operations			Shares		Loss			Operations			Shares		Loss
	(In millions, except per share amounts)
Basic earnings per share	$	(29.9	)		41.0	$	(0.73	)	$	(20.0	)		40.7	$	(0.49	)
Effect of dilutive securities:
Restricted stock and stock options		—			—		—			—			—		—
Diluted earnings per share	$	(29.9	)		41.0	$	(0.73	)	$	(20.0	)		40.7	$	(0.49	)

	Six Months								Six Months
	Ended								Ended
	June 30, 2008								June 30, 2007
	Loss								Loss
	from					Per-			from					Per-
	Continuing					Share			Continuing					Share
	Operations			Shares		Loss			Operations			Shares		Loss
	(In millions, except per share amounts)
Basic earnings per share	$	(31.3	)		41.0	$	(0.76	)	$	(29.0	)		40.7	$	(0.71	)
Effect of dilutive securities:
Restricted stock and stock options		—			—		—			—			—		—
Diluted earnings per share	$	(31.3	)		41.0	$	(0.76	)	$	(29.0	)		40.7	$	(0.71	)

Approximately 1,578,000 stock options outstanding with an average exercise price of $11.53 at June 30, 2008, were “out of the money,” thus, antidilutive. Since the company incurred a loss from continuing operations for the three months and six months ended June 30, 2008, no dilution of the loss per share would result from an additional 2.2 million potentially dilutive stock options and restrictive shares outstanding at June 30, 2008. Approximately 786,000 stock options outstanding with an average exercise price of $14.69 at June 30, 2007, were “out of the

TRONOX INCORPORATED

~~NOTES TO~~ CONDENSED CONSOLIDATED ~~FINANCIAL~~ STATEMENTS ~~— (Continued)~~ OF STOCKHOLDERS’ EQUITY

~~money,”~~(Unaudited) thus, antidilutive. Since the company incurred a loss from continuing operations for the three months and six months ended June 30, 2007, no dilution of the loss per share would result from an additional 1.6 million potentially dilutive stock options and restrictive shares outstanding at June 30, 2007.

4.(Millions ~~Balance~~of ~~Sheet~~dollars) ~~Data~~

Accounts receivable, net of allowance for doubtful accounts, consist of the following:


	Common Stock		Capital in Excess of par Value		Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total Stockholders’ Equity
Successor:
Three Months Ended March 31, 2012
Balance at December 31, 2011	$	0.1	$	579.2	$	241.5	$	(57.0	)	$	(11.5	)	$	752.3
Net income		—		—		86.3		—			—			86.3
Other comprehensive income		—		—		—		6.7			—			6.7
Warrants exercised		—		0.1		—		—			—			0.1
Stock-based compensation		—		3.3		—					(0.7	)		2.6

Balance at March 31, 2012	$	0.1	$	582.6	$	327.8	$	(50.3	)	$	(12.2	)	$	848.0

	June 30,			December 31,
	CommonStock			Class ACommonStock			Class BCommonStock			Capital inExcess ofpar Value			RetainedEarnings			AccumulatedOtherComprehensiveIncome (Loss)			TreasuryStock			TotalStockholders’Equity
	2008			2007
Predecessor:
	(In millions)
One Month Ended January 31, 2011
Accounts receivable — trade (1)	$	259.8		$	238.7
Balance at December 31, 2010	$	—		$	0.2		$	0.2		$	496.2		$	(1,128.2	)	$	8.8		$	(7.2	)	$	(630.0	)
Receivable from Kerr-McGee		17.6			17.9
Net income		—			—			—			—			631.3			—			—			631.3
Receivable from the U.S. Department of Energy		—			11.0
Other comprehensive income		—			—			—			—			—			0.3			—			0.3
Receivable from insurers		5.4			7.3
Stock-based compensation		—			—			—			0.1			—			—			—			0.1
Other		19.0			29.5
Fresh-start reporting adjustments:
Accounts receivable, gross		301.8			304.4
Elimination of predecessor common stock, capital in excess of par value, and accumulated deficit		—			(0.2	)		(0.2	)		(496.3	)		496.9			(9.1	)		7.2			(1.7	)
Allowance for doubtful accounts		(11.9	)		(13.9	)
Issuance of new common stock		0.1			—			—			564.1			—			—			—			564.2
Accounts receivable, net	$	289.9		$	290.5
Balance at January 31, 2011	$	0.1		$	—		$	—		$	564.1		$	—		$	—		$	—		$	564.2
Successor:
Two Months Ended March 31, 2011
Balance at February 1, 2011	$	0.1		$	—		$	—		$	564.1		$	—		$	—		$	—		$	564.2
Net income		—			—			—			—			10.2			—			—			10.2
Other comprehensive income		—			—			—			—			—			1.3			—			1.3
Shares withheld for claims		—			—			—			—			—			—			(6.9	)		(6.9	)
Warrants exercised		—			—			—			0.7			—			—			—			0.7
Stock-based compensation		—			—			—			3.0			—			—			(1.0	)		2.0
Balance at March 31, 2011	$	0.1		$	—		$	—		$	567.8		$	10.2		$	1.3		$	(7.9	)	$	571.5

~~(1)~~See ~~Includes~~notes ~~$48.9 million and $39.5 million in subordinated retained interest at June 30, 2008 and December 31, 2007, respectively, related~~ to ~~the~~condensed ~~accounts~~consolidated ~~receivable~~financial ~~securitization program discussed below~~statements.

The company executed an accounts receivable securitization program (“the Program”) in September 2007 with an initial term of one year. Financing under the program could be extended for an additional two years in the form of a securitization or a secured borrowing as determined by the sponsoring institution, ABN AMRO Bank N.V. (“ABN”). Under the Program, all receivables owned by the company’s U.S. subsidiaries (“transferor subsidiaries”) are sold on a recurring basis by the company to Tronox Funding LLC (“Funding”), a wholly owned special purpose subsidiary of the company. Funding, in turn, sells to either Amsterdam Funding Corporation (“AFC”), an asset-backed multi-seller commercial paper conduit sponsored by ABN AMRO Bank N.V. (“ABN”), or to ABN directly (both AFC and ABN collectively referred to as “Amsterdam”) an undivided percentage ownership interest in the pool of receivables Funding acquires from the transferor subsidiaries. At June 30, 2008, the balance in receivables sold by the transferor subsidiaries to Funding totaled $109.3 million, of which $59.7 million was sold to Amsterdam in the form of the purchased participation interest, resulting in a subordinated retained interest held by Funding with a fair value of $48.9 million.

The receivables sale agreement contains cross default provisions with the company’s debt agreements. In June 2008, the company obtained a waiver under the agreement which, due to a default under the company’s Credit Agreement at May 31, 2008, would have otherwise prevented Funding from purchasing additional receivables from the transferor subsidiaries. In July 2008, the receivables sale agreement was amended resulting in the elimination of the two-year extension option described above and reducing the program size to $75.0 million. Extension of the program beyond the expiration of the initial term in September 2008 will be allowed only upon consent of ABN. In the event that ABN elects not to extend financing beyond the initial term, the program will enter into a termination phase. During this phase, all collections on receivables owned by Funding will be remitted to ABN up to the outstanding amount of ABN’s purchased participating interest along with any outstanding fees. If the program is not extended, there would be no further sales of receivables under this program and cash flows from operations would decrease compared to periods where the current program is ongoing.

For the three month and six month periods ended June 30, 2008, the company incurred losses in connection with the sale of receivables under the Program of $1.4 million and $3.1 million, respectively, along with interest income accreted on the collections of receivables of $0.7 million and $1.6 million, respectively. The net of both

TRONOX INCORPORATED

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~— (Continued)~~

~~items~~(Unaudited) for the three month and six month periods ended June 30, 2008, was $0.7 million and $1.5 million, respectively, representing the net expense associated with the company’s securitization program for the applicable periods which is included in other income, net, in the Condensed Consolidated Statements of Operations. There were no corresponding charges in the prior year as the program had not been implemented during that period.

~~Inventories~~(Millions of dollars, ~~net~~except ofshare ~~allowance~~and ~~for~~per ~~obsolete~~share ~~inventories~~data ~~and supplies,~~or ~~consist~~unless ofotherwise ~~the~~noted) ~~following:~~

	June 30,		December 31,
	2008		2007
	(In millions)
Raw materials	$	64.1	$	69.6
Work-in-process		14.9		12.8
Finished goods (1)		193.2		200.6
Materials and supplies, net		72.6		67.0
Total inventories	$	344.8	$	350.0

1. The Company

Tronox Incorporated, a Delaware Corporation, and its subsidiaries (1collectively referred to as “Tronox” or the “Company”) ~~Includes~~is ~~$28.7~~one ~~million~~of the leading producers and ~~$20.8~~marketers ~~million~~of titanium dioxide (“TiO2”) pigment, which is used in ~~inventory~~consumer products such as paint, plastic and certain specialty products. The Company was formed on ~~consignment~~May 17, to2005, ~~others~~in atpreparation ~~June~~for 30the contribution (the “Contribution”) and transfer by Kerr-McGee Corporation (“Kerr-McGee” or “KM”) of certain entities, ~~2008~~including those comprising substantially all of its chemical business. The Company has one reportable segment representing its pigment business. The pigment segment primarily produces and markets TiO2, and ~~December~~has 31production facilities in the United States, ~~2007~~Australia and the Netherlands. The pigment segment also includes heavy minerals production operated through the Company’s joint venture in Australia (the “Tiwest Joint Venture”). The heavy minerals production is integrated with the Company’s Australian pigment plant, ~~respectively~~but also has third-party sales of minerals not utilized by its pigment operations. Electrolytic and other chemical products, which does not constitute a reportable segment, represents the Company’s other operations, which are comprised of electrolytic manufacturing and marketing operations, all of which are located in the United States. Electrolytic and other chemical products is reported in “Other Activities” when reconciling segmented information presented in Note 22.

~~Property~~On January 12, ~~plant~~2009 (the “Petition Date”), Tronox Incorporated and ~~equipment~~certain of its subsidiaries (collectively, ~~net~~the “Debtors”) filed voluntary petitions in the U.S. Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) seeking reorganization relief under the provisions of Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”). The Debtors’ Chapter 11 cases were consolidated for the purpose of joint administration. On November 30, ~~consist~~2010 (the “Confirmation Date”), the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Debtors’ First Amended Joint Plan of Reorganization pursuant to Chapter 11 of the ~~following:~~Bankruptcy Code, dated November 5, 2010 (as amended and confirmed, the “Plan”).

	June 30,			December 31,
	2008			2007
	(In millions)
Land	$	84.1		$	83.8
Buildings		176.3			167.3
Machinery and equipment		1,856.2			1,798.6
Construction-in-progress		28.7			38.3
Other		89.8			88.0
Property, plant and equipment, gross		2,235.1			2,176.0
Less accumulated depreciation		(1,404.2	)		(1,327.1	)
Property, plant and equipment, net	$	830.9		$	848.9

Material conditions to the Plan were resolved during the period from the Confirmation Date until January 26, 2011, and subsequently on February 14, 2011 (the “Effective Date”), the Debtors emerged from bankruptcy and continued operations as reorganized Tronox Incorporated. See Note 4 for additional information on the Company’s emergence from bankruptcy.

The Company applied fresh-start accounting under Accounting ~~Other~~Standards ~~long~~Codification (“ASC”) 852, Reorganizations (“ASC 852”) as of January 31, 2011. The Company evaluated the activity between January 26, 2011 and January 31, 2011 and, based upon the immateriality of such activity, concluded that the use of January 31, 2011 to reflect the fresh-~~term~~start ~~assets~~accounting ~~consist~~adjustments was appropriate for financial reporting purposes. Accordingly, the financial information set forth in this report, unless otherwise expressly set forth or as the context otherwise indicates, reflects the consolidated results of operations and financial condition of Tronox and its subsidiaries on a fresh-start basis for the ~~following:~~period beginning February 1, 2011 (“Successor”), and of Tronox and its subsidiaries on a historical basis for the period through January 31, 2011 (“Predecessor”).

	June 30,		December 31,
	2008		2007
	(In millions)
Receivable from the U.S. Department of Energy	$	19.2	$	16.1
Investments in equity method investees		20.9		21.3
Receivables from insurers		20.9		15.3
Debt issuance costs, net		9.5		8.4
Prepaid pension cost		45.6		46.5
Intangible asset — proprietary technology (1)		57.3		55.2
Other		3.0		5.9
Total other long-term assets	$	176.4	$	168.7

Acquisition of Exxaro Mineral Sands Operations

On September 25, 2011, the Company entered into a definitive agreement (1)the ~~Associated~~“Transaction Agreement”) with ~~the~~Exxaro ~~company~~Resources Limited (“Exxaro”) and certain of its affiliated companies, to acquire 74% of its South African mineral sands operations, including its Namakwa and KZN Sands mines, separation facilities and slag furnaces, along with Exxaro’s ~~reportable~~50% ~~pigment~~share ~~segment~~of the Tiwest Joint Venture in Western Australia (together “Exxaro Mineral Sands”), which is referred to as the Transaction (the “Transaction”).

and $12.50 in cash for each share of Tronox Incorporated common stock, unless the holder elects to receive an exchangeable share of Tronox Limited (subject to proration), which will be ~~TRONOX~~exchangeable for one Class A Share of Tronox Limited and an amount in cash equal to $12.50 without interest (the “Exchangeable Shares”). The Exchangeable Shares will not be transferable until after December 31, 2012, but the ~~INCORPORATED~~Tronox Limited Class A Shares, including those delivered upon the exchange of an Exchangeable Share, will be transferable. In the second step, Tronox Limited will acquire Exxaro Mineral Sands in exchange for issuance of Class B Shares to Exxaro and one of its subsidiaries. Upon completion of the Transaction, assuming no Tronox Incorporated stockholders elect to receive Exchangeable Shares, former Tronox Incorporated stockholders and Exxaro will hold 15,238,612 Class A Shares and 9,950,856 Class B Shares, respectively, representing approximately 61.5% and 38.5%, respectively, of the voting power in Tronox Limited.

As of the closing of the Transaction, Tronox Limited will be the world’s third-largest producer and marketer of TiO2 manufactured via chloride technology, as well as was the third-largest titanium feedstock producer and the second largest zircon producer. Tronox Limited will have global operations in the Americas, Europe, South Africa and the Asia-Pacific region. Its assured feedstock supply and global presence, combined with a focus on providing customers with world-class products, ~~NOTES TO~~end-use market expertise and strong technical support, will allow it to continue to sell products to a diverse portfolio of customers in various regions of the world, with most of whom it has well-established relationships. Tronox Limited will ~~CONDENSED~~operate ~~CONSOLIDATED~~three ~~FINANCIAL~~TiO2 facilities at the following locations: ~~STATEMENTS — (Continued)~~Hamilton, Mississippi, Botlek, The Netherlands and Kwinana, Australia representing 465,000 tonnes of annual TiO2 production capacity. Additionally, Tronox Limited will operate three separate mining operations: KZN Sands located in South Africa, Namakwa Sands located in South Africa and Tiwest located in Australia, which have a combined production capacity of 723,000 tonnes of titanium feedstock and 265,000 tonnes of zircon.

~~Accrued~~Tiwest ~~liabilities~~Joint ~~consist of the following:~~Venture

	June 30,				December 31,
	Nature of Business		2011%				2010%			2009%
	2008				2007
Tiwest Joint Venture	Titanium minerals, and pigment production			50	%			50	%		50	%
	(In millions)
Employee-related costs and benefits	$	38.7			$	37.6
Reserves for environmental remediation and restoration — current portion		92.0				94.9
Sales rebates		17.6				23.3
Other		38.9				41.9
Total accrued liabilities	$	187.2			$	197.7

The Company operates the Tiwest Joint Venture with Exxaro Australia Sands Pty Ltd., ~~Other~~which ~~long-term~~is ~~liabilities~~a ~~consist~~subsidiary of Exxaro. The Tiwest Joint Venture operates a chloride process TiO2 plant located in Kwinana, Western Australia (the ~~following:~~“Kwinana Facility”), a mining operation in Cooljarloo, Western Australia, and a mineral separation plant and a synthetic rutile processing facility, both in Chandala, Western Australia.

	June 30,		December 31,
	2008		2007
	(In millions)
Reserve for uncertain tax positions	$	77.8	$	69.7
Pension and postretirement obligations		47.9		77.6
Asset retirement obligations (1)		35.1		32.9
Reserve for workers’ compensation and general liability claims		15.8		16.6
Other (1)		17.6		22.1
Total other long-term liabilities	$	194.2	$	218.9

The Tiwest Joint Venture is a contractual relationship between Tronox and Exxaro whereby each party holds an undivided interest in each asset of the joint venture, and are proportionally liable for each of the joint venture’s liabilities. The Tiwest Joint Venture is not a separate legal entity and does not enter into any transactions. Transactions are entered into by the joint venture partners who have the right to sell their own product, collect their proportional share of the revenues and absorb their share of costs. As such, the Company does not account for the Tiwest Joint Venture under the equity method.

~~(1)~~The ~~Includes~~Company ~~reclassification~~accounts for its share of the ~~company~~Tiwest Joint Venture’s assets ~~long~~that ~~term~~are ~~obligation~~jointly tocontrolled ~~rehabilitate~~and ~~the~~its ~~mine~~share ~~used~~of liabilities for which it is jointly responsible on a proportionate gross basis in its ~~Australian~~Condensed ~~operations~~Consolidated Balance Sheet. Additionally, the Company accounts for the revenues generated from ~~“Other”~~its share toof ~~“Asset~~the ~~retirement~~products ~~obligations~~sold and its share of the expenses of the joint venture on a gross basis in its Condensed Consolidated Statements of Operations.”

Through a separate agreement, the Company is responsible for the marketing of Exxaro’s TiO2, in which capacity it acts as principal and bears the credit risk for such sales. As the Company acts as principal, the total tonnes of TiO2 from the Tiwest Joint Venture sold are ~~Goodwill~~ included in the Company’s net sales and ~~intangible~~the ~~assets~~ cost to acquire any tonnes from Exxaro is included in the Company’s cost of goods sold.

~~During~~In the second ~~quarter~~step of ~~2008,~~ the ~~company~~Transaction, ~~performed~~as ~~its annual~~discussed ~~impairment~~above, ~~review~~Tronox ofLimited ~~its~~will ~~goodwill~~acquire ~~and~~Exxaro ~~indefinite-lived intangible~~Mineral ~~assets~~Sands. inExxaro ~~accordance~~Mineral ~~with~~Sands ~~SFAS No. 142, “Goodwill~~is ~~and~~composed ~~Intangible~~of ~~Assets.”~~Exxaro ~~Due~~Sands toand ~~continued cost~~Exxaro ~~escalations~~TSA ~~and~~Sands ~~compressed~~in ~~margins~~South Africa, ~~the company has~~and ~~determined~~Exxaro’s ~~that~~50.0% ~~the~~interest ~~goodwill reflected~~ in the ~~pigment~~Tiwest ~~segment~~Joint ~~is impaired~~Venture. ~~and~~As ~~has~~such, ~~reflected~~Tronox aLimited ~~$13.5 million~~will ~~charge~~own in100% ~~the Condensed Consolidated Statements~~ of ~~Operations for~~ the ~~three months~~Tiwest ~~ended~~Joint ~~June 30,~~Venture ~~2008.~~as ~~The~~of ~~analysis~~the ~~indicated~~date ~~no impairment~~of to the ~~company’s indefinite-lived intangible assets related to proprietary technology~~Transaction.

~~Fair value~~2. Basis ~~measurement~~ of Presentation

AsThe ~~stated~~accompanying incondensed ~~Note 2,~~consolidated ~~Basis~~financial statements of ~~Presentation~~Tronox Incorporated are unaudited and ~~Accounting~~have been ~~Policies,~~prepared ~~the~~pursuant ~~company~~to ~~adopted~~ the ~~methods~~rules and regulations of ~~fair~~the ~~value~~SEC ~~as described~~regarding ininterim ~~SFAS No~~financial reporting. ~~157~~ toAccordingly, ~~value~~they ~~its~~do ~~financial assets~~not ~~and~~include ~~liabilities~~all ~~effective~~of ~~January~~the ~~2008.~~information Asand ~~defined~~footnotes ~~in SFAS No. 157,~~required ~~fair~~by ~~value~~accounting isprinciples ~~based~~generally onaccepted in the ~~price~~United ~~that~~States ~~would~~(“U.S. beGAAP”) ~~received~~for tocomplete ~~sell~~financial anstatements ~~asset~~and orshould ~~paid~~be toread ~~transfer a liability~~ in anconjunction ~~orderly~~with ~~transaction~~the ~~between~~audited ~~market~~consolidated ~~participants at~~financial ~~the~~statements ~~measurement~~and ~~date.~~notes Inthereto ~~order~~included toin ~~increase~~Tronox ~~consistency~~Limited and ~~comparability~~ inTronox ~~fair~~Incorporated’s ~~value~~Registration ~~measurements, SFAS No~~Statement. ~~157~~ The ~~establishes~~December 31, a2011 ~~fair~~balance ~~value~~sheet ~~hierarchy~~was ~~that~~derived ~~prioritizes~~from ~~observable and~~audited ~~unobservable~~financial ~~inputs~~statements, ~~used~~but todoes ~~measure~~not ~~fair~~include ~~value~~all ~~into~~of ~~three broad~~the ~~levels,~~disclosures ~~which~~required ~~are~~by ~~described~~U.S. ~~below:~~ GAAP for complete financial statements.

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2: Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

In management’s opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and ~~TRONOX~~assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. It ~~INCORPORATED~~is at least reasonably possible that the effect on the financial statements of a change in estimate within one year of the date of the financial statements due to one or more future confirming events could have a material effect on the financial statements. The consolidated results of operations for interim periods are not necessarily indicative of results for the entire year.

~~NOTES TO CONDENSED~~Certain ~~CONSOLIDATED~~prior ~~FINANCIAL~~period amounts have been reclassified to conform to the manner and presentation in the current period. Such reclassifications had no impact on the Company’s net income or consolidated ~~STATEMENTS — (Continued)~~ results of operations.

InForeign ~~measuring~~Currency fair value on a recurring basis, the company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.

~~Financial~~The ~~assets~~U.S. ~~and~~dollar ~~liabilities~~is ~~carried~~considered atthe ~~fair~~functional ~~value~~currency asfor the Company’s operations, except for the majority of its European operations. The Company determines the functional currency of each ~~June 30~~subsidiary based on a number of factors, ~~2008~~including the predominant currency for revenues, expenditures and borrowings. Foreign currency transaction gains or losses are ~~classified~~recognized in the ~~table~~period ~~below~~incurred and are included in ~~one~~“Other ofincome (expense)” on the ~~three~~Consolidated ~~categories~~Statements ~~described~~of ~~above:~~ Operations.

	Level 1		Level 2		Level 3
	(In millions)
Assets
Foreign currency derivatives	$	—	$	1.1	$	—
Natural gas forward contracts		—		3.3		—
Interest rate swap derivatives		—		0.1		—
Subordinated retained interest in accounts receivable (1)		—		—	$	48.9
Total assets at fair value	$	—	$	4.5	$	48.9
Liabilities
Foreign currency derivatives	$	—	$	0.2	$	—
Natural gas forward contracts		—		—		—
Interest rate swap derivatives		—		0.9		—
Total liabilities at fair value	$	—	$	1.8	$	—

The euro is the functional currency for the majority of the Company’s European operations and, as such, translation adjustments resulting from translating the functional currency financial statements into U.S. dollar equivalents are reflected as a separate component on the Consolidated Statements of Other Comprehensive Income (Loss). When the subsidiary’s functional currency is the U.S. dollar, such as the Company’s Australian operations, adjustments from the remeasurement of foreign currency monetary assets and liabilities are presented in “Other income (expense)” on the Consolidated Statements of Operations.

~~(1)~~Gains ~~Level~~and 3losses ~~inputs~~on intercompany ~~were~~foreign ~~used~~currency totransactions ~~calculate~~that anare ~~unrealized~~not ~~fair~~expected ~~value~~to ~~loss~~be ofsettled ~~$0.7~~in ~~million subsequently subtracted from~~ the ~~face~~foreseeable ~~value~~future ofare ~~receivables~~reported toby ~~obtain~~ the ~~fair~~Company ~~value~~in of the ~~subordinated~~same ~~retained~~manner ~~interest~~as ~~related~~translation ~~to the company’s account receivable securitization program~~adjustments.

The fair value estimate of the subordinated retained interest includes a present value discount that incorporates commercial paper borrowing rates and a risk premium based on the subordinated position of the retained interest3. Recent ~~Servicing~~Accounting ~~costs and~~Pronouncements anticipated credit losses based on the performance history of transferred receivables are also incorporated into the fair value calculation. Collectively, the present value discount, anticipated servicing cost and anticipated credit loss comprise an unrealized loss on the retained interest that is subtracted from the face value to arrive at its fair value. Other than commercial paper rates, most of the fair value losses above are calculated from unobservable inputs which conform to a Level 3 measurement.

5On January 1, 2012, the Company adopted the required guidance under ASU 2011-05, Presentation of Comprehensive Income (“ASU 2011-05”), which changed the presentation requirements of comprehensive income by improving the comparability, consistency, and transparency of financial reporting and increased the prominence of items reported in other comprehensive income. ~~Summarized~~The ~~Combined~~adoption ~~Financial~~of ~~Information~~this guidance did not have a material impact on the Company’s condensed consolidated financial statements. During 2011, the FASB issued ASU 2011-12, which deferred certain requirements of ~~Affiliates~~ASU 2011-05. The Company did not adopt such deferred requirements.

~~The~~In ~~company~~May 2011, ~~has~~the ~~investments~~FASB inissued ~~Basic~~ASU ~~Management~~2011-04, ~~Inc~~Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and ~~Subsidiaries~~ International Financial Reporting Standards (a“IFRS”) ~~corporation~~(“ASU in2011-04”), which ~~the~~changes ~~company~~certain ~~has~~fair ~~an approximate~~value ~~31%~~measurement ~~interest~~and disclosure requirements, ~~whose~~clarifies ~~combined~~the ~~financial~~application ~~statements include~~of ~~The~~existing ~~LandWell~~fair ~~Company,~~value Lmeasurement and disclosure requirements and provides consistency to ensure that U.PS., aGAAP ~~limited~~and ~~partnership~~IFRS ~~in which~~fair ~~the~~value ~~company~~measurement ~~has~~and andisclosure ~~approximate~~requirements ~~29%~~are ~~direct~~described ~~interest).~~in ~~The~~the same ~~company’s~~way. ASU ~~share~~2011-04 inis ~~the~~effective ~~net~~for ~~earnings~~interim ofand ~~these~~annual ~~investees~~periods ~~is disclosed~~beginning inafter ~~Note~~December 315, 2011. The ~~Summarized~~adoption ~~unaudited~~of ~~income~~this ~~statement information~~guidance ofdid ~~the~~not ~~significant~~have ~~investees~~a ismaterial asimpact ~~follows:~~ on the condensed consolidated financial statements.

	Three Months					Six Months
	Ended					Ended
	June 30,					June 30,
	2008			2007		2008			2007
				(In millions)
Departmental revenues	$	3.0		$	8.9	$	4.7		$	16.8
Departmental income (loss)		(0.4	)		5.2		(1.6	)		9.4
Income (loss) before taxes		(0.7	)		5.2		(1.9	)		9.4
Net income (loss)		(0.6	)		4.4		(1.5	)		8.1

4. Emergence from Chapter 11 Proceedings

On November 30, 2010, the Confirmation Date, the Bankruptcy Court confirmed the Debtors’ Plan. Under Chapter 11 of the Bankruptcy Code, a debtor may reorganize its business for the benefit of its stakeholders with the consummation of a plan of reorganization being the principal objective. Among other things (subject to certain limited exceptions and except as otherwise provided in the Plan or the Confirmation Order), the Confirmation Order discharged the Debtors from any debt arising before the Petition Date, terminated all of the rights and interests of pre-bankruptcy equity security holders and substituted the obligations set forth in the Plan and new common stock for those pre-bankruptcy claims. Under the Plan, claims and equity interests were divided into classes according to their relative priority and other criteria.

The Plan was designed to accomplish, and was premised on, a resolution of the Debtor’s legacy environmental (the “Legacy Environmental Liabilities”) and legacy tort liabilities (the “Legacy Tort Liabilities” and collectively, with the Legacy Environmental Liabilities, the “KM Legacy Liabilities”). The Plan ensured that the Debtors emerged from Chapter 11 free of the significant KM Legacy Liabilities and were sufficiently capitalized. A final settlement was reached in November 2010 with respect to the Legacy Environmental Liabilities (the “Environmental Settlement”) and the Legacy Tort Liabilities (the “Tort Settlement” and, together with the Environmental Settlement, the “Settlement”). In exchange, claimants provided the Debtors and the reorganized Tronox Incorporated with discharges and/or covenants not to sue subsequent to the Effective Date with respect to the Debtors’ liability for the Legacy Environmental Liabilities. The Settlement established certain environmental response and tort claims trusts that are now responsible for the KM Legacy Liabilities in exchange for cash, certain non-monetary assets, and the rights to the proceeds of certain ongoing litigation and insurance and other third party reimbursement agreements. The Plan also provided for the creation and funding of a torts claim trust (the “Tort Claims Trust”), which was the sole source of distributions to holders of Legacy Tort Liabilities claims, who were paid in accordance with the terms of such trust’s governing documentation.

As a result of the settlement of the Debtors’ pre-petition debt and termination of the rights and interests of pre-bankruptcy equity, the Plan enabled Tronox Incorporated to reorganize around its existing operating locations, including: (a) its headquarters and technical facility at Oklahoma City, Oklahoma; ~~TRONOX~~(b) the TiO2 facilities at Hamilton, Mississippi and ~~INCORPORATED~~Botlek, the Netherlands; (c) the electrolytic chemical businesses at Hamilton, Mississippi and Henderson, Nevada (except that the real property and buildings associated with the Henderson business were transferred to an environmental response trust and reorganized Tronox Incorporated is not responsible for environmental remediation related to historic contamination at such site); and (d) its interest in the Tiwest Joint Venture in Australia.

As part of the Debtor’s emergence from the Chapter 11 proceedings, the Company relied on a combination of debt financing and money from new equity issued to certain existing creditors. Specifically, such funding included: (i) total funded exit financing of no more than $470 million; (ii) the proceeds of a $185 million rights offering (the “Rights ~~NOTES~~Offering”) open to substantially all unsecured creditors and backstopped by certain groups; (iii) TOsettlement of government claims related to the Legacy Environmental Liabilities through the creation of certain environmental response trusts ~~CONDENSED~~and ~~CONSOLIDATED~~a ~~FINANCIAL~~litigation trust; (iv) settlement of claims related to the Legacy Tort Liabilities through the establishment of a torts claim trust; (v) issuance of common stock whereby holders of the allowed general unsecured claims received their ~~STATEMENTS~~pro rata share of 50.9% of the new common stock on the Effective Date, and the opportunity to participate in the Rights Offering for an aggregate of 49.1% of the new common stock, also issued on the Effective Date; and (vi) —issuance of warrants, on the Effective Date, to the holders of equity in the Predecessor consisting of two tranches: the new series A warrants (~~Continued~~the “Series A Warrants”) and the new series B warrants (the “Series B Warrants”), to purchase their pro rata share of a combined total of 7.5% of the new common stock, after and including the issuance of any new common stock upon exercise of the Series A Warrants and the Series B Warrants.

65. Fresh-Start ~~Work~~Accounting ~~Force Reduction~~

OnThe ~~May 22,~~following ~~2008,~~unaudited ~~the~~condensed ~~company~~consolidated ~~announced~~balance ansheet ~~involuntary~~information ~~work force~~illustrates ~~reduction program as part of its ongoing efforts to reduce costs. As a result of~~ the ~~program,~~financial ~~the~~effects ~~company’s~~from ~~U.S. work~~implementing ~~force was reduced by 31 employees. An additional 38 positions that were vacant prior to~~ the ~~work~~Plan ~~force reduction~~and ~~will not be filled. There were no costs associated with~~ the ~~elimination~~adoption of ~~vacant~~fresh-start ~~positions.~~accounting ~~The program was substantially completed~~ as of ~~June~~January 3031, ~~2008~~2011.

Qualifying employees terminated under this program were eligible for special termination benefits under the company’s pension plan along with severance payments. In connection with the program, the company incurred pretax charges of $1.5 million for severance and other employee related costs and $2.7 million for special termination benefits under its pension plan. These charges are included in restructuring charges in the Condensed Consolidated Statements of Operations. The total charge attributable to the company’s reportable pigment segment was nil as the restructuring charges were primarily attributable to “corporate and nonoperating sites” (see Note 15). Of the total provision for severance and other employee related costs of $1.5 million, $0.8 million was paid in the second quarter with remaining balance of $0.7 million at June 30, 2008, reflected in accrued liabilities in the Condensed Consolidated Balance Sheets.


	As of January 31, 2011
	Predecessor			Reorganization Adjustments			Fresh-Start Adjustments			Successor
Current Assets
Cash and cash equivalents	$	117.4		$	(56.4	) a	$	—		$	61.0
Accounts receivable, net		256.7			(3.8	) b		—			252.9
Inventories		213.7			(1.7	) c		35.5	k		247.5
Prepaid and other assets		139.3			(88.7	) d		—			50.6
Deferred income taxes		4.2			—			0.4	p		4.6

Total Current Assets		731.3			(150.6	)		35.9			616.6
Property, Plant and Equipment, Net		317.5			(21.0	) e		185.7 l			482.2
Intangible Assets, Net		—			—			335.1	m		335.1
Other Long-Term Assets		41.7			(13.9	) f		(13.6	) n		14.2

Total Assets	$	1,090.5		$	(185.5	)	$	543.1		$	1,448.1

Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	221.6		$	(0.3	) g	$	—		$	221.3
Accrued liabilities		44.5			(0.5	) h		—			44.0
Short-term debt		—			25.0	i		—			25.0
Long-term debt due within one year		4.3			—			—			4.3
Income taxes payable		2.7			—			—			2.7

Total Current Liabilities		273.1			24.2			—			297.3
Noncurrent Liabilities
Long-term debt		420.7			—			—			420.7
Pension and other postretirement benefits		107.2			—			(10.8	)o		96.4
Deferred income taxes		—			—			13.1	p		13.1
Other		47.0			—			9.4	q		56.4

Total Noncurrent Liabilities		574.9			—			11.7			586.6
Liabilities Subject to Compromise		896.7			(896.7	) j		—			—

Total Liabilities		1,744.7			(872.5	)		11.7			883.9

Total Stockholders’ Equity		(654.2	)		687.0			531.4 r			564.2

Total Liabilities and Stockholders’ Equity	$	1,090.5		$	(185.5	)	$	543.1		$	1,448.1

7. Debt

As discussed below, following a waiver and amendment of potential non-compliance, the company classified debt as current as of June 30, 2008. Debt outstanding at June 30, 2008, and December 31, 2007, consisted of the following:

	June 30,			December 31,
	2008			2007
	(In millions)
9.5% Senior Unsecured Notes due December 2012	$	350.0		$	350.0
Variable-rate term loan due in installments through November 2011		121.1			126.9
Revolving credit facility available through November 2010		69.0			—
Variable-rate note payable due in installments through July 2014		—			7.9
Total debt		540.1			484.8
Less: Long-term debt due in one year		(10.3	)		(9.2	)
Less: Long-term debt classified as current		(529.8	)		—
Total long-term debt	$	—		$	475.6

The terms of the credit agreement provide for customary representations and warranties, affirmative and negative covenants, and events of default. In February 2008, the company requested and obtained approval for an amendment to the 2008 and 2009 financial covenants. On June 27, 2008, the company received a waiver for a potential default on the Consolidated Total Leverage Ratio (as defined) for the fiscal quarter ended June 30, 2008. In July 2008, the company obtained approval for an amendment to the Consolidated Total Leverage ratio (as defined) for the second, third and fourth quarters of 2008. The limitations on capital expenditures have not been modified and are $130 million in 2008 and $100 million in 2009 and thereafter. We incurred amendment fees of approximately $2.5 million for each of the amendments in February 2008 and July 2008. These costs will be amortized over the remaining life of the debt. The margin applicable to LIBOR borrowings at June 30, 2008 was 350 basis points. Because the company’s Consolidated Quarterly Leverage Ratio (as defined) at June 30, 2008, exceeded 4.25x, the margin increased by 50 basis points for the third quarter of 2008 to 400 basis points effective July 1, 2008. Due to a downgrade on the company’s debt rating on July 31, 2008, the margin increased by an additional 50 basis points on that date and is currently 450 basis points for the remainder of the third quarter of 2008.

~~TRONOX INCORPORATED~~ Allocation of reorganization value to assets and liabilities

~~NOTES TO CONDENSED~~The ~~CONSOLIDATED~~reorganization ~~FINANCIAL~~value derived from the Company’s enterprise value of $1,150.0 million was allocated among Tronox’s assets in ~~STATEMENTS —~~ conformity with the purchase method of accounting guidance for business combinations included in ASC 805, Business Combinations (~~Continued~~“ASC 805”), which requires recording assets and liabilities at fair value (except for deferred income taxes and pension and postretirement benefit obligations). The reorganization value was assigned first to tangible and identifiable intangible assets and then the excess of net asset values over reorganization value was recorded as an adjustment to equity.

~~The~~All ~~following~~estimates, ~~table~~assumptions, ~~presents~~valuations, ~~the~~appraisals ~~Total~~and ~~Leverage~~financial ~~Ratio~~projections, ~~and~~including the fresh-start adjustments, ~~Interest~~the ~~Coverage~~reorganization ~~Ratio~~value asand ~~specified~~equity ~~under~~value ~~the~~projections, ~~company~~are inherently subject to significant uncertainties outside of management’s ~~credit~~ ~~agreement~~control. Accordingly, asthere ~~amended.~~can be no assurance that the estimates, assumptions, valuations, appraisals and financial projections will be realized and actual results could vary materially.

	Consolidated		Consolidated
	Total		Interest
	Leverage Ratio		Coverage Ratio
Fiscal Quarter Ended
June 30, 2008		5.20:1		1.00:1
September 30, 2008		5.55:1		0.80:1
December 31, 2008		5.35:1		0.80:1
March 31, 2009		4.50:1		1.25:1
June 30, 2009		4.35:1		1.25:1
September 30, 2009		3.90:1		1.75:1
December 31, 2009		3.50:1		1.75:1

Cash and cash equivalents — The adjustments to cash and cash equivalents represent net cash outflows, after giving effect to transactions pursuant to the Plan, including borrowings under a $125.0 million senior secured asset-based revolving credit agreement with Wells Fargo Capital Finance, LLC (the “Wells Revolver”) with a maturity date of February 14, 2015, receipt of proceeds from the Rights Offering; payments relating to the discharge of debts and other liabilities subject to compromise; and the funding of the environmental response and tort trusts.

The company was in compliance with its financial covenants at June 30, 2008, following the waiver and subsequent amendment. Under these circumstances, accounting guidance requires the company to demonstrate that it is not probable that the company will be in default on its financial covenants in the next twelve months in order for the company to classify its debt as noncurrent obligations. Due to the continued uncertainty of the economic environment, the company is unable to demonstrate such compliance with reasonable certainty over the next twelve months and hence the outstanding balances on the company’s credit agreement have now been classified as current obligations. The company’s senior notes contain cross default provisions such that if a default on the credit agreement were to occur and remain uncured, this would trigger a default on the senior notes as well. As a result, the entire $350.0 million balance on the senior notes has been classified as a current obligation as well.


Sources of funds:
Wells Revolver	$	25.0
Rights Offering		185.0
Release of environmental settlement escrow		35.0
Transfer of environmental letters of credit		29.9
Transfer of surety bonds		15.0
5% cash premium on collateralized letters of credit		2.2

	$	292.1

Use of funds:
Environmental letters of credit	$	(29.9	)
Surety bonds		(15.0	)
Cash settlement payments to environmental trusts		(270.0	)
Cash settlement to tort trust		(16.5	)
Admin., cure and 503(b)(9) claims		(3.7	)
Settlement of secured and convenience claims		(0.9	)
Professional and legal service fees		(12.0	)
Prorated property taxes		(0.5	)

	$	(348.5	)

Net cash outflows from reorganization	$	(56.4	)

~~The achievement of the company’s forecasted results is critical to remaining in compliance with the financial covenants~~b. ~~Future~~Accounts ~~compliance with the covenants may be adversely affected by various economic~~receivable, ~~financial~~net ~~and~~— ~~industry~~The ~~factors.~~adjustment ~~In the~~represents ~~event of any future noncompliance with any covenants, we would seek to negotiate further amendments to~~ the ~~applicable covenants~~transfer ~~or to obtain waivers from our lenders. If we are unable to obtain amendments or waivers, noncompliance with the covenants would constitute an event~~ of ~~default~~certain ~~under~~trade ~~the credit agreement, allowing the lenders to accelerate repayment of any outstanding borrowings~~ and~~/or~~ ~~to terminate~~miscellaneous ~~their~~receivables ~~commitments~~ to the ~~credit~~environmental ~~facility~~trusts.

Inc. ~~January~~Inventories ~~2008,~~— ~~the~~The ~~company~~adjustment ~~elected~~represents tothe ~~redeem~~transfer ~~its~~of ~~Australian dollar~~finished ~~denominated~~goods ~~variable-rate~~and ~~note~~materials ~~payable~~and bysupplies ~~paying~~held ~~the outstanding~~at ~~principal~~legacy ~~balance~~sites ~~and~~to ~~applicable~~the ~~interest~~environmental trusts.

~~Our~~d. ~~financial~~Prepaid ~~statements~~and ~~are~~other ~~presented on a going concern basis, which contemplates the realization of~~ assets ~~and~~— ~~satisfaction~~The ~~of liabilities~~adjustments into ~~the~~prepaid ~~normal course of business. We have $540.1 million in borrowings at June 30, 2008~~ and ~~have experienced~~other ~~significant~~assets ~~losses~~represent ~~for~~ the ~~year~~transfer ~~ended December 31, 2007,~~ and ~~the~~release ~~six~~of ~~months~~funds ~~ended~~on ~~June 30, 2008,~~deposit ~~and~~related ~~continue~~ to ~~generate~~letters ~~negative~~of ~~cash~~credit, ~~flows~~surety ~~from operations.~~bonds ~~If we were to continue to generate losses~~ and ~~negative~~ ~~cash~~environmental ~~flows,~~settlement ~~this~~escrow ~~would~~accounts ~~raise~~that ~~substantial~~have ~~doubt~~been ~~about our~~reclassified ~~ability~~ to ~~continue~~cash ~~as a going concern~~ and ~~we may need to seek alternative financing arrangements. Our ability to continue as a going concern will depend upon our ability to generate positive~~ cash ~~flows,~~equivalents ~~restructure our capital structure including, among other alternatives, refinancing our outstanding indebtedness~~ and ~~mitigating~~used ~~the~~as ~~legacy~~“sources ~~environmental~~of ~~liabilities carried by the company. Failure to address these issues could result in~~funds,” ~~among~~along ~~other~~with ~~things,~~ the ~~depletion~~transfer of ~~available~~prepaid ~~funds~~ and ~~our~~other ~~not~~asset ~~being~~balances ~~able~~at tolegacy ~~pay~~sites ~~our~~that ~~obligations~~have ~~when~~been ~~they~~transferred ~~become due, as well as possible defaults under our debt obligations. The accompanying condensed consolidated financial statements do not include any adjustments~~ to ~~reflect~~ the ~~possible~~environmental ~~future effects on the recoverability and classification of assets~~trust.

TRONOX INCORPORATED


Change in prepaid and other assets
Transfer of environmental letters of credit	$	(29.9	)
Release of environmental settlement escrow		(35.0	)
Release of Kress Creek escrow account		(4.6	)
Henderson prepaid land development costs		(2.0	)
Transfer of surety bonds		(15.0	)
5% cash premium on collateralized letters of credit		(2.2	)

	$	(88.7	)

~~NOTES TO CONDENSED~~e. ~~CONSOLIDATED~~Property, ~~FINANCIAL STATEMENTS~~ plant and equipment, net — ~~(Continued)~~ The adjustment represents the transfer of property, plant and equipment held at legacy sites to the environmental trust.

f. Other long-term assets — The net adjustment represents the transfer of a $14.8 million investment in equity method investees to the Nevada Environmental Trust and $1.5 ~~Comprehensive~~million ~~income~~in ~~(loss)~~long-term receivables transferred to other environmental trusts, which were slightly offset by the recognition of $2.4 million in deferred financing fees related to the Wells Revolver.

~~Comprehensive~~g. ~~income~~Accounts ~~(loss),~~payable — The net ofadjustment ~~taxes,~~represents ~~consists~~payments made at emergence offset by accruals recorded for payments that will need to be made post-emergence as a result of execution of the ~~following:~~ Plan.

	Three Months						Six Months
	Ended						Ended
	June 30,						June 30,
	2008			2007			2008			2007
				(In millions)
Net loss	$	(34.4	)	$	(21.2	)	$	(34.6	)	$	(30.6	)
After tax changes in:
Foreign currency translation adjustments		(1.8	)		3.6			18.8			6.9
Cash flow hedge activity:
Unrealized gain (loss)		2.1			(0.6	)		3.9			0.4
Reclassification adjustments		(1.3	)		—			(1.5	)		0.8
Benefit plan activity:
Amortization of net actuarial loss		0.5			0.8			0.9			1.7
Amortization of net prior service cost		(1.2	)		0.3			(2.3	)		0.5
Partial settlement on nonqualified pension plan		0.9			—			0.9			—
Postretirement benefit plan changes		17.6			—			17.6			—
Valuation allowance on deferred tax (1)		0.6			—			1.0			—
Total comprehensive income (loss)	$	(17.0	)	$	(17.1	)	$	4.7		$	(20.3	)

h.	Accrued liabilities — The adjustment represents $0.5 million in pro-rated property taxes related to sites that have been transferred to the environmental trusts as part of the Plan.

~~(1)~~i. AShort-term ~~valuation~~debt ~~allowance~~— onThe ~~certain~~change ~~deferred~~in ~~tax~~the ~~assets~~short-term ofdebt ~~the~~balance ~~U.S.~~represents ~~consolidated~~a ~~group~~$25.0 ~~was~~million ~~recognized~~draw inon the ~~year~~Wells ~~ending~~Revolver ~~December~~that ~~31,~~the ~~2007.~~Company Inmade ~~2008,~~on the ~~valuation~~Effective ~~allowance was adjusted for changes in comprehensive income items in which a valuation allowance was previously established~~Date.

9j. ~~Income~~Liabilities ~~Taxes~~subject to compromise — The adjustment to liabilities subject to compromise reflects the discharge of liabilities subject to compromise through a series of transactions involving cash and equity.

As discussed in Note 1, the Company applied ~~The~~fresh-start ~~reconciliation~~accounting pursuant to ASC 852 as of January 31, 2011. ASC 852 provides for, among other things, a determination of the ~~federal~~value ~~statutory~~to ~~rate~~be assigned to the assets of the reorganized Company. In applying fresh-start accounting on ~~effective~~January 31, 2011, the Company recorded assets and liabilities at estimated fair value, except for deferred income ~~tax~~taxes ~~rate~~and ~~applicable~~certain liabilities associated with employee benefits, which were recorded in accordance with ASC 852 and ASC 740, Income Taxes (“ASC 740”), respectively. The significant assumptions related to ~~loss~~the ~~from~~valuations ~~continuing~~of the Company’s assets and liabilities recorded in connection with fresh-start accounting are discussed herein. All ~~operations~~valuation isinputs, with the exception of the calculation of raw material inventories and the Company’s long-term debt, are considered to be Level 3 inputs, as ~~follows:~~they are based on significant inputs that are not observable in the market.

	Three Months						Six Months
	Ended						Ended
	June 30,						June 30,
	2008			2007			2008			2007
U.S. statutory tax rate		35.0	%		35.0	%		35.0	%		35.0	%
Increases (decreases) resulting from —
Taxation of foreign operations		(10.5	)		(17.0	)		(8.6	)		(19.6	)
State income taxes		(0.2	)		(4.5	)		(0.3	)		(2.1	)
Valuation allowances		17.3			(30.1	)		14.2			(23.8	)
Prior year accrual adjustments		(5.5	)		—			(0.8	)		—
Changes in unrecognized tax benefits		(3.7	)		(29.7	)		(4.9	)		(20.3	)
Other — net		0.9			(5.2	)		(0.1	)		(2.2	)
Effective income tax rate		33.3	%		(51.5	)%		34.5	%		(33.0	)%

k.	Inventories — The Company recorded inventory at its fair value of $247.5 million, which was determined as follows:

~~The~~• ~~company~~Finished ~~recorded~~goods ~~changes~~were tovalued based on the ~~valuation~~estimated ~~allowances~~selling price of ~~certain~~ ~~U.S. and~~finished ~~foreign~~goods ~~deferred~~on ~~tax~~hand ~~assets~~less ~~during~~costs ~~the three~~to ~~month~~sell, ~~and~~including ~~six~~disposal ~~month~~and ~~periods~~holding ~~ended~~period ~~June 30~~costs, ~~2008,~~and ~~due to~~a ~~changes~~reasonable inprofit margin on the ~~unrecognized~~selling ~~prior~~and ~~service~~ disposal effort for each specific category of finished goods being evaluated;

•

Work in process was valued based on the estimated selling price once completed less total costs to complete the manufacturing process, costs to sell including disposal and holding period costs, a reasonable profit margin on the remaining manufacturing, selling, and disposal effort; and

•

Raw materials were valued based on current replacement cost, which approximates fair value.

Property, plant, and equipment, net — The Company recorded a $143.7 million fair value step-up on its property, plant and equipment at the time of applying fresh-start accounting. The $143.7 million step-up was ascribed to the corresponding property, plant and equipment classes which included land, buildings, machinery and equipment and construction in progress, (collectively real and personal property). Fair value was based on the highest and best use of the assets. For the majority of assets, the indirect cost approach was utilized to value the assets.

Additionally, the Company recorded the fair value of lease tenements of $42.0 million using a discount ~~TRONOX INCORPORATED~~ rate of 19.1% based on the Company’s WACC adjusted for risks inherent to lease tenements and a remaining useful life of 16 years, depreciated on a unit of production basis.

~~NOTES TO CONDENSED~~m. ~~CONSOLIDATED~~Intangible ~~FINANCIAL STATEMENTS~~ assets, net — ~~(Continued)~~ The change in intangibles is due to the recognition of $335.1 million in separately identifiable intangible assets at fair value as a result of the application of fresh-start accounting.

~~cost~~n. ~~component~~Other oflong-term assets — The change in other long-term assets is due to the ~~company’s~~write-off ~~postretirement~~of ~~plan~~$14.6 asmillion ~~well as~~of ~~current~~deferred ~~year~~financing ~~changes~~fees that were related to Predecessor debtor-in-possession (“DIP”) financing facilities, which converted to a $425.0 million exit facility on February 14, 2011. The $14.6 million was partially offset by $0.8 million in deferred ~~tax~~taxes ~~assets~~recognized and $0.2 million related to the write-off of the net pension asset related to the Predecessor. At that time, additional deferred ~~tax liabilities~~financing costs were capitalized based on the application of accounting principles. As of the emergence date, the fair value of debt changed where the stated coupon of the debt became par. Therefore all previous deferred financing costs were written-off.

~~The~~o. ~~company~~Pension ~~adopted~~and ~~the~~other ~~provisions~~postretirement ofbenefits ~~FIN 48~~— ~~as of January 1, 2007.~~ The ~~gross~~net ~~amount~~adjustment ofreflects ~~unrecognized tax positions at June 30, 2008, was $58.7 million, compared to $54.6 million at December 31, 2007. The change during~~ the ~~quarter~~fair ~~was~~value ~~primarily~~adjustments ~~related~~ to ~~foreign currency~~pension ~~translation,~~obligations ~~tax~~as ~~rate differentials on~~ a ~~timing~~result ~~issue, and~~of ~~interest accruals. Excluded from~~ the ~~balances~~application are valuation allowances and indirect tax benefits which net to $2.9 million and $2.6 million at June 30, 2008, and December 31, 2007, respectively. At June 30, 2008, the net benefit associated with approximately $60.1 million of ~~the~~fresh-start ~~reserve for unrecognized tax benefits, if recognized, would affect the effective income tax rate~~accounting. ~~The equivalent amount at December 31, 2007, was $55.6 million.~~

Asp. aDeferred ~~result~~income taxes — The application of ~~ongoing~~fresh-start ~~negotiations~~accounting ~~with~~on ~~tax~~January ~~authorities~~31, it2011, ~~is reasonably~~resulted ~~possible~~in ~~that~~ the ~~company’s~~re-measurement ~~gross~~of ~~unrecognized~~ deferred income tax ~~benefits~~assets ~~balance~~and ~~may~~liabilities ~~decrease~~associated ~~within~~with the ~~next~~revaluation ~~twelve~~of ~~months by~~the aCompany’s ~~range~~assets ofand ~~zero~~liabilities pursuant to ~~$15~~ASC 852.~~8 million~~ Deferred income taxes were recorded at amounts determined in accordance with ASC 740.

~~The company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense~~q. ~~During~~Other ~~the three~~noncurrent ~~months~~liabilities ~~and~~— ~~six~~The ~~months~~net ~~ended~~adjustment ~~June 30,~~reflects ~~2008,~~ the ~~company~~ ~~recognized~~fair ~~approximately~~value ~~$1.0 million~~adjustments ~~and $2.6 million,~~to ~~respectively,~~asset inretirement ~~gross~~obligations ~~interest~~as ~~and~~a ~~penalties in~~result ~~the Condensed Consolidated Statement~~ of ~~Operations. As of December 31, 2007,~~ the ~~company~~application ~~had approximately $12.6 million accrued for the gross payment~~ of ~~interest~~fresh-start ~~and penalties~~accounting. ~~The equivalent amount at June 30, 2008, was $15.8 million, including the effects of foreign currency translation.~~

~~The company was included in the U~~r.~~S. federal~~ ~~income~~Stockholders’ ~~tax returns~~equity of— ~~Kerr-McGee Corporation and Subsidiaries for tax periods ending in 2005 and prior.~~ The ~~Internal~~adjustments ~~Revenue~~reflect ~~Service has~~net ~~completed~~gains ~~its~~relating ~~examination~~to ofexecuting the ~~Kerr-McGee Corporation~~ ~~and~~Plan, ~~Subsidiaries’~~gains ~~federal~~related ~~income~~to ~~tax~~revaluation ~~returns for~~of ~~all~~assets ~~years through 2002~~ and is“resetting” ~~currently~~retained ~~conducting~~earnings ~~an examination of the years 2003 through 2005. The years through 2002 have been closed with the exception of issues for which a refund claim has been filed~~ and isaccumulated ~~being~~other ~~pursued~~comprehensive inincome ~~United States Court of Federal Claims. The company believes it has made adequate provisions for any amounts that may become payable~~ to ~~Kerr-McGee under~~ ~~the tax sharing agreement with respect to these closed years~~zero.

~~A German audit is being conducted for the years 1998 through 2001~~6. Accounts AReceivable Dutch audit is being conducted for the years 2001 through 2005. Only the year 2002 has closed with respect to Australia, and no periods have closed with respect to Germany, Switzerland or the Netherlands (periods subsequent to the acquisition in 2000). The company believes that it has made adequate provision for income taxes that may be payable with respect to years open for examination; however, the ultimate outcome is not presently known and, accordingly, additional provisions may be necessary and/or reclassifications of noncurrent tax liabilities to current may occur in the future.

~~Tax~~Accounts ~~Sharing~~receivable, ~~Agreement~~exclusive ~~and~~of ~~Tax~~related ~~Allocations —~~party ~~The company~~receivables ~~entered into a tax sharing agreement with Kerr-McGee that governs Kerr-McGee’s~~ and ~~the~~net ~~company’s~~of ~~respective rights, responsibilities and obligations subsequent to~~ the ~~IPO with~~related ~~respect~~allowance ~~to taxes~~ for ~~tax~~doubtful ~~periods ending in 2005 and prior. Generally~~accounts, ~~taxes incurred or accrued prior to the IPO that are~~ ~~attributable~~consisted ~~to the business~~ of ~~one party will be borne solely by that party. Payables or receivables may result under~~ the ~~tax sharing~~following ~~agreement~~at asMarch 31, ~~the~~2012 ~~IRS completes its examination of the Kerr-McGee Corporation~~ and ~~Subsidiaries’ U.S.~~December ~~federal income~~31, ~~tax~~2011: ~~returns for tax periods ending in 2005 and prior.~~

The company may incur certain restructuring taxes as a result of the separation from Kerr-McGee. A restructuring tax is any tax incurred as a result of any restructuring transaction undertaken to effectuate the separation other than the IPO, the Distribution and entering into the senior secured credit facility, which in the judgment of the parties is currently required to be taken into account in determining the tax liability of Kerr-McGee or Tronox (or their respective subsidiaries) for any pre-deconsolidation period as defined in the tax sharing agreement. The tax sharing agreement provides that Kerr-McGee will be responsible for 100% of the restructuring taxes up to, but not to exceed, $17.0 million. To date, Kerr-McGee has reimbursed the company approximately $0.7 million under this provision all of which was received during 2008. The company is responsible for any restructuring taxes in excess of $17.0 million. However, the company does not expect the restructuring taxes to exceed $17.0 million. In addition, the company is required to indemnify Kerr-McGee for any tax liability incurred


	Successor
	March 31, 2012			December 31, 2011
Accounts receivable — trade	$	347.5		$	268.7
Other		1.6			2.6

Total		349.1			271.3
Allowance for doubtful accounts		(0.7	)		(0.4	)

Net	$	348.4		$	270.9

7. Inventories

Inventories, net of allowance for obsolete inventories and supplies, consisted of the following at March 31, 2012 and December 31, 2011:


	Successor
	March 31, 2012		December 31, 2011
Raw materials	$	177.2	$	123.5
Work-in-process		11.3		9.0
Finished goods(1)		168.4		130.3
Materials and supplies, net(2)		47.5		48.4

Total	$	404.4	$	311.2

(1)	Includes inventory on consignment to others of approximately $13.5 million at March 31, 2012 and $12.0 million at December 31, 2011.

(2)	Materials and supplies consist of processing chemicals, maintenance supplies and spare parts, which will be consumed directly and indirectly in the production of the Company’s products.

~~TRONOX INCORPORATED~~ 8. Property, Plant and Equipment

~~NOTES~~Property, plant and equipment, net consisted of the following at March ~~TO CONDENSED~~31, ~~CONSOLIDATED~~2012 ~~FINANCIAL STATEMENTS~~and December ~~— (Continued)~~31, 2011:

by reason of the Distribution being considered a taxable transaction to Kerr-McGee as a result of a breach of any representation, warranty or covenant made by the company in the tax sharing agreement.


	Successor
	March 31, 2012			December 31, 2011
Land	$	24.2		$	24.2
Buildings		45.8			44.9
Machinery and equipment		421.7			417.1
Construction-in-progress		60.8			49.1
Mineral leaseholds		42.0			42.0
Other		36.3			33.1

Total		630.8			610.4
Less accumulated depreciation, depletion and amortization		(72.0	)		(55.9	)

Net	$	558.8		$	554.5

~~Under~~Depreciation ~~U.S. federal~~expense ~~income~~related ~~tax~~to ~~laws~~property, ~~the~~plant ~~company~~ and ~~Kerr-McGee~~ ~~are~~equipment ~~jointly and severally liable~~ for ~~Kerr-McGee’s U.S. federal~~ ~~income taxes attributable to~~ the ~~periods~~three ~~prior to~~months ~~and~~ended ~~including the 2005 taxable year of Kerr-McGee. If~~March 31, ~~Kerr-McGee~~2012, ~~fails~~two tomonths ~~pay~~ended ~~the~~March 31, ~~taxes~~2011 ~~attributable to it under the tax sharing agreement for periods prior to~~ and ~~including~~one ~~the 2005~~month ~~taxable~~ended ~~year of Kerr-McGee~~January 31, ~~the~~2011 ~~company~~was ~~may~~$16.1 ~~be liable for any part~~million, ~~including~~$8.8 ~~the whole amount~~million, ofand ~~these tax liabilities~~$3. ~~The~~8 ~~company~~million, ~~has not provided for taxes relating to Kerr-McGee that it would not otherwise be liable for under the terms of the tax sharing agreement~~respectively.

109. Intangible ~~Discontinued~~Assets ~~Operations~~

~~The~~Intangible ~~following~~assets, ~~table~~net ~~presents~~consisted ~~pretax~~of ~~loss~~the ~~from~~following ~~discontinued operations~~at byMarch 31, ~~type~~2012 ~~of cost~~ and ~~total~~December 31, ~~after-tax loss from discontinued operations for the periods indicated~~2011:

	Three Months Ended						Six Months Ended
	Successor
	June 30,						June 30,
	March 31,2012			December 31,2011
	2008			2007			2008		2007
Intangible assets	$	335.1		$	335.1
				(In millions)
Less accumulated amortization		(27.7	)		(21.8	)
Environmental provisions/(reimbursements) (1)	$	2.4		$	(1.2	)	$	0.2	$	0.3
Intangible assets, net	$	307.4		$	313.3
Litigation provisions, legal and other costs (1)		2.1			3.2			3.1		2.3
Total pretax loss		4.5			2.0			3.3		2.6
Tax benefit (2)		—			(0.8	)		—		(1.0	)
Total after-tax loss	$	4.5		$	1.2		$	3.3	$	1.6

(1)		Environmental provisions, litigation provisions, legal and other costs are allocated to discontinued operations primarily on a specific identification basis. Other costs are primarily comprised of insurance and ad valorem taxes.
(2)		The tax provision on 2008 income from discontinued operations was offset by an adjustment to a previously established valuation allowance. As a result, no income tax provision has been recognized on 2008 loss from discontinued operations.

The gross cost and accumulated amortization of intangible assets at March 31, 2012 and December 31, 2011, by major intangible asset category, were as follows:

		000000000000		000000000000			000000000000
	Successor
	March 31, 2012
	Gross Cost		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	293.9	$	(23.6	)	$	270.3
TiO₂ technology		31.9		(1.8	)		30.1
Trade names		3.6		(0.9	)		2.7
In-process research and development		5.0		(1.2	)		3.8
Other		0.7		(0.2	)		0.5

Total	$	335.1	$	(27.7	)	$	307.4


	Successor
	December 31, 2011
	Gross Cost		Accumulated Amortization			Net Carrying Amount
Customer relationships	$	293.9	$	(18.6	)	$	275.3
TiO₂ technology		31.9		(1.5	)		30.4
Trade names		3.6		(0.7	)		2.9
In-process research and development		5.0		(0.9	)		4.1
Other		0.7		(0.1	)		0.6

Total	$	335.1	$	(21.8	)	$	313.3

Amortization expense related to intangible assets for the three months ended March 31, 2012 and two months ended March 31, 2011 was $5.9 million and $3.9 million, respectively. There was no amortization expense related to intangible assets for the one month ended January 31, 2011.

Estimated future amortization expense related to intangible assets is as follows: ~~TRONOX INCORPORATED~~

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Total
	Amortization
2012	$	17.8
2013		23.7
2014		22.9
2015		22.8
2016		21.2
Thereafter		199.0

Total	$	307.4

1110. Accrued ~~Retirement~~Liabilities ~~Plans~~

~~The~~Accrued ~~following~~liabilities ~~table~~consisted ~~presents~~of the ~~components~~following ofat ~~net~~March 31, ~~periodic pension~~2012 and ~~postretirement~~December 31, ~~cost and total retirement expense for the periods indicated~~2011:

	Retirement						Postretirement
	Successor
	Plans						Plans
	March 31,2012			December 31,2011
	Three Months Ended June 30,
Employee-related costs and benefits	$	20.8		$	26.3
	2008			2007			2008			2007
Sales rebates		7.9			8.2
				(In millions)
Taxes other than income taxes		4.4			5.2
Service cost	$	2.0		$	3.0		$	0.1		$	0.4
Interest		4.0			1.3
Interest cost		7.5			7.1			0.8			2.1
Asset retirement obligations		0.7			0.9
Expected return on plan assets		(9.2	)		(9.9	)		—			—
Reserves for environmental remediation and restoration		0.1			0.1
Net amortization —
Other		3.6			3.7
Prior service cost (credit)		0.7			0.7			(2.5	)		(0.3	)
Total	$	41.5		$	45.7
Net actuarial loss		0.6			0.8			0.2			0.5
Sub-total net periodic cost		1.6			1.7			(1.4	)		2.7
Settlement loss (1)		1.2			—			—			—
Special termination benefits (2)		2.7			—			—			—
Total retirement expense	$	5.5		$	1.7		$	(1.4	)	$	2.7

(1)		The 2008 settlement loss is associated with a partial settlement of a U.S. nonqualified pension plan and is discussed below.
(2)		The 2008 special termination benefits are associated with the work force reduction program announced by the company and discussed in Note 6.

11. Debt

	Retirement						Postretirement
	Plans						Plans
	Six Months Ended June 30,
	2008			2007			2008			2007
				(In millions)
Service cost	$	4.2		$	5.9		$	0.3		$	0.8
Interest cost		15.0			14.1			1.6			4.2
Expected return on plan assets		(18.4	)		(19.7	)		—			—
Net amortization —
Prior service cost (credit)		1.4			1.4			(5.1	)		(0.6	)
Net actuarial loss		1.1			1.7			0.3			0.9
Sub-total net periodic cost		3.3			3.4			(2.9	)		5.3
Settlement loss (1)		1.2			—			—			—
Special termination benefits (2)		2.7			—			—			—
Total retirement expense	$	7.2		$	3.4		$	(2.9	)	$	5.3

Short-term Debt

(1)		The 2008 settlement loss is associated with a partial settlement of a U.S. nonqualified pension plan and is discussed below.
(2)		The 2008 special termination benefits are associated with the work force reduction program announced by the company and discussed in Note 6.

Short-term debt consisted of the following at March 31, 2012 and December 31, 2011:

The company is obligated under the Master Separation Agreement (“MSA”) to maintain the Material Features (as defined in the employee benefits agreement of the MSA) of the U.S. postretirement plan without change for a period of three years following the Distribution date. During the third quarter of 2007, the company announced that


	Successor
	March 31, 2012		December 31, 2011
Wells Revolver(1)	$	—	$	—

Short-term debt	$	—	$	—

(1)	Average effective interest rate of 14.1% in 2011 and 0.0% in 2012 as there were no borrowings during the three months ended March 31, 2012.

Asset Based Lending Facility

On February 14, 2011 the Company entered into the Wells Revolver, a senior secured asset-based revolving credit agreement with Wells Fargo Capital Finance, LLC. The Wells Revolver has a maturity date of February 14, 2015. The Wells Revolver provides the Company with a committed source of capital with a principal borrowing amount of up to $125.0 million subject to a borrowing base, and also permits an expansion of up to $150.0 million. Borrowing availability under the Wells Revolver is subject to a borrowing base, which is related to certain eligible inventory and receivables held by the Company’s U.S. subsidiaries. As of March 31, 2012, the Company’s borrowing base was $125.0 million, less letters of credit outstanding of $26.3 million, for a total net availability of $98.7 million.

Borrowings under the Wells Revolver are secured by a first priority lien on substantially all of the Company’s and the subsidiary guarantors’ existing and future deposit accounts, inventory and receivables, and certain related assets, and a second priority lien on all of Tronox’s and the subsidiary guarantors’ other assets, including capital stock which serve as security under Tronox’s $425.0 million exit facility (the “Exit Financing Facility”).

The Wells Revolver bears interest at the Company’s option at either (i) the greater of the prime lending rate as announced by Wells Fargo Bank, N.A., (ii) the Federal Funds Rate plus 0.50%, or (iii) the one month LIBOR rate plus 0.50%, plus a margin that varies from 2.0% to 3.5% per annum depending on the ~~TRONOX~~average excess availability under the revolver. The unused portion of the Wells Revolver is subject to a commitment fee of 0.75% per annum on the average unused portion of the revolver, payable monthly in arrears. Interest is payable quarterly ~~INCORPORATED~~ or, if the prime lending rate or Federal Funds Rate applies, is payable monthly.

During 2012, the Company ~~NOTES~~had no borrowings against the Wells Revolver. During 2011, to facilitate its exit from bankruptcy and help pay for the buy-in of its 50% share of the Kwinana Facility TiO2 expansion, the Company borrowed $39.0 million against the Wells Revolver, which by December ~~TO CONDENSED~~31, ~~CONSOLIDATED~~2011, ~~FINANCIAL~~was fully ~~STATEMENTS — (Continued)~~ repaid using cash generated from operations.

~~effective~~On ~~April~~February 18, ~~2009~~2012, ~~certain features will change, including~~ the ~~cost-sharing~~Company ~~provisions~~amended ~~between~~ the ~~company~~Wells ~~and plan~~Revolver ~~participants,~~to ~~life~~allow ~~insurance benefits and certain~~for ~~retirement eligibility criteria. This announcement resulted in a plan remeasurement, which was performed by~~ the ~~company’s actuary~~Transaction ~~in August 2007. A new discount rate of 6.25% was selected by management for this remeasurement due~~ to ~~changes~~occur ~~in certain~~while ~~economic~~keeping ~~indicators since~~ the ~~previous~~revolver ~~measurement~~in ~~as of December 31, 2006~~force. The remeasurement reduced the company’s postretirement benefit obligation by $93.1 million, impacted the unrecognized prior service cost component of other comprehensive income by $47.7 million, net of taxes, and impacted the unrecognized actuarial loss component of other comprehensive income by $10.3 million, net of taxes.

OnSubsequent ~~June 30, 2008, the company announced additional changes~~ to the ~~cost-sharing provisions between the company and plan participants to take effect beginning on April 1~~Transaction, ~~2009. This~~Tronox ~~announcement~~Limited ~~resulted~~will inhave ~~a plan remeasurement, which was performed by~~ the ~~company’s actuary in June 2008. A new~~ ~~discount~~opportunity ~~rate of 6.75% was selected by management for this remeasurement due~~ to ~~changes~~upsize inor ~~certain~~add ~~economic~~additional ~~indicators since~~asset ~~the~~based ~~previous~~lending ~~measurement~~facilities ~~as of December 31, 2007. The remeasurement reduced the company’s postretirement benefit obligation by $28.2 million. The changes~~ in ~~plan~~foreign ~~benefits impacted~~jurisdictions ~~the~~up ~~unrecognized~~to ~~prior~~a ~~service~~total ~~cost~~limit ~~component~~ of ~~other comprehensive income by~~ $13400.~~4 million,~~0 net of taxes, and the change in the discount rate assumption along with the change in claims estimates impacted the unrecognized actuarial loss component of other comprehensive income by $4.2 million~~, net of taxes~~. ~~The remeasurement will reduce 2008 estimated annual net periodic cost by approximately $2.1 million in the second half of 2008.~~

InLong-Term ~~2008,~~Debt lump sum payments under the company’s U.S. nonqualified pension plan were made as a result of certain employee retirements. The total amount of lump sum payments was sufficiently large to require the company to record a partial settlement on that plan in accordance with SFAS No. 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits” (“SFAS No. 88”). The partial settlement resulted in a plan remeasurement, which was performed by the company’s actuary in June 2008. A new discount rate of 6.75% was selected by management for this remeasurement due to changes in certain economic indicators since the previous measurement as of December 31, 2007. The remeasurement reduced the company’s projected benefit obligation by $0.3 million and impacted the unrecognized actuarial loss component of other comprehensive income by $0.2 million, net of taxes. In addition, the company recorded a settlement loss of $1.2 million recognized in expense for the three and six months ended June 30, 2008, in the accompanying Condensed Consolidated Statements of Operations.

~~Effective~~Long-term ~~January 1,~~debt ~~2008,~~consisted of the ~~company’s U.S. pension~~following ~~plan~~at ~~was amended to reflect certain changes~~March 31, ~~including~~ ~~prospective~~2012 ~~changes to retirement eligibility criteria, early retirement factors~~ and the final average pay calculation. These changes are reflected in the company’s financial statements as a reduction in the service cost component of net periodic cost for 2008 and future periods. The company estimates that the changes will resulted in lower expense of approximately $0.9December ~~million~~31, ~~for~~2011: ~~the first half 2008.~~

12. Employee Stock-Based Compensation


	Initial				Successor
	Principal Amount		Maturity Date		March 31, 2012			December 31, 2011
Term Facility(1)	$	550.0		2/8/18	$	550.0		$	—
Exit Financing Facility(2)	$	425.0		10/21/15		—			420.8
Co-generation Unit Financing Arrangement	$	8.0		2/1/16		6.3			6.5

Total debt						556.3			427.3
Less: Long-term debt due in one year						(4.4	)		(5.9	)

Long-term debt					$	551.9		$	421.4

~~The company’s Long Term Incentive Plan~~ (~~“LTIP”~~1) ~~authorizes~~ ~~the~~Average ~~issuance~~effective ofinterest ~~certain~~rate ~~stock-based awards including fixed-price stock options, restricted stock awards and performance awards, among others. In January 2008, the compensation committee~~ of ~~the Board of Directors authorized the issuance of approximately 260,000 stock options, 273,000 restricted stock-based awards and 4,174,000 performance units~~5. ~~Performance~~0% ~~units are awards that management intends to settle~~ in ~~cash at the end of a three-year performance cycle (as defined in the LTIP)~~2012. The contractual life and vesting period for performance units directly relate to the performance cycle and are generally three years. Performance units are liability awards (as defined by applicable accounting guidance) and are based on achievement of specified shareholder return targets, including a comparison to the returns of peer group companies for the same performance period. Liability awards are required to be remeasured on a quarterly basis until the settlement date at the end of the vesting period. Employees terminating their employment due to retirement, death or disability, retain the right to receive a pro-rata payout under the performance units awards.

(2)	Average effective interest rate of 7.1% and 7.2% in 2012 and 2011, respectively.

The Company’s debt is recorded at historical amounts. At March 31, 2012 and December 31, 2011, the total carrying value of long-term debt approximates its fair value due to the variable interest rates and frequent repricing of such instruments. The fair value hierarchy for long-term debt is a Level 2 input.

The scheduled maturities of the Company’s long-term debt were as follows at March 31, 2012:


	Total Debt
2012	$	2.6
2013		7.1
2014		7.1
2015		7.1
2016		5.7
Thereafter		526.7

Total debt	$	556.3

Exit Financing Facility

On February 14, 2011, the Company’s senior secured super-priority DIP and Exit Credit Agreement (the “Final DIP Facility”) with Goldman Sachs Lending Partners (“GSLP”), in accordance with its terms, converted into the Exit Financing Facility, with a maturity date of October 21, 2015.

The Exit Financing Facility bore interest at the greater of a base rate plus a margin of 4.0% or adjusted Eurodollar rate plus a margin of 5.0%. The base rate was defined as the greater of (i) the prime lending rate as quoted in the print edition of The Wall Street Journal, (ii) the Federal Funds Rate plus 0.50%, or (iii) 3%. The adjusted Eurodollar rate is defined as the greater of (i) the LIBOR rate in effect at the beginning of the interest period, or (ii) 2.0%. Interest was payable quarterly or, if the adjusted Eurodollar rate applied, it was payable on the last day of each interest period.

The Exit Financing Facility was secured by a first priority lien on substantially all of ~~TRONOX INCORPORATED~~ Tronox’s and the Subsidiary Guarantors’ existing and future property and assets.

The terms of the Exit Financing ~~NOTES~~Facility provided for customary representations and warranties, affirmative and negative covenants and events of default. The terms of the covenants, subject to certain exceptions, restricted, among other things: (i) TOdebt incurrence; ~~CONDENSED~~(ii) lien ~~CONSOLIDATED~~incurrence; ~~FINANCIAL STATEMENTS~~(iii) —investments, dividends and distributions; (iv) dispositions of assets and subsidiary interests; (~~Continued~~v) acquisitions; (vi) sale and leaseback transactions; and (vii) transactions with affiliates and shareholders. The Exit Financing Facility also contained covenants that limited the amount of capital expenditures to $55.0 million per year, with a carry-forward of the excess of the $55.0 million over the amount utilized in the prior year, but with no more than $15.0 million able to be carried-forward from one year to the next. In addition, the Exit Financing Facility required certain financial ratios to be maintained.

~~The~~Term ~~company~~Facility estimates valuation assumptions for stock option and performance unit awards. For stock options the company uses the Black-Scholes option-pricing model and significant inputs and assumptions are summarized in the table below.

	January 2008
	Assumptions
Grant-date share price	$	7.48
Exercise price	$	7.48
Risk-free interest rate		3.47	%
Expected dividend yield (1)		2.67	%
Expected volatility		36	%
Expected life (years)		6.2
Per-unit fair value of options granted	$	2.31

On February 8, 2012, the Company refinanced its Exit Facility and obtained a new Term Loan facility comprised of a $550.0 million Senior Secured Term Loan and a $150.0 million Senior Secured Delayed Draw Term Loan (together, the Term Facility). The Term Facility expressly permits the Transaction and, together with existing cash, is expected to fund the cash needs of the combined business, including any cash needs arising from the Transaction. The Term Facility has a maturity date of February 8, 2012.

~~(1)~~The ~~Awards~~Term ~~subsequent~~Facility tobears ~~those~~interest ~~issued~~at ina ~~January~~base ~~2008~~rate ~~will~~plus ~~incorporate~~a ~~revised~~margin ~~assumptions~~of on2.25% ~~the~~or ~~expected~~adjusted ~~dividend~~Eurodollar ~~yield~~rate plus a margin of 3.25%. The base rate is defined as athe ~~result~~greater of (i) the ~~suspension~~prime lending rate as quoted in the print edition of ~~quarterly~~The ~~dividends~~Wall ~~announced~~Street byJournal, (ii) the ~~company~~Federal inFunds ~~May~~Rate ~~2008~~plus 0.50%, or (iii) 2%.

~~For~~The ~~performance~~Term ~~units,~~Facility ~~the~~is ~~company~~secured ~~uses~~by a ~~Monte~~first ~~Carlo~~priority ~~simulation model~~lien toon ~~estimate~~substantially ~~fair~~all ~~value at the end~~ of ~~each reporting period. This model uses multiple input variables to determine~~ the ~~probability of satisfying the award~~Company’s ~~market conditions. Inputs into the model include the following for Tronox~~ and ~~peer group companies: total shareholder return from~~ the ~~beginning~~subsidiary ~~of the performance cycle through the measurement~~guarantors’ ~~date,~~existing ~~volatility, risk-free rates~~ and ~~correlation~~future ~~of Tronox’s~~property and ~~peer group companies’ total shareholder return~~assets. ~~The~~This ~~inputs~~will ~~are~~include, ~~based~~upon onthe ~~historical~~consummation ~~capital~~of ~~market data. The total fair-value-based obligation associated with awards expected to vest is further adjusted to reflect~~ the ~~extent~~Transaction, ~~to which~~certain ~~employee~~assets ~~services necessary~~ to ~~earn~~be ~~the~~acquired ~~awards have been rendered. Compensation cost for any given period equals the increase or decrease~~ in the ~~liability for awards outstanding and expected to vest~~Transaction.

~~For~~The terms of the ~~three~~Term ~~months~~Facility ~~ended~~provides ~~June 30,~~for ~~2008~~customary representations and ~~2007~~warranties, ~~compensation~~ ~~expense~~affirmative ~~related~~and tonegative ~~all~~covenants ~~stock-based~~and ~~awards,~~events ~~totaled $1~~of default.~~1 million~~ ~~and~~The ~~$1.8 million~~terms of the covenants, ~~respectively.~~subject ~~For~~to ~~the~~certain exceptions, ~~six~~restrict, ~~months~~among ~~ended~~other ~~June~~things: (i) 30debt incurrence; (ii) lien incurrence; (iii) investments, ~~2008~~dividends and ~~2007,~~distributions; ~~compensation expense~~(iv) dispositions ~~related~~of toassets ~~all~~and ~~stock-based~~subsidiary ~~awards~~interests; ~~totaled $2.2~~(v) ~~million~~acquisitions; (vi) sale and ~~$4.9~~leaseback transactions; and (vii) ~~million,~~transactions ~~respectively~~with affiliates and shareholders.

13In connection with the refinancing, the Company paid debt issuance costs of $24.5 ~~Contingencies~~million, of which $5.5 million was paid in 2011 and $19.0 million was paid in 2012. Such costs are recorded in “Prepaid and other assets” on the Condensed Consolidated Balance Sheet and are being amortized through the maturity date.

~~The~~Co-generation ~~following~~Unit ~~table~~Financing ~~summarizes~~Arrangement the contingency reserve balances, provisions, payments and settlements for the six months ended June 30, 2008, as well as balances, accruals and receipts of reimbursements of environmental costs from other parties.

			Reserves for
	Reserves for		Environmental			Reimbursements
	Litigation		Remediation (1)			Receivable (2)
	(In millions)
Balance, December 31, 2007	$	9.6	$	188.8		$	67.6
Provisions/accruals		—		10.2			9.5
Payments/settlements		—		(15.2	)		(14.0	)
Balance, June 30, 2008	$	9.6	$	183.8		$	63.1

In March 2011, the Tiwest Joint Venture acquired a steam and electricity gas fired co-generation plant, adjacent to its Kwinana pigment plant, through a five year financing arrangement. Tronox Western Australia Pty Ltd, the Company’s wholly owned subsidiary, owns a 50% undivided interest in the co-generation plant through the Tiwest Joint Venture. As a result, the Company incurred additional debt totaling $8.0 million, in order to finance its share of the asset purchase. Under the financing arrangement, monthly payments are required and interest accrues on the remaining balance owed at the rate of 6.5% per annum.

(1)		Provisions for environmental remediation and restoration include $4.0 million related to the company’s former thorium compounds manufacturing, uranium and refining operations. These charges are reflected in the Condensed Consolidated Statements of Operations as a component of loss from discontinued operations (net of taxes).
(2)		Accruals for environmental remediation and restoration reimbursements include $3.8 million related to the company’s former thorium compounds manufacturing, uranium, nuclear and refining operations, which are reflected in the Condensed Consolidated Statements of Operations as a component of loss from discontinued operations (net of taxes).

Financial Covenants

The Term Facility requires that a leverage ratio, as defined in the agreement, not exceed, as of the last day of any fiscal quarter, the correlative ratio as follows:


Fiscal Quarter Ending	Total Leverage Ratio
June 30, 2012 through December 31, 2015		3.00:1.00
March 31, 2016 and thereafter		2.75:1.00

The Wells Revolver contains various covenants and restrictive provisions which limits the Company’s ability to incur additional indebtedness. The Wells Revolver agreement requires us to maintain a Consolidated Fixed Charge Coverage Ratio of 1.0 to 1.0 calculated monthly, only if excess availability on the Wells Revolver is less than ~~TRONOX~~$18.75 million. If we are required to maintain the Consolidated Fixed Charge Coverage Ratio then either: i) the Consolidated Adjusted EBITDAR for the test period shall not be less than the Specified EBITDAR percentage of 65% of the ~~INCORPORATED~~Consolidated Adjusted EBITDAR of the parent and its subsidiaries for all periods ending on or prior to December 31, 2012 or ii) the Consolidated Adjusted EBITDAR during the test period shall not be less than the Specified EBITDAR threshold of $100.0 million; provided that the Specified EBITDAR threshold shall be reduced by $1.25 million on the last day of each month, commencing on January 31, 2012 and ending on December 31, 2012, until such time as the Specified Adjusted EBITDAR threshold is reduced to $85.0 million.

~~NOTES TO CONDENSED~~The ~~CONSOLIDATED~~Term ~~FINANCIAL~~Facility and the Wells Revolver are subject to an ~~STATEMENTS — (Continued)~~ intercreditor agreement pursuant to which the lenders’ respective rights and interests in the security are set forth.

~~Management~~The ~~believes,~~Company ~~after~~was ~~consultation~~in compliance with its ~~internal~~financial ~~legal counsel,~~covenants ~~that~~at ~~currently~~March 31, ~~the~~2012. ~~company~~A isbreach ~~reserved~~of ~~adequately~~any ~~for~~ of the ~~probable~~covenants ~~and~~imposed ~~reasonably~~on ~~estimable~~the Company ~~costs~~by ofthe ~~known environmental~~terms ~~matters~~of ~~and~~the ~~other~~Term ~~contingencies.~~Facility ~~However, additions~~or to the ~~reserves~~Wells ~~may~~Revolver becould ~~required~~result asin ~~additional information~~a isdefault ~~obtained~~under ~~that~~the ~~enables~~agreement. In the ~~company~~event toof ~~better estimate~~a ~~its liabilities~~default, ~~including~~the ~~liabilities~~lenders atcould ~~sites~~terminate ~~now under~~their ~~review.~~commitments Atto ~~this~~the ~~time,~~Company ~~however,~~and ~~the~~could ~~company~~accelerate ~~cannot~~the ~~reliably estimate~~repayment aof ~~range~~all of ~~future additions to~~ the ~~reserves for any~~ ~~individual~~Company’s ~~site~~indebtedness orunder ~~for~~the ~~all~~agreement. ~~sites~~In ~~collectively.~~such ~~Reserves~~case, ~~for environmental~~the ~~sites~~Company ~~are~~may ~~based,~~not ~~among~~have ~~other~~sufficient ~~factors,~~funds ~~on assumptions~~to ~~regarding~~pay the ~~volumes~~total amount of ~~contaminated~~accelerated ~~soils~~obligations, and ~~groundwater~~ ~~involved,~~its aslenders ~~well~~could asproceed ~~associated~~against ~~excavation, transportation~~the ~~and~~collateral ~~disposal costs~~pledged.

~~The~~Interest company provides for costs related to contingencies when a loss is probable and the amount is reasonably estimable. It is not possible for the company to reliably estimate the amount and timing of all future expenditures related to environmental and legal matters and other contingencies because, among other reasons: Expense

• Some sites are in the early stages of investigation, and other sites may be identified in the future. • Remediation activities vary significantly in duration, scope and cost from site to site depending on the mix of unique site characteristics, applicable technologies and regulatory agencies involved. • Remediation requirements are difficult to predict at sites where remedial investigations have not been completed or final decisions have not been made regarding remediation requirements, technologies or other factors that bear on remediation costs. • Environmental laws frequently impose joint and several liability on all potentially responsible parties (“PRPs”), and it can be difficult to determine the number and financial condition and possible defenses of PRPs and their respective shares of responsibility for clean-up costs. • Environmental laws and regulations, as well as enforcement policies and clean-up levels, are continually changing, and the outcome of court proceedings, alternative dispute resolution proceedings (including mediation) and discussions with regulatory agencies are inherently uncertain. • Unanticipated construction problems and weather conditions can hinder the completion of environmental remediation. • Some legal matters are in the early stages of investigation or proceeding or their outcomes otherwise may be difficult to predict, and other legal matters may be identified in the future. • The inability to implement a planned engineering design or use planned technologies and excavation or extraction methods may require revisions to the design of remediation measures, which can delay remediation and increase costs. • The identification of additional areas or volumes of contamination and changes in costs of labor, equipment and technology generate corresponding changes in environmental remediation costs.


	Successor						Predecessor
	Three Months			Two Months			One Month
	Ended March 31,			Ended March 31,			Ended January 31,
	2012			2011			2011
Interest expense	$	7.0		$	5.1		$	2.6
Amortization of deferred debt issuance costs		0.8			0.1			0.3
Other		0.4			0.2			—
Capitalized interest		(0.3	)		(0.1	)		—

Interest and debt expense	$	7.9		$	5.3		$	2.9

~~Current~~For ~~and former operations of~~ the ~~company~~one ~~require~~month ~~the management~~ended ~~of regulated materials and are subject to various environmental laws and regulations. These laws and regulations will obligate the company to clean up various sites at which petroleum~~January 31, ~~chemicals~~2011, ~~low-level~~interest ~~radioactive~~expense ~~substances and/or~~excludes ~~other materials~~$2.8 ~~have been contained~~million, ~~disposed~~which ofwould ~~or released. Some of these sites~~ have been ~~designated~~payable ~~Superfund~~under ~~sites by~~ the ~~U.S. Environmental~~ ~~Protection~~terms ~~Agency~~of (the ~~“EPA”), pursuant~~Company’s to$350.0 ~~the~~million ~~Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”) or state equivalents~~9.5% ~~Similar~~senior ~~environmental~~unsecured ~~laws and regulations and other requirements exist in foreign countries in which the company operates~~notes.

~~The table below presents environmental reserve provisions during the six-month period ending June~~12. ~~30,~~Other ~~2008~~Assets and ~~reserve balances~~Other asLiabilities of that date, for major sites, followed by discussion of those major sites. Although actual costs may differ from current estimates reflected in the reserve balances, the amount of any further revisions in remediation costs cannot be reasonably estimated at this time.

Prepaid and Other Current Assets — Prepaid and other current assets consisted of the following at March 31, 2012 and December 31, 2011:


	Successor
	March 31, 2012		December 31, 2011
Prepaid expenses	$	5.9	$	10.2
Cash collateralized letters of credit and surety bonds		5.0		4.9
Other		7.1		6.6

Total	$	18.0	$	21.7

Other Long-Term Assets — Other long-term assets consisted of the ~~TRONOX INCORPORATED~~ following at March 31, 2012 and December 31, 2011:

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Successor
	March 31, 2012		December 31, 2011
Debt issuance costs, net	$	26.5	$	8.4
Deferred tax benefits		8.3		9.0
Other, net		2.5		3.2

Total	$	37.3	$	20.6

	Provisions/Accruals		Reserve		Reimbursement
	for the		Balance at		Receivable at
	Six Months Ended		June 30,		June 30,
Location of Site	June 30, 2008		2008		2008
	(Millions of dollars)
Henderson, Nevada (1)	$	6.2	$	27.3	$	26.3
West Chicago, Illinois		0.2		49.2		19.2
Ambrosia Lake, New Mexico		—		7.9		—
Crescent, Oklahoma		—		9.1		—
Manville, New Jersey		—		35.0		17.5
Sauget, Illinois		—		5.6		—
Cleveland, Oklahoma (2)		3.8		7.1		—
Cushing, Oklahoma		—		9.0		—
Jacksonville, Florida		—		4.8		—
Riley Pass, South Dakota		—		1.5		—
Other sites		—		27.3		0.1
Total of all sites with reserves	$	10.2	$	183.8	$	63.1

Noncurrent Liabilities — Other — Noncurrent liabilities — other consisted of the following at March 31, 2012 and December 31, 2011:

(1)	A $6.2 million provision was recorded in the second quarter of 2008 for the Henderson Environmental Conditions Assessment (ECA) with a corresponding reimbursement receivable of $5.6 million.
	Successor
(2)	A $3.8 million provision was recorded in the second quarter of 2008 for a reassessment of soil volumes to be disposed of subsequent to discovery of asbestos impacted material at the site.
	March 31,2012		December 31,2011
Reserve for uncertain tax positions	$	1.0	$	0.9
Asset retirement obligations		30.5		29.2
Reserve for workers’ compensation and general liability claims		8.8		8.5
Reserves for environmental remediation and restoration		0.5		0.5
Other		6.3		1.9
Total	$	47.1	$	41.0

~~Following~~13. Commitments ~~are discussions regarding certain environmental sites~~ and ~~litigation~~Contingencies ~~of the company.~~

Letters of Credit — At March 31, 2012, the Company had outstanding letters of credit in the ~~Environmental~~ amount of approximately $31.1 million, of which $26.3 million was outstanding under the Wells Revolver.

~~Henderson~~Other Commitments — The Company entered into certain agreements prior to the bankruptcy that required it to indemnify third parties for losses related to environmental matters, ~~Nevada~~ litigation and other claims. No material obligations are presently known and, thus, no reserve has been recorded in connection with such indemnification agreements.

InEnvironmental ~~1998,~~Contingencies ~~Tronox~~Related ~~LLC decided~~ to ~~exit~~Ongoing ~~the~~Businesses ~~ammonium~~of ~~perchlorate business.~~Tronox At— ~~that~~In ~~time,~~accordance ~~Tronox~~with ~~LLC~~ASC ~~curtailed~~450, ~~operations~~Contingencies, and ~~began~~ ~~preparation~~ASC ~~for~~410, ~~the~~Asset Retirement ~~shutdown~~and ofEnvironmental ~~the~~Obligations, ~~associated~~Tronox ~~production facilities~~Incorporated inrecognizes ~~Henderson,~~a ~~Nevada,~~loss ~~that~~and ~~produced~~records ~~ammonium perchlorate~~an ~~and~~undiscounted ~~other~~liability ~~related~~when ~~products.~~litigation ~~Manufacture~~has ~~of perchlorate~~commenced ~~compounds~~or ~~began~~a atclaim ~~Henderson~~or inan ~~1945~~assessment inhas ~~facilities owned~~been byasserted, ~~the~~or, ~~U.S. government.~~based ~~The~~on ~~U.S. Navy~~available ~~expanded~~information ~~production~~commencement ~~significantly~~of inlitigation ~~1953~~or ~~when~~assertion ~~it completed construction~~ of a ~~plant~~claim ~~for~~or ~~the~~assessment ~~manufacture~~is ofprobable, ~~ammonium~~and ~~perchlorate.~~the ~~The U.S. Navy~~associated ~~continued~~costs tocan ~~own~~be ~~the~~estimated. ~~ammonium~~It ~~perchlorate~~is ~~plant, as~~not ~~well~~possible asfor ~~other~~the ~~associated~~Company ~~production~~to ~~equipment~~reliably atestimate ~~Henderson, until 1962, when~~ the ~~plant~~amount ~~was~~and ~~purchased~~timing byof aall ~~predecessor~~future ofexpenditures ~~the~~related to ~~company.~~environmental ~~The~~matters ~~ammonium~~because, ~~perchlorate~~among ~~produced~~other atreasons, ~~the~~environmental ~~Henderson facility~~laws ~~was~~and ~~used~~regulations, ~~primarily~~as inwell ~~federal~~as ~~government~~enforcement ~~defense~~policies and ~~space~~ ~~programs.~~clean ~~Perchlorate~~up ~~that may have originated~~levels, atare ~~least in~~continually ~~part~~changing, ~~from~~and the ~~Henderson~~outcome ~~facility~~of ~~has~~court ~~been~~proceedings, ~~detected~~alternative indispute ~~nearby~~resolution proceedings ~~Lake~~(including ~~Mead~~mediation) and ~~the~~discussions ~~Colorado~~with ~~River,~~regulatory ~~which~~agencies ~~contribute~~are toinherently ~~municipal water supplies in Arizona, Southern California and Southern Nevada~~uncertain.

Tronox ~~LLC~~Incorporated believes ~~began~~that ~~decommissioning~~it has reserved adequately for the ~~facility~~probable and ~~remediating associated~~reasonably ~~perchlorate~~estimable ~~contamination,~~costs ~~including~~of ~~surface impoundments~~known ~~and~~contingencies. ~~groundwater~~There is no environmental litigation, ~~when~~claim itor ~~decided~~assessment tothat ~~exit~~has ~~the business~~been inasserted ~~1998.~~nor Inis ~~1999~~there ~~and~~any ~~2001,~~probability ~~Tronox~~of ~~LLC~~an ~~entered~~assessment ~~into~~or a ~~consent~~claim ~~orders~~for ~~with~~which the ~~Nevada~~Company ~~Division~~has ofnot ~~Environmental Protection~~recorded (a liability. However, additions to the ~~“NDEP”)~~reserves may be required as additional information is obtained that ~~require~~enables itthe Company to ~~implement both~~better ~~interim~~estimate ~~and~~its ~~long-term~~liabilities. ~~remedial~~The ~~measures~~Company tocannot ~~capture~~reliably ~~and~~estimate the ~~remove~~amount ~~perchlorate~~of ~~from~~future ~~groundwater~~additions to the reserves at this time. In ~~April~~certain ~~2005~~situations, ~~Tronox~~reserves ~~LLC entered~~may ~~into~~be anprobable ~~amended~~but ~~consent~~may ~~order~~not ~~with~~be ~~the~~estimable. ~~NDEP that requires~~Additionally, sites may be identified in ~~addition~~the tofuture where the ~~capture~~Company ~~and~~could ~~treatment~~have ofpotential liability for environmental ~~groundwater~~related matters. If a site is identified, the ~~closure~~Company ofwill aevaluate ~~certain~~to ~~impoundment~~determine ~~related~~what toreserve, ~~the past~~if ~~production~~any, should be established. For additional discussion of ~~ammonium~~environmental ~~perchlorate~~matters, ~~including~~see ~~treatment~~“Management’s Discussion and ~~disposal~~ Analysis of ~~solution~~Financial Condition and ~~sediment~~Results ~~contained~~of ~~in the impoundment~~Operations. ”

The Company’s reserves for environmental contingencies related to its ongoing businesses amounted to $0.6 million at March 31, 2012, of which $0.5 million was classified in “Other Non-current Liabilities” on the Condensed Consolidated Balance Sheets.

The following table summarizes the contingency reserve balances, provisions, payments and ~~TRONOX INCORPORATED~~ settlements for the three months ended March 31, 2012, as well as balances, accruals and receipts of reimbursements of environmental costs from other parties.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Reserves for Environmental Remediation (1)
Successor: Balance at December 31, 2011	$	0.6
Provisions/Accruals		—
Payments		—

Successor: Balance at March 31, 2012	$	0.6

~~A separate consent agreement reached in 1996 with the NDEP also requires Tronox LLC to conduct an Environmental Conditions Assessment~~ (~~“ECA”~~1) toBalance ~~test for various potential contaminants~~ at ~~the~~March ~~site.~~31, ~~The~~2012 ~~ECA~~includes ~~is ongoing and NDEP has required a two-phase characterization of all potential source areas on the site~~$0.3 ~~The~~million ~~second~~related ~~phase~~to of the ~~site~~Company’s ~~investigation including~~Oklahoma ~~preparation~~Tech ~~of a risk assessment is expected to be completed by mid-2009~~Center. ~~The~~These ~~$6.2 million~~charges ~~reserve~~are ~~provision shown~~reflected ~~above~~in ~~covers increased costs for~~ the ~~expanded~~Condensed ~~soil~~Consolidated ~~and groundwater~~Statements ~~investigation required by NDEP. NDEP has conditionally approved five~~ of ~~six~~Operations ~~work~~as ~~plans~~“Provision ~~submitted~~for ~~by Tronox.~~environmental ~~Results~~remediation ~~of testing may lead to further site characterization~~ and ~~remediation~~restoration, ~~the~~net ~~costs~~ of ~~which, if any, are not currently included in the financial reserves discussed below~~reimbursements. ”

InLegal ~~1999,~~— ~~Tronox~~The ~~LLC~~Western ~~initiated~~Australian ~~the~~Office ~~interim~~of ~~measures~~State ~~required~~Revenue by (the ~~consent~~“OSR”) ~~orders.~~continues Ato ~~long-term~~review ~~remediation~~their ~~system~~technical isposition ~~operating in~~on ~~compliance~~the ~~with~~imposition ~~the~~of ~~consent~~stamp ~~orders.~~duty ~~Initially,~~on the transfer ~~remediation~~of ~~system~~the ~~was~~Company’s ~~projected~~shares related to ~~operate~~Kerr-McGee’s ~~through~~restructuring ~~2007. However,~~in ~~studies~~2002 ofand from the ~~decline~~share oftransfer ~~perchlorate~~related ~~levels~~to in the ~~groundwater~~ ~~indicate~~spinoff ~~that~~of ~~Tronox~~the ~~LLC~~Company ~~may~~from ~~need~~Kerr-McGee toin ~~operate the system through 2011~~2005. The ~~scope,~~OSR ~~duration~~recently ~~and~~contacted ~~cost~~the ofCompany ~~groundwater remediation~~seeking ~~likely~~additional ~~will~~information berelated to ~~driven in~~ the ~~long~~2005 ~~term~~spinoff. byIn ~~drinking water standards regarding perchlorate~~addition, ~~which~~the toOSR ~~date~~informed ~~have~~the ~~not been~~Company ~~formally~~that ~~established~~it byhas ~~applicable~~made ~~state~~a orpreliminary ~~federal regulatory~~determination ~~authorities.~~that ~~The~~the ~~EPA~~Company ~~and~~was ~~other~~land ~~federal~~rich ~~and~~at ~~state agencies~~the ~~continue~~time toof ~~evaluate~~ the ~~health~~2002 ~~and~~share ~~environmental~~transfers ~~risks associated~~and, ~~with perchlorate~~ as ~~part~~a ofresult, the ~~process~~Company ~~for ultimately~~may ~~setting~~be ~~drinking~~liable ~~water~~for ~~standards.~~stamp ~~Two~~duty ~~state agencies,~~and ~~the~~penalties ~~Massachusetts~~arising ~~Department~~from ofthat ~~Environmental~~share ~~Protection~~transfer. ~~and~~The ~~the California~~OSR ~~Environmental~~has ~~Protection~~not ~~Agency~~made ~~have~~an ~~established maximum~~assessment ~~contaminant~~at ~~levels~~this ~~(MCLs)~~time ~~for~~and ~~perchlorate~~continues ofdiscussions 2with ~~parts~~the ~~per billion~~Company and 6its ~~parts~~legal ~~per billion, respectively~~advisors. ~~Also,~~The ~~the~~Company ~~EPA~~ has ~~established~~ aaccrued ~~reference~~stamp ~~dose~~duty ~~for~~on ~~perchlorate,~~the ~~which~~2002 istransaction ~~a preliminary~~in ~~step~~the toamount ~~setting~~of ~~drinking water standards~~$3.2 ~~The~~million ~~establishment~~based ofupon ~~applicable~~its ~~drinking~~position ~~water~~that ~~standards~~the ~~could materially~~Company ~~affect~~was ~~the~~not ~~scope,~~land ~~duration~~rich ~~and~~at ~~cost~~the time of the ~~long-term groundwater~~share ~~remediation~~transfers. ~~that~~The ~~Tronox~~Company ~~LLC~~intends ~~is required~~ to ~~perform. The~~exercise ~~long-term~~all ~~scope, duration and cost~~ of ~~groundwater remediation~~its ~~and~~legal ~~impoundment closure are uncertain~~ and~~, therefore,~~ ~~additional~~administrative ~~costs~~remedies ~~beyond those accrued may be incurred~~ in the ~~future.~~event ~~However,~~that the ~~amount~~OSR ofmakes ~~additional~~an ~~costs,~~assessment ifbased ~~any, cannot~~upon beits ~~reasonably~~claim ~~estimated~~that atit ~~this~~is land ~~time~~rich.

~~Litigation —~~Registration InRights ~~2000,~~Agreement ~~Tronox~~— ~~LLC~~On ~~initiated litigation~~the ~~against~~Effective Date, the ~~United~~Company ~~States~~entered ~~seeking~~into ~~contribution for~~a ~~its~~Registration ~~Henderson~~Rights ~~response~~Agreement ~~costs.~~(the ~~The~~“Registration ~~suit~~Rights ~~was~~Agreement”) ~~based~~with oncertain ~~the~~stockholders ~~fact that~~of the ~~government~~Company ~~owned~~party ~~the~~thereto. ~~plant~~Pursuant into the ~~early~~Registration ~~years~~Rights ~~of its operation~~Agreement, ~~exercised~~among ~~significant~~other ~~control~~things, ~~over production at~~ the ~~plant~~ ~~and~~Company ~~the~~was ~~sale~~required ofto ~~products~~file ~~produced~~with at the ~~plant~~SEC, ~~even while~~ ~~not~~pursuant ~~the~~to ~~owner,~~Section 13(a) ~~and was the largest consumer~~ of ~~products produced at~~ the ~~plant.~~Exchange ~~Before trial~~Act, ~~the~~a ~~parties~~registration ~~agreed~~statement tofor aits ~~settlement of~~common ~~the~~stock ~~claims~~prior ~~against~~to ~~the~~September 30, ~~United States~~2011. The ~~settlement~~Company ~~was memorialized~~did innot ameet ~~consent decree approved by~~ the ~~court on January~~September 1330, ~~2006.~~2011 Indeadline, ~~February~~and ~~2006~~therefore, ~~under~~was ~~the~~subject ~~consent decree,~~to ~~the~~liquidation ~~United~~damages ~~States~~of approximately ~~paid~~$2.0 million. The ~~Tronox~~Company ~~LLC~~accrued $202.5 0 million ~~in contribution~~related ~~for~~to ~~past~~such ~~costs.~~liability ~~Commencing~~during ~~January~~2011 and, as of December 131, 2011, the ~~United~~Company ~~States~~received ~~will~~and bepaid ~~obligated~~claims toin ~~pay~~the ~~21%~~amount of ~~Tronox LLC’s~~$0.6 ~~remaining~~million. ~~response~~The ~~costs~~remaining at$1.4 ~~Henderson,~~million ifof ~~any,~~claims ~~related~~were toreceived ~~perchlorate~~and paid during the first quarter of 2012.

~~Insurance~~Other ~~Reimbursement~~ Matters — InFrom ~~2001~~time to time, ~~Tronox~~the ~~LLC~~Company ~~purchased~~may be party to a ~~10-year, $100 million~~ ~~environmental~~number ~~cost~~of ~~cap~~legal ~~insurance~~and ~~policy~~administrative ~~for groundwater~~proceedings involving environmental and/or other ~~remediation~~matters atin ~~Henderson~~various courts or agencies. ~~The~~These ~~insurance policy~~proceedings, ~~provides~~individually ~~coverage~~and ~~after~~in ~~Tronox~~the ~~LLC~~aggregate, ~~exhausts~~may have a ~~self-insured~~ ~~retention~~material ofadverse ~~approximately~~effect ~~$62~~on the Company.~~3 million~~ ~~($61.3 million~~These ~~self-insured~~proceedings ~~retention,~~may ~~plus~~be anassociated ~~additional $1.0 million~~with ~~retention~~facilities ~~for~~currently ~~certain~~or ~~additional~~previously ~~coverage under~~owned, operated or used by the ~~policy)~~Company and/or ~~covers~~its ~~only~~predecessors, ~~those~~some ~~costs~~of ~~incurred~~which ~~to achieve~~may ainclude ~~cleanup~~claims ~~level~~for ~~specified~~personal ininjuries, ~~the~~property ~~policy.~~damages, Ascleanup ~~noted~~costs ~~above,~~and other ~~federal~~environmental matters. Current and ~~applicable~~former ~~state~~operations ~~agencies~~of ~~have~~the ~~not~~Company ~~established~~may ~~a drinking~~also ~~water~~involve ~~standard~~management ~~and,~~of ~~therefore~~regulated materials, itwhich isand ~~possible~~are ~~that Tronox~~subject ~~LLC~~to ~~may~~various beenvironmental ~~required~~laws toand ~~achieve~~regulations aincluding ~~cleanup~~the ~~level~~Comprehensive ~~more~~Environmental Response ~~stringent~~Compensation ~~than~~and ~~that~~Liability ~~covered~~Act by(“CERCLA”), the ~~policy~~Resource Conservation and Recovery Act (RCRA) or state equivalents. IfSimilar ~~so,~~environmental ~~the~~laws ~~amount recoverable~~and ~~under~~regulations ~~the~~and ~~policy~~other ~~may~~requirements beexist ~~less~~in ~~than~~foreign countries in which the ~~ultimate cleanup~~Company ~~cost~~operates.

~~At June 30, 2008, the company had received $18~~14.3 ~~million~~Statements of ~~cost~~Operations ~~reimbursement~~Data under the insurance policy, and expects that an estimated aggregate cleanup cost of $88.6 million less the $62.3 million self-insured retention to be covered by the policy (for a net amount of $26.3 million in potential reimbursement). The company believes that additional reimbursement of approximately $26.3 million is probable, and, accordingly, has recorded a receivable in the financial statements for that amount.

Other Income (Expense) — The components of other income (expense) consisted of:


	Successor					Predecessor
	Three Months			Two Months		One Month
	Ended March 31,			Ended March 31,		Ended January 31,
	2012			2011		2011
Net unrealized and realized foreign currency gain (loss)	$	(2.2	)	$	0.9	$	1.5
Interest income		0.2			0.1		0.1
Other		0.6			—		—

Total	$	(1.4	)	$	1.0	$	1.6

Reorganization Income — Items resulting from the Company’s reorganization from bankruptcy are classified as “Reorganization income” on Condensed Consolidated Statements of Operations. Upon emergence from bankruptcy, the Company no longer reports reorganization income or expense. Any residual income or costs are included in “Selling, general and administrative expenses” on the Condensed Consolidated Statements of Operations.

~~TRONOX INCORPORATED~~ The Company’s net charges for reorganization items were as follows:

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Predecessor
	One Month
	Ended January 31,
	2011
Legal and professional fees	$	(12.0	)
Indirect environmental claims		(24.3	)
Fees related to the Rights Offering and other debt related costs		(9.2	)
Forgiveness of debt		127.7
Gain as a result of application of fresh-start accounting		531.4

Total	$	613.6

~~West Chicago,~~15. Income ~~Illinois~~ Taxes

InThe ~~1973,~~following ~~Tronox~~table ~~LLC~~presents ~~closed~~the aincome ~~facility~~tax ~~in West Chicago~~provision, ~~Illinois, that~~along ~~processed~~with ~~thorium~~income ~~ores~~from ~~for~~continuing ~~the federal government and for certain commercial purposes. Historical~~ operations ~~had resulted in low-level radioactive contamination at the facility~~ and ~~in surrounding areas. The original processing facility is regulated by~~ the ~~State of Illinois (the “State”), and four~~effective ~~vicinity~~tax ~~areas~~rate: ~~are designated as Superfund sites on the National Priorities List (the “NPL”).~~

Closed Facility — Pursuant to agreements reached in 1994 and 1997 among Tronox LLC, the City of West Chicago and the State regarding the decommissioning of the closed West Chicago facility, Tronox LLC has substantially completed the excavation of contaminated soils and has shipped those soils to a licensed disposal facility. Surface restoration was completed in 2004, except for areas designated for use in connection with the Kress Creek and Sewage Treatment Plant remediation discussed below. Groundwater remediation is expected to continue for approximately six years. Groundwater monitoring is expected to continue for approximately ten years.


	Successor						Predecessor
	Three Months			Two Months			One Month
	Ended March 31,			Ended March 31,			Ended January 31,
	2012			2011			2011
Income tax provision	$	(17.4	)	$	(3.3	)	$	(0.7	)
Income from Continuing Operations before Income Taxes	$	103.7		$	13.5		$	632.2
Effective Tax Rate		16.8	%		24.4	%		0.1	%

~~Vicinity Areas —~~ The ~~EPA~~tax ~~has~~provisions ~~listed~~for ~~four areas in~~ the ~~vicinity~~2012 ofand ~~the~~2011 ~~closed~~Successor ~~West~~periods ~~Chicago~~differ ~~facility~~from on the ~~NPL and~~U.S. statutory ~~has~~rate ~~designated~~of 35% ~~Tronox~~primarily ~~LLC~~due asto avaluation ~~PRP~~allowances in ~~these four areas. Tronox LLC has substantially completed remedial work for three of~~ the ~~areas~~United ~~(known~~States ~~as the Residential Areas, Reed-Keppler Park~~ and ~~the~~income ~~Sewage~~in ~~Treatment~~foreign ~~Plant).~~jurisdictions Intaxed ~~June~~at ~~2007,~~rates alower ~~Chicago-area newspaper~~than ~~published articles suggesting that certain Residential Area properties were not cleaned up adequately in the 1980s or the 1990s~~35%. ~~The~~In ~~company believes~~ the ~~cleanup~~one ofmonth aended ~~significant portion~~January 31, of2011, the ~~Residential~~tax ~~Area~~provision ~~properties~~for ~~to be adequate, as~~ the ~~EPA~~Predecessor ~~was~~period ~~involved~~differs ~~indirectly~~from in the ~~cleanup~~U. ~~One property has been found to require additional assessment and cleanup~~S. ~~The~~ ~~company~~statutory israte ~~currently completing cleanup~~ of ~~this~~35% ~~property~~primarily ~~under an~~due ~~approved~~to ~~EPA~~fresh-start ~~workplan.~~adjustments, ~~The~~which ~~EPA~~were isbooked innet ~~the process~~ of ~~verifying the~~tax. ~~work~~Additionally, ~~done on~~ the ~~remaining~~Predecessor ~~residential~~period ~~properties.~~effective ~~The company~~tax ~~has~~rate ~~established~~was aimpacted ~~reserve~~by ~~for~~valuation ~~the~~allowances ~~work~~in ~~that~~multiple ~~has~~jurisdictions ~~been identified.~~and ~~Future~~income ~~requirements~~in ~~that~~foreign ~~may result from the planned~~jurisdictions ~~EPA~~taxed ~~work~~at ~~cannot~~lower berates ~~estimated~~than ~~at this time~~35%.

~~Work~~The ~~continues~~application atof ~~the~~fresh-start ~~other~~accounting ~~NPL~~on ~~site~~January 31, ~~known~~2011 asresulted ~~Kress~~in ~~Creek. The~~the ~~work~~re-measurement ~~involves removal~~ of ~~low~~deferred ~~level~~income ~~insoluble~~tax ~~thorium~~liabilities ~~residues principally~~associated ~~in streambanks and streambed sediments. Tronox LLC has reached an agreement~~ with the ~~appropriate~~revaluation ~~federal and state agencies and local communities regarding the characterization and cleanup~~ of the ~~sites,~~Company’s ~~past~~assets and ~~future~~liabilities ~~government~~pursuant ~~response costs,~~to ~~and~~ASC 852 ~~the~~(see ~~waiver of natural resource damages claims~~Note 5). ~~The agreement~~As isa ~~incorporated~~result, indeferred ~~consent~~income ~~decrees,~~taxes ~~which~~ were ~~approved~~ ~~and~~recorded ~~entered~~at byamounts ~~the~~determined ~~federal court~~ in ~~August 2005. The~~ ~~cleanup~~accordance ~~work,~~with ~~which~~ASC 740 ~~began in the third quarter~~ of ~~2005,~~$11.8 million ~~is expected~~as topart ~~be completed in 2010 and will require excavation~~ of ~~contaminated~~ ~~soils~~reorganization ~~and~~income. ~~stream~~Additionally, ~~sediments~~during ~~and~~2011, ~~shipment~~the ~~of excavated~~Company ~~materials~~released tovaluation aallowances ~~licensed~~against ~~disposal~~certain ~~facility. Restoration~~ of ~~affected~~its ~~areas~~deferred ~~will~~tax ~~continue~~assets ~~into~~in ~~2011. Monitoring of~~ the ~~restored~~ ~~areas~~Netherlands ~~will~~and ~~continue~~Australia ~~for~~resulting ~~three~~from ~~years after restoration~~this ~~is complete~~re-measurement.

~~Government~~For ~~Reimbursement —~~U.S. ~~Pursuant~~federal ~~to Title X~~income tax purposes, typically the ~~U.S. Department~~amount of ~~Energy~~cancellation of debt income (~~the~~ “~~DOE~~CODI”) recognized, isand ~~obligated~~accordingly tothe ~~reimburse~~amount ~~the~~of ~~company~~tax ~~for certain~~attributes ~~decommissioning~~that ~~and~~may ~~cleanup~~be ~~costs~~reduced, ~~incurred~~depends in ~~connection with~~part on the ~~West~~fair ~~Chicago~~market ~~sites~~value inof ~~recognition~~non-cash consideration given to creditors. On the Company’s date of emergence, the ~~fact~~fair ~~that~~market value of non-cash ~~about~~consideration ~~55%~~given was such that the creditors received consideration in excess of their claims. For this reason, the ~~facility’s~~company ~~production~~did ~~was~~not ~~dedicated~~recognize to any CODI and retained all of its U.S. ~~government~~ ~~contracts~~tax attributes. ~~The~~In ~~amount~~addition, ~~authorized~~the ~~for~~Company is reflecting a tax ~~reimbursement~~deduction ~~under~~for ~~Title X~~the ispremium paid to the creditors of $~~365~~ 1,129.7 million. ~~plus inflation~~This ~~adjustments.~~deduction ~~That~~will ~~amount~~increase isthe ~~expected~~Company’s tonet ~~cover~~operating ~~the government~~losses (“NOL’s”) ~~full~~in ~~share~~the ofUnited ~~West~~States ~~Chicago~~and ~~cleanup~~in ~~costs. Through~~various ~~June 30,~~states ~~2008,~~where the company ~~had~~has ~~been~~filing ~~reimbursed~~requirements. ~~approximately~~The resulting federal tax benefit of $~~315~~395.5 4 million ~~under~~and ~~Title X~~the estimated corresponding state tax benefit of $51.0 million, net of the deferred federal effect, have been fully offset by a valuation allowance in accordance with ASC 740, after considering all available positive and negative evidence. Because the financial offset for the consideration given to creditors was recorded through equity, neither the tax benefits nor the offsetting valuation allowance impacts are shown in the effective tax rate table above. Instead, the excess tax benefit, which nets to zero with the valuation allowance, is reflected as an equity adjustment.

~~Reimbursements~~Upon ~~under~~emergence ~~Title X~~from ~~are provided by congressional appropriations. Historically~~bankruptcy, ~~congressional appropriations have lagged~~ the ~~company’s clean-up expenditures.~~Company Asexperienced ofan ~~June 30,~~ownership ~~2008,~~change ~~the~~resulting ~~government’s share~~in ofa ~~costs~~limitation ~~incurred~~under byIRC ~~the~~Sections ~~company~~382 ~~but~~and ~~not~~383 ~~yet~~related ~~reimbursed~~to ~~by the~~its ~~DOE totaled approximately $19~~U.~~2 million,~~S. ~~which~~NOL’s ~~includes $3.4 million~~generated ~~accrued~~prior into ~~2008~~emergence. The ~~company received~~ ~~$11.3 million~~Company ~~from~~does ~~the~~not ~~government~~expect ~~in April 2008 and believes~~ that ~~receipt of~~ the ~~remaining~~application ~~$19.2~~of inthese ~~due~~limitations ~~course~~will ~~is probable~~have ~~and~~any ~~has~~material ~~reflected~~affect ~~that~~upon ~~amount~~its ~~as a receivable in the financial statements~~U.S. ~~The~~federal ~~company~~or ~~will~~state ~~recognize~~income ~~recovery~~tax ~~of the government’s share of future remediation costs for the West Chicago sites as it incurs the cash expenditures~~liabilities.

The Company continues to maintain a valuation allowance related to the net deferred tax assets in the United States. Future provisions for income taxes will include no tax benefits with respect to losses incurred and tax expense only to the extent of current payments until the valuation allowance in the United States is ~~TRONOX INCORPORATED~~ eliminated. ASC 740 requires that all available positive and negative evidence be weighted to determine whether a valuation allowance should be recorded.

~~NOTES TO CONDENSED~~16. ~~CONSOLIDATED~~Earnings ~~FINANCIAL STATEMENTS —~~ (~~Continued~~Loss) Per Share

~~Although~~The ~~actual~~following ~~costs~~table ~~may~~sets ~~differ~~forth ~~from current estimates,~~ the ~~amount~~ ofcomputation ~~any revisions in remediation costs, if any, cannot be reasonably estimated at this time. The amount~~ of ~~the~~basic ~~reserve~~and ~~is not~~diluted ~~reduced~~earnings byper ~~reimbursements~~share ~~expected~~ from ~~the~~continuing ~~federal government~~operations ~~under Title X of~~ for the ~~Energy~~periods ~~Policy~~indicated: ~~Act of 1992 (“Title X”).~~

Ambrosia Lake, New Mexico


	Successor				Predecessor
	Three Months		Two Months		One Month
	Ended March 31,		Ended March 31,		Ended January 31,
	2012		2011		2011
Income from Continuing Operations	$	86.3	$	10.2	$	631.5
Shares (In thousands)		15,078		14,924		41,311
Effect of Dilutive Securities:
Restricted Stock		49		265		88
Warrants		587		604		—
Options		19		—		—

Total Dilutive Shares		15,733		15,793		41,399
Basic Income per Share	$	5.72	$	0.68	$	15.29

Diluted Income per Share	$	5.48	$	0.65	$	15.25

~~From~~In ~~the~~computing ~~late~~diluted ~~1950s~~earnings ~~until~~per ~~1988,~~share ~~the~~under ~~company operated a uranium mining and milling operation at Ambrosia Lake near Grants, New Mexico, pursuant to a license issued by~~ the ~~Atomic~~treasury ~~Energy Commission~~stock ~~(the “AEC”)~~method, ~~now~~ the ~~Nuclear~~Company ~~Regulatory~~considered ~~Commission~~potentially ~~(the~~dilutive ~~“NRC”)~~shares. ~~When~~The ~~the~~number operation was sold, the company retained responsibility for certain environmental conditions existing at the site, including mill tailings, selected ponds and groundwater contamination related to the mill tailings and unlined ponds. Since 1989, the unaffiliated current owner of ~~the~~stock ~~site,~~options ~~Rio~~that ~~Algom~~were ~~Mining~~anti-dilutive ~~LLC~~because ~~(“Rio~~they ~~Algom”), has~~were ~~been~~not ~~decommissioning the site pursuant to the license issued by the NRC. Mill tailings, certain impacted surface soils and selected pond sediments have been consolidated~~ “in ~~an onsite containment unit. Under terms of~~ the ~~sales~~money” ~~agreement,~~was ~~which included provisions capping the liability of Rio Algom~~1, ~~the company became obligated to solely fund the remediation for the items described above when total expenditures exceeded $30 million~~152,408 ~~which occurred in late 2000. A decommissioning plan~~ for the ~~remaining~~one ~~impacted~~month ~~soil~~ended ~~was submitted by Rio Algom to the NRC in~~ January 2005 and was approved in July 2006. The soil decommissioning plan will take about three years to complete. The NRC has recently mandated additional erosion controls to protect the main tailings pile. This additional work will lengthen the time to complete NRC requirements to mid-2009. Groundwater treatment was discontinued after approval by the NRC in February 2006; however 31, ~~closure~~2011 ofat an ~~associated~~average ~~permit issued~~exercise byprice ~~the state~~ of ~~New Mexico is still pending~~$9. ~~The state of New Mexico has recently raised issues about certain non-radiological constituents in the groundwater at the site~~54. ~~Discussions~~ ~~regarding these issues are ongoing, and resolution could affect remediation costs and/or delay ultimate site closure.~~

InThe ~~addition~~following totable ~~those~~sets ~~remediation~~forth ~~activities~~the ~~described~~computation ~~above~~of ~~for which~~basic ~~reserves~~and ~~have~~diluted ~~been~~earnings ~~established,~~per asshare ~~described below, Rio Algom is investigating soil contamination potentially caused by past discharge of mine water~~ from ~~the~~discontinued ~~site,~~operations for ~~which~~the ~~no reserve~~periods ~~has~~indicated: ~~been established.~~

Litigation — On January 18, 2006, Rio Algom filed suit against Tronox Worldwide LLC in the U.S. District Court for the District of New Mexico. The suit seeks a determination regarding responsibility for certain labor-related and environmental remediation costs. Though Rio Algom seeks no specific amount in its complaint, it has asserted that future groundwater remediation costs for which it believes Tronox Worldwide LLC has responsibility could be as much as $128 million. Tronox Worldwide LLC believes these costs are hypothetical and unsupportable. Discovery has been completed. Past efforts to reach a settlement have not been successful. No trial date has been set. The company has not provided a reserve for this lawsuit beyond the above-mentioned remediation reserve because at this time, the probability of a loss and the amount of loss, if any, cannot be reasonably estimated.


	Successor				Predecessor
	Three Months		Two Months		One Month
	Ended March 31,		Ended March 31,		Ended January 31,
	2012		2011		2011
Loss from Discontinued Operations	$	—	$	—	$	(0.2	)
Basic Loss per Share		—		—		(0.01	)

Diluted Loss per Share	$	—	$	—	$	—

~~Crescent, Oklahoma~~ 17. Stockholders’ Equity

~~Beginning~~Common inStock ~~1965,~~— ~~Cimarron~~The ~~Corporation~~changes (“Cimarron”) operated a facility near Crescent, Oklahoma, at which it produced uranium and mixed oxide nuclear fuels pursuant to licenses issued by the AEC (now the NRC). Operations at the facility ceased in ~~1975.~~common ~~Since~~stock ~~that~~shares ~~time,~~outstanding ~~buildings~~ and ~~soils were~~treasury ~~decommissioned~~shares in accordance with the NRC licenses. In limited areas of the site, groundwater is contaminated with radionuclides, and, in 2003, Cimarron submitted to the NRC and the Oklahoma Department of Environmental Quality (the “ODEQ”) a draft remediation work plan addressing the groundwater contamination. In 2005, the company began evaluating available technologies to address remaining groundwater issues. A remediation technology has been selected, and the company submitted for ~~approval an amended plan to~~ the ~~NRC and the ODEQ~~three inmonths ~~December~~ended ~~2006. The plan describes the remediation of the remaining groundwater issues. While there can be no guarantee that the plan will be approved~~March 31, ~~the~~2012 ~~company~~were ~~believes~~as ~~the~~follows: ~~plan represents an appropriate remediation technology. Negotiations with the NRC on the plan approval are ongoing.~~


New common stock shares outstanding:
Outstanding at December 31, 2011			15,076,691
Stock-based compensation			8,443
Shares issued for warrants exercised			3,676
Claims			5

Balance at March 31, 2012			15,088,815

New common stock held as treasury shares:
Balance at December 31, 2011			94,513
Stock-based compensation			3,790

Balance at March 31, 2012			98,303

Warrants — As part of its emergence from bankruptcy, the Company authorized 544,041 Series A Warrants and 672,175 Series B Warrants. As of March 31, 2012, the Company had outstanding Series A Warrants to purchase 459,419 ordinary shares at an exercise price of $62.13 per ordinary share issued and outstanding and Series B Warrants to purchase 590,678 ordinary shares at an exercise price of $68.56 per ordinary share issued and outstanding. The warrants have anti-dilution protection for in-kind stock dividends, stock splits, stock combinations and similar transactions and may be exercised at any time during the period from February 14, 2011 to the close of business on February 14, 2018.

~~TRONOX INCORPORATED~~ 18. Stock-Based Compensation

~~NOTES TO CONDENSED~~Successor ~~CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

On the Effective Date, the Company adopted the management equity incentive plan (the “MEIP”), which permits the grant of awards that constitute incentive stock options, nonqualified stock ~~New Jersey~~options, ~~Wood~~stock appreciation rights, restricted stock, restricted stock units, performance awards and other stock-~~Treatment~~based ~~Site~~awards, cash payments and other forms such as the compensation committee of the Board in its discretion deems appropriate, including any combination of the above. Subject to further adjustment, the number of shares available for delivery pursuant to the awards granted under the MEIP is 1.2 million shares. The shares awarded under the MEIP, may be authorized but unissued shares, authorized and issued shares reacquired and held as treasury shares or a combination thereof.

~~Tronox~~Grants LLC was named in 1999 as a potential responsible party (“PRP”) under CERCLA at a former wood-treatment site in New Jersey at which the EPA is conducting a cleanup. On April 15, 2005, Tronox LLC received a letter from the EPA asserting it is liable under CERCLA as a former owner or operator of the site and demanding reimbursement of costs expended by the EPA at the site. The letter made demand for payment of past costs in the amount of approximately $179 million, plus interest. The EPA informed Tronox LLC that as of December 5, 2006, project costs are approximately $244 million, and that it would consider resolving the matter for $239 million. Tronox LLC did not operate the site, which had been sold to ~~a third party before~~Board Tronox LLC succeeded to the interests of a predecessor in the 1960s. The predecessor also did not operate the site, which had been closed down before it was acquired by the predecessor. Based on historical records, there are substantial uncertainties about whether or under what terms the predecessor assumed any liabilities for the site. In addition, although it appears there may be other PRPs to whom notice has been given, the company does not know whether the other PRPs have any valid defenses to liability for the site or whether the other PRPs have the financial resources necessary to meet their obligations, if proven. Tronox LLC, Tronox Worldwide LLC, Tronox Incorporated, Kerr-McGee Worldwide Corporation and the EPA entered into an agreement to toll the statute of limitations (“tolling agreement”) on March 28, 2006, and Tronox LLC and the EPA have submitted the matter to nonbinding mediation that could lead to a settlement or resolution of the EPA’s demand. Members

OnAs ~~June 25,~~noted ~~2007~~above, the ~~New~~MEIP ~~Jersey~~authorized ~~Department of Environmental Protection (“NJ DEP”) and~~ the ~~Administrator~~ issuance of ~~the~~restricted ~~New~~shares ~~Jersey~~to ~~Spill~~eligible ~~Compensation~~directors ~~Fund~~who ~~sued Tronox~~were ~~LLC~~serving ~~and~~on ~~unnamed others in Superior Court, Law Division,~~the ~~Somerset~~Board ~~County,~~on ~~New~~the ~~Jersey~~Effective Date. The ~~plaintiffs~~equity ~~allege~~compensation ~~defendants are~~available ~~responsible~~under ~~for releases from~~ the ~~Federal~~MEIP ~~Creosote~~to ~~Superfund Site~~eligible ~~that~~directors ~~damaged~~consists ~~the state’s groundwater and seek natural resource damages and reimbursement~~ of ~~costs that~~ the ~~state expended~~following: at(i) an ~~the~~equity ~~site~~retainer ~~and~~award; ~~other~~(ii) a ~~similar~~primary ~~relief.~~award; ~~Tronox~~and ~~LLC~~(iii) a ~~has filed~~secondary ~~an answer in the matter~~award. The ~~state~~terms ~~court~~of ~~has ordered that~~those ~~the~~specific ~~case~~awards beare ~~stayed~~as ~~and~~follows: ~~referred the matter to the ongoing mediation with the EPA regarding the site.~~

As• ~~a follow-up~~Equity ~~to a~~Retainer ~~July~~Award ~~2007~~— ~~mediation~~Eligible ~~session,~~directors ~~another~~who ~~meeting~~were ~~was~~serving ~~held~~ on ~~November 28,~~ ~~2007, with~~ the ~~mediator,~~Board ~~the~~on ~~EPA,~~ the ~~DOJ,~~Effective ~~the New~~Date ~~Jersey~~received ~~Attorney~~shares ~~General’s~~of ~~office~~restricted ~~and~~stock ~~the~~with NJa ~~DEP~~value equal to ~~discuss~~ ~~the~~$70,000, ~~remedy~~determined ~~utilized~~ by ~~the~~dividing ~~government~~$70,000 toby ~~clean up~~ the ~~site.~~ ~~Following~~average ~~this~~of ~~meeting,~~ the ~~DOJ~~ten ~~and~~day ~~the~~trading ~~EPA~~price ~~discussed~~of the ~~next~~ ~~steps~~Company’s ~~with~~common ~~the~~stock ~~mediator~~for ~~and it was agreed that~~ the ~~EPA~~ten ~~and DOJ~~day ~~would~~period ~~continue~~commencing ~~to focus~~ on ~~their~~the ~~evaluation~~twentieth oftrading ~~other~~day ~~PRPs and~~following ~~would~~the ~~submit~~Effective aDate ~~response~~and ~~(either~~rounding indown ~~writing or in another meeting)~~ to the ~~issues~~nearest wefull ~~raised in the November mediation session~~share. OnThe ~~February 4,~~equity ~~2008,~~retainer aaward ~~meeting~~vest ~~between the above-referenced parties was held~~ in ~~Washington, D.C.~~four ~~to discuss~~pro-rata ~~EPA’s~~equal ~~initial~~installments ~~responses~~on ~~to Tronox comments and other issues. On January 16, 2008,~~ the ~~EPA~~last ~~issued~~day ~~a second 104(e) request to Tronox seeking information and documents related to Kerr-McGee’s restructuring~~ of ~~its~~each ~~chemical, legacy~~quarter ~~and~~that ~~oil~~ends ~~and~~during ~~gas~~the ~~entities~~covered ~~in 2001 and 2002~~period, ~~Kerr-McGee attempted~~provided ~~sale~~that ~~and eventual spin-off of its legacy and chemical businesses, and~~ the ~~Master~~eligible ~~Separation~~director ~~Agreement~~is ~~between~~then ~~the~~providing ~~two companies.~~services ~~The EPA issued an identical request for information~~ to ~~Anadarko~~the ~~Petroleum~~Board ~~Corporation~~on ~~for~~each ~~Kerr-McGee.~~such ~~The~~vesting ~~company has responded to the EPA’s request for information~~date.

On• ~~November 14,~~Primary ~~2007,~~Award ~~two~~— ~~members~~Eligible ofdirectors ~~the~~who ~~U.S. Senate requested~~were serving on the ~~U.S. Government~~Board ~~Accountability~~on ~~Office (“GAO”)~~the ~~investigate~~Effective ~~EPA’s~~Date ~~cleanup~~received ofa ~~the~~grant ~~site.~~of ~~On November 28~~2,500 ~~2007,~~shares ~~the~~of ~~GAO~~restricted ~~accepted~~stock. ~~the~~The ~~request~~primary ~~and indicated~~award itrestricted ~~would~~shares ~~begin~~vest ~~its~~in ~~investigation~~twelve ~~around February 1,~~pro-rata ~~2008.~~equal Oninstallments ~~April 30,~~on ~~2008,~~the ~~Tronox~~last ~~received notice~~day ~~that~~of ~~the~~each ~~general~~calendar ~~contractor~~quarter ~~for~~that ~~the~~ends ~~Manville~~following ~~remediation project~~the ~~has~~Effective ~~sued~~Date, ~~its~~provided ~~subcontractors~~that ~~and~~the ~~project~~eligible ~~manager~~director ~~for fraud,~~is ~~bribery~~then ~~and~~providing ~~other~~services ~~improprieties related~~ to the ~~work~~Board ~~done at~~on ~~the~~each ~~site~~such vesting date.

~~The~~• ~~EPA,~~Secondary ~~the~~Award ~~DOJ,~~— ~~Tronox~~Eligible ~~and~~directors ~~Anadarko~~who ~~Petroleum~~were ~~Corporation~~serving ~~have agreed~~on ~~to extend~~ the ~~tolling~~Board ~~agreement~~on ~~to August 29, 2008. Discussion is continuing through~~ the ~~mediator.~~Effective IfDate ~~the~~received ~~mediation is~~grants ~~unsuccessful,~~of werestricted ~~intend~~shares toas ~~vigorously defend against the EPA’s claim.~~ follows:

~~MSA~~• ~~Reimbursement —~~The AsChairman of ~~June 30, 2008,~~ the ~~company~~Board ~~had~~received a ~~receivable~~secondary ofrestricted ~~$17.5 million~~share ~~representing 50%~~award of ~~the settlement amount that Anadarko Petroleum Corporation~~6,500 ~~on behalf of Kerr-McGee, has consented to~~ shares.

•

Each Co-chairman of the Strategic Committee, who was not serving as Chairman of the Board, received a secondary restricted share award of 6,500 shares.

•

The Chairman of the Audit Committee, who was not serving as the Chairman of the Board or Chairman of the Strategic Committee, received a secondary restricted share award of 4,500 shares.

•

All eligible directors, other than the Chairman of the Board and the Chairmen of the Strategic Committee and Audit Committee, received a secondary restricted share award of 3,500 shares.

The secondary awards vest based on the following schedule, provided that the eligible director is then providing services to the Board on each such vesting date:(i) 12.5% on December 31, 2011, December 31, 2012 and December 31, 2013; (ii) 20% on December 31, 2014; and (iii) 42.5% on December 31, 2015; provided that all secondary restricted share awards shall immediately vest upon the consummation of a change in control of the Company, as specified in the MEIP.

Notwithstanding anything set forth to the contrary in the MEIP, effective January 1, 2014, the shareholders of the Company, may, upon a majority vote, resolve to terminate any or all unvested secondary restricted shares, and following such a vote, all such secondary restricted shares shall be cancelled and forfeited for no consideration.

Compensation expense related to these restricted stock awards was $0.2 million for the three ~~TRONOX INCORPORATED~~ months ended March 31, 2012 and $0.3 million for the two months ended March 31, 2011.

~~NOTES TO CONDENSED~~The ~~CONSOLIDATED~~following ~~FINANCIAL~~table ~~STATEMENTS~~summarizes restricted stock share activity with Board members for the three months ended March ~~— (Continued)~~ 31, 2012.

contribute at or before the time the settlement, if accepted, becomes payable. The receivable has been reflected in accounts receivable in the accompanying Consolidated Balance Sheets.


	Equity Retainer Award				Primary Award					Secondary Award
Restricted Shares	Number of Shares		Weighted-Avg. Grant Date Fair Value		Number Of Shares			Weighted-Avg. Grant Date Fair Value		Number of Shares		Weighted-Avg. Grant Date Fair Value
Balance at December 31, 2011		—	$	—		10,008		$	122.50		24,497	$	122.50
Awards granted		—		—		—			—		—		—
Awards earned		—		—		(1,040	)		122.50		—		—

Balance at March 31, 2012		—	$	—		8,968		$	122.50		24,497	$	122.50

Outstanding awards expected to vest		—	$	—		8,968		$	122.50		24,497	$	122.50

~~Sauget, Illinois~~ Grants to employees

~~From~~On ~~1927~~January 2, ~~to 1969~~2012, ~~Tronox~~the ~~LLC~~Company ~~operated~~granted ato ~~wood-treatment~~its ~~plant~~employees ~~on a~~10,083 ~~60-acre site~~shares, inwhich ~~the~~have ~~Village~~graded ofvesting ~~Sauget~~provisions. ~~(formerly~~The ~~known~~Company asis ~~Monsanto)~~withholding ~~in St.~~the ~~Clair~~highest ~~County,~~combined ~~Illinois.~~maximum ~~Operations~~rate onimposed ~~the~~under ~~property~~all ~~resulted~~applicable ~~in the contamination of soil~~federal, ~~sediment~~state, ~~surface~~local ~~water~~ and ~~groundwater~~ atforeign ~~the~~tax ~~site~~laws ~~with~~on ~~creosote~~behalf ~~and~~of ~~other~~the ~~substances~~employees ~~used in~~that ~~wood~~have ~~treating~~received these awards. In ~~1988,~~accordance ~~Tronox~~with ~~LLC~~ASC ~~entered~~718, ~~into~~Compensation ~~a court-approved~~– ~~consent~~Stock ~~order~~Compensation, ~~with~~such ~~the~~restricted ~~Illinois~~stock ~~Attorney~~awards ~~General and~~are ~~Illinois~~classified ~~Environmental~~as ~~Protection~~liability ~~Agency.~~awards ~~The~~and ~~investigation~~are ~~and~~re-measured ~~feasibility~~to ~~study~~fair ~~for~~value ~~soil~~at ~~and~~each ~~sediments~~reporting ~~required~~date. byCompensation ~~the order~~expense ~~are~~related ~~complete.~~to ~~Pond~~employee ~~sediment~~restricted ~~removal~~stock awards was ~~completed~~$6.0 million inand ~~2007, with~~$2.6 ~~final~~million ~~pond~~for ~~closure~~the ~~expected~~three tomonths beended ~~completed~~March 31, in2012 ~~2008. Waste disposal~~ and ~~additional~~two ~~groundwater~~months ~~investigation~~ended ~~are~~March 31, ~~expected~~2011, ~~to be conducted in 2009~~respectively.

The following table summarizes restricted stock share activity with employees for the three months ended ~~Cleveland~~March 31, ~~Oklahoma~~ 2012.

Triple S Refining Corporation (“Triple S”), formerly known as Kerr-McGee Refining Corporation, owned and operated a petroleum refinery near Cleveland, Oklahoma, until the facility was closed in 1972. In 1992, Triple S entered into a Consent Order with the Oklahoma Department of Health (later, the ODEQ), which addresses the remediation of air, soil, surface water and groundwater contaminated by hydrocarbons and other refinery related materials. Facility dismantling and several interim remedial measures have been completed. In 2006, the ODEQ approved the remedial design for soil and waste remediation, which includes construction of an on-site disposal cell. Triple S is currently conducting a reassessment of the expected soil volumes that will require placement in the previously approved disposal cell. This reassessment was required due to additional findings of asbestos impacted material. This evaluation and other associated project requirements resulted in a reserve provision of $3.8 million in the second quarter of 2008. The proposed disposal cell is anticipated to be constructed in 2009. A feasibility study of groundwater remedial measures is under review by the ODEQ. Duration of remedial activities currently cannot be estimated.


	Number of Shares			Fair Value(1)
Balance at December 31, 2011		201,094		$	107.91
Awards granted		10,083			120.13
Awards earned		(11,193	)		122.50
Awards forfeited		—			—

Balance at March 31, 2012		199,984		$	106.91

Outstanding awards expected to vest		199,984		$	106.91

~~Additional~~(1) ~~groundwater~~Represents ~~characterization will occur upon completion of~~ the ~~soils~~weighted-average ~~and~~grant-date ~~sediments~~fair ~~removal~~value. ~~Although actual costs may differ from current estimates, the amount of any revisions in remediation costs, if any, cannot be reasonably estimated at this time.~~

~~Cushing, Oklahoma~~ Stock Options

InDuring ~~1972~~2012, ~~Triple~~the SCompany ~~closed~~granted ato ~~petroleum~~its ~~refinery~~employees ~~it had operated~~stock ~~near Cushing~~options, ~~Oklahoma.~~which ~~Prior~~have tograded ~~closing~~vesting ~~the~~provisions. ~~refinery,~~The ~~Triple~~following ~~S also~~table ~~had~~presents ~~produced~~a ~~uranium~~summary ~~and~~of ~~thorium~~activity ~~fuel~~for ~~and~~the ~~metal~~Company’s atoptions for the ~~site pursuant~~three tomonths ~~licenses~~ended ~~issued~~March 31, by2012: ~~the AEC.~~

In 1990, Triple S entered into a consent agreement with the State of Oklahoma to investigate the site and take appropriate remedial actions related to petroleum refining and uranium and thorium residuals. Investigation and remediation of hydrocarbon contamination is being performed under the oversight of the ODEQ. Remediation activities to address known hydrocarbon contamination in soils is expected to take about four more years. The long-term scope, duration and cost of groundwater remediation are uncertain and, therefore, additional costs beyond those accrued may be incurred in the future.


	Number of Options		Price (1)		Contractual Life Years (1)		Intrinsic Value(2)
Balance at December 31, 2011		69,000	$	110.00		9.95	$	0.7
Options issued		4,466		123.00		9.76		0.2

Outstanding at March 31, 2012		73,466	$	110.79		9.71	$	4.7

In(1) ~~1993,~~Represents ~~Triple~~weighted Saverage ~~received~~exercise aprice ~~decommissioning license from the NRC, the successor to the AEC’s licensing authority, to perform certain cleanup of uranium~~ and ~~thorium~~weighted ~~residuals.~~average ~~All known~~remaining ~~radiological~~contractual ~~contamination has been removed from the site and shipped to a licensed disposal facility~~life, ~~completing~~as ~~the license requirements~~applicable.

At(2) ~~the~~Reflects ~~company’s~~aggregate ~~request,~~intrinsic ~~the~~value ~~NRC~~based ~~terminated~~on the ~~site license~~difference inbetween ~~2006,~~the ~~thereby~~market ~~allowing~~price of the ~~company~~Company’s tostock ~~avoid~~at ~~costs that~~March ~~would~~31, ~~otherwise~~2012 beand ~~incurred~~the inoptions’ ~~association~~exercise ~~with continued license maintenance~~price.

Valuation and Cost Attribution Methods. Options’ fair value was determined on the date of grant using the Black-Scholes option-pricing model and was recognized in earnings on a straight-line basis over the employee service period of three years necessary to earn the awards, which is the vesting period. On January 3, ~~TRONOX INCORPORATED~~ 2012, the Company ran the Black-Scholes option-pricing model for the 4,466 options granted and used the following assumptions:

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	2012
Risk-free interest rate		1.97	%
Expected dividend yield		0.0	%
Expected volatility		48.6	%
Expected term (years)		10.0
Per-unit fair value of options granted	$	73.89

~~Jacksonville~~The Company used the fair market value and exercise price of $123.00, which was the closing price of ~~Florida~~ TROX.PK recorded on January 3, 2012.

InExpected ~~1970,~~Volatility — ~~Tronox~~In ~~LLC~~setting ~~purchased~~the avolatility ~~facility in Jacksonville~~assumption, the ~~Florida,~~Company ~~that~~considered ~~manufactured~~the ~~and~~most ~~processed~~recent ~~fertilizers,~~reported ~~pesticides and~~volatility ~~herbicides.~~of ~~Tronox~~each ~~LLC~~compensation ~~closed~~peer ~~the~~company. ~~facility~~For inthe ~~1978.~~2012 ~~In 1988~~valuation, ~~all~~ ~~structures~~the ~~were~~peer ~~removed,~~company ~~and~~group ~~Tronox~~included ~~LLC~~the ~~began~~following ~~site characterization~~companies: ~~studies.~~Cabot ~~In 2000~~Corporation, ~~Tronox~~Celanese ~~LLC~~Corporation, ~~entered~~Chemtura ~~into~~Corporation, ~~a consent~~Cliffs ~~order with the EPA to conduct a remedial investigation~~Natural ~~and~~Resources ~~a feasibility study~~Inc., ~~The~~Cytec ~~remedial~~Industries ~~investigation~~Inc., ~~was completed~~Eastman ~~and~~Chemical ~~submitted~~Company, toFMC ~~the~~Corporation, ~~EPA~~Freeport-McMoRan inCopper & ~~August~~Gold ~~2005~~Inc., AGeorgia ~~feasibility study~~Gulf ~~was~~Corporation, ~~submitted~~Huntsman toCorporation, ~~the~~Kronos ~~EPA~~Worldwide, ~~in October 2006~~Inc., The ~~study recommended~~Lubrizol ~~site~~Corporation, ~~soil~~Nalco ~~remediation~~Holding ~~and excavation~~Company, ~~site capping~~ ~~and~~PPG ~~limited~~Industries, ~~groundwater remediation~~Inc., ~~The~~Rockwood ~~EPA~~Holdings, ~~requested additional~~Inc., ~~sediment~~RPM ~~data~~International beInc., ~~collected~~The toSherwin-Williams ~~support~~Company, ~~the~~Solutia ~~site recommendation~~Inc., ASouthern ~~sediment~~Copper ~~analysis~~Corporation, ~~plan~~Teck ~~has~~Resources ~~been~~Limited, ~~prepared and was submitted in August 2007 to respond to the EPA’s request.~~ The ~~analysis~~Valspar ~~work~~Corporation, ~~plan was approved by the EPA in January 2008~~W.R. ~~Sampling~~Grace & ofCo, ~~most~~and ofWestlake ~~the river sediments was~~Chemical ~~completed in the first quarter of 2008~~Corporation.

~~The~~Risk-free ~~EPA~~interest israte — ~~currently~~The ~~completing~~Company aused ~~final review of the site feasibility study and has created~~ a ~~proposed~~risk-free ~~plan~~interest ~~that~~rate ~~describes the~~of ~~remediation options for the site to the public~~1.97%, ~~This document~~which was ~~published by~~ the ~~EPA~~yield ~~in June 2008 and a public meeting has been held. The EPA’s preferred alternative for remediation~~ of the ~~site~~ten ~~adds~~year ~~a bulkhead structure to contain any impacted sediments in the river and includes a perimeter slurry wall~~U. ~~The company believes that any potential increased costs for these additions to the site remedy will be offset by reduced costs for soil disposal and shoreline capping~~S. ~~The~~Treasury ~~EPA is expected to finalize a site Record of Decision by the end of 2008~~Note.

Compensation expense related to the Company’s nonqualified stock option ~~Riley Pass~~awards for the three months ended March 31, ~~South~~2012 ~~Dakota~~ and two months ended March 31, 2011 was $0.5 million and nil, respectively.

~~The~~Predecessor site consists of a series of natural bluffs where the company conducted mining for uranium in the early to mid 1960s. The uranium was located in a lignite coal bed which was extracted after the overburden materials were removed. The bluff locations are mostly contained on properties owned by the federal government and managed by the U.S. Forest Service. In February 2007, the company entered into a Settlement Agreement and Consent Order with the Forest Service that requires the company to conduct an assessment of the site and to evaluate any required remedial actions needed to address contaminated soils or to prevent soil erosion. The company prepared a work plan to assess the site soils, conduct vegetation studies, evaluate archeological sites and to generate a preliminary pre-design report. This work plan and subsequent submittals have been approved by the Forest Service. Data collected as part of the approved work plans have identified areas where soils exceed a cleanup threshold that requires the material to be excavated and placed into engineered disposal cells. A reserve had been made for such work in 2007. Final design plans for the cells and the procedures for excavating and transporting the material to the cells will be submitted to the Forest Service for approval in late 2008. Additional plans and design details will continue to be evaluated in 2008 to identify any other work required at the site.

Upon ~~Other Sites~~ emergence from bankruptcy, all predecessor common stock equivalents, including but not limited to stock options and restricted stock units of the Company vested and were immediately cancelled with the Plan.

InOverview — ~~addition~~The toCompany’s ~~the~~Long ~~sites~~Term ~~described~~Incentive ~~above,~~Plan ~~the~~(“LTIP”) ~~company~~authorized ~~is responsible~~the ~~for~~issuance ~~environmental~~of ~~costs~~shares ~~related~~of ~~to certain other~~its ~~sites.~~Class A ~~These~~common ~~sites~~stock ~~relate primarily~~ to ~~wood~~certain ~~treating,~~employees ~~chemical production, landfills, mining,~~ and ~~oil~~non-employee ~~and~~directors ~~gas refining, distribution and marketing. Although actual costs may differ from current estimates, the amount of~~ any ~~revisions in remediation costs cannot be reasonably estimated at this~~ time~~. One~~ ~~such~~prior ~~site~~to ~~is a site in Hanover~~November 16, ~~Massachusetts~~2015, ~~which~~in ~~has~~the ~~a reserve~~form ~~balance~~ of ~~$0.2 million~~fixed-price atstock ~~June 30~~options, ~~2008. Evaluations~~restricted ~~are ongoing concerning the possible extent of any future remediation and the company’s share of costs~~stock, ~~if any,~~stock ~~cannot~~appreciation berights ~~reasonably~~or ~~estimated~~performance ~~at this time~~awards. InAs ~~addition, the~~of ~~company and~~ the ~~other PRPs assert that most~~Effective Date, ~~if not~~ all, ~~of the~~stock-based ~~impacts~~awards topreviously ~~the~~issued ~~site were a result of the activities done~~ under ~~Department of Defense (“DOD”) control which would reduce~~ the ~~company~~Predecessor’s ~~percentage~~LTIP ofplan ~~responsibility. Negotiations~~vested ~~with~~and ~~the~~were ~~DOD~~immediately ~~are ongoing~~cancelled.

For the one month ended January 31, 2011, the Company recognized $0.1 million of compensation expense related to restricted ~~Master Separation~~stock-based ~~Agreement~~awards, which was based on the fair value of the awards. During the one month ended January 31, 2011, the valuation allowance was adjusted for activity during each period. For this reason, any tax benefit associated with compensation expense had a corresponding offset to the valuation allowance, yielding no overall income tax benefit.

The ~~Pursuant~~following totable ~~the~~summarizes ~~MSA~~information ~~(which~~about ~~recites~~restricted ~~that~~stock itaward, ~~binds~~performance ~~successors), Kerr-McGee~~award ~~will~~and ~~reimburse~~stock ~~the~~option ~~company~~activity for ~~a portion of~~ the ~~environmental~~ ~~remediation~~one ~~costs~~month itended ~~incurs~~January 31, ~~and~~2011: ~~pays (net of any cost reimbursements it recovers or~~


	Restricted Stock Awards & Stock Opportunity Grants					Performance Awards			Stock Options
	Number of			Fair		Number Of			Number of					Contractual		Intrinsic
Restricted Shares	Shares			Value(1)		Units			Options			Price(2)		Life (Years)(2)		Value(3)
Balance at December 31, 2010		148,053		$	4.92		2,689,150			1,152,408		$	9.54		5.31	$	9.54
Awards vested/cancelled		(148,053	)		—		(2,689,150	)		(1,152,408	)		—		—		—

Balance at January 31, 2011		—		$	—		—			—		$	—		—	$	—

(1)	Represents the weighted average grant date fair value.

(2)	Represents weighted average exercise price and weighted average remaining contractual life, as applicable.

(3)	Reflects aggregate intrinsic value based on the difference between the market price of the Company’s stock and the options’ exercise price.

~~TRONOX INCORPORATED~~ 19. Cash Flows Statement Data

~~NOTES TO CONDENSED~~Other ~~CONSOLIDATED~~noncash ~~FINANCIAL~~items included in the reconciliation of net income to net cash flows from operating activities include ~~STATEMENTS — (Continued)~~ the following:

expects to recover from insurers, governmental authorities or other parties). The reimbursement obligation extends to costs incurred at any site associated with any of the company’s former businesses or operations.


	Successor				Predecessor
	Three Months		Two Months		One Month
	Ended March 31,		Ended March 31,		Ended January 31,
	2012		2011		2011
Workers’ compensation and insurance liability	$	0.6	$	0.2	$	0.1
Abandonment expense		0.3		0.3		—
Asset retirement obligation accretion expense		0.5		0.3		0.1
Asset retirement obligation changes in estimates		—		0.9		—
Inventory write-downs		—		0.7		—
FIN 48 liability adjustment		—		1.0		(0.4	)
Other net adjustments		0.9		—		—

Total	$	2.3	$	3.4	$	(0.2	)

~~With~~Other, ~~respect to any site for which the company has established a reserve as of the effective date of the MSA~~net, ~~50%~~included ofin the ~~remediation~~ ~~costs~~reconciliation ~~the company incurs in excess~~ of ~~the reserve amount (after meeting a $200,000 minimum threshold amount) will be reimbursable by Kerr-McGee,~~ net ofincome ~~any amounts recovered or, in the company’s reasonable and good faith estimate, that will be recovered from third parties. With respect~~ to any site for which the company has not established a reserve as of the effective date of the MSA, 50% of the amount of the remediation costs the company incurs and pays (after meeting a $200,000 minimum threshold amount) will be reimbursable by Kerr-McGee, net ofcash ~~any~~flows ~~amounts recovered or, in the company’s reasonable and good faith estimate, that will be recovered~~ from ~~third~~ ~~parties.~~operating ~~At June 30, 2008, the company had a~~activities ~~receivable~~includes ~~of $17.6 million, primarily representing 50% of~~ the ~~settlement~~following: offer the company made related to the New Jersey wood-treatment site as described above that Anadarko Petroleum Corporation, on behalf of Kerr-McGee, has consented to contribute at or before the time the settlement, if accepted, becomes payable.

Kerr-McGee’s aggregate reimbursement obligation to the company cannot exceed $100 million and is subject to various other limitations and restrictions. For example, Kerr-McGee is not obligated to reimburse the company for amounts it pays to third parties in connection with tort claims or personal injury lawsuits, or for administrative fines or civil penalties that the company is required to pay. Kerr-McGee’s reimbursement obligation also is limited to costs that the company actually incurs and pays within seven years following the completion of the IPO. As of June 30, 2008, Kerr-McGee has reimbursed the company $3.4 million under this arrangement.


	Successor						Predecessor
	Three Months			Two Months			One Month
	Ended March 31,			Ended March 31,			Ended January 31,
	2012			2011			2011
Pension and postretirement	$	(1.5	)	$	(0.7	)	$	—
Asset retirement obligation expenditures		—			(0.4	)		—
Environmental expenditures, net of reimbursements		—			33.1			—
Other net adjustments		1.3			(0.5	)		1.0

Total	$	(0.2	)	$	31.5		$	1.0

~~Litigation~~ 20. Pension and ~~Claims~~ Other Postretirement Healthcare Benefits

~~Birmingham~~The components of net periodic pension and postretirement healthcare cost for the three months ended March 31, ~~Alabama~~ 2012, two months ended March 31, 2011 and one month ended January 31, 2011 were as follows:

Until 1995, Triple S operated a petroleum terminal in Birmingham, Alabama. In late 2005, a local church, which is located on property adjacent to the site, demanded payment for damages of approximately $25 million in connection with a release of petroleum alleged to have occurred at the terminal and threatened litigation. In March 2006, the company filed a lawsuit in federal court seeking a declaration of the parties’ rights and injunctive relief. The defendant has moved to dismiss the company’s suit and has also filed a countersuit in the circuit court for Jefferson County, Alabama, against the company and third parties seeking property damages, injunctive relief and costs. In January 2007, the judge in the federal lawsuit issued an order abstaining from exercising jurisdiction over the matter, and Triple S’s appeal was denied. The case will remain in state court. Discovery is ongoing. The company has not provided a reserve for the litigation because at this time it cannot reasonably determine the probability of a loss, and the amount of loss, if any, cannot be reasonably estimated. The company currently believes that the ultimate resolution of the litigation is not likely to have a material adverse effect on the company.


	Retirement Plans									Postretirement Healthcare Plan
	Successor						Predecessor			Successor				Predecessor
	Three Months Ended March 31,			Two Months Ended March 31,			One Month Ended January 31,			Three Months Ended March 31,		Two Months Ended March 31,		One Month Ended January 31,
	2012			2011			2011			2012		2011		2011
Net periodic cost:
Service cost	$	1.2		$	0.5		$	0.2		$	0.1	$	—	$	—
Interest cost		6.3			3.9			1.9			0.1		0.1		—
Expected return on plan assets		(6.0	)		(3.7	)		(2.0	)		—		—		—
Net amortization — Prior service cost (credit)		—			—			—			—		—		(1.1	)
Net amortization — Actuarial (gain) loss		—			—			0.5			—		—		0.1

Sub-total net periodic cost (income)	$	(1.5	)	$	0.7		$	0.6		$	0.2	$	0.1	$	(1.0	)

~~Forest Products~~21. Related ~~Litigation~~ Party Transactions

The ~~company~~Company isconducts ~~defending~~transactions awith ~~number~~Exxaro ofAustralia ~~lawsuits~~Sands ~~related~~Pty toLtd ~~three~~(“Exxaro”), the ~~former~~Company’s ~~wood-treatment~~50% ~~plants~~partner in ~~Columbus,~~the ~~Mississippi;~~Tiwest ~~Avoca~~Joint Venture. The Company purchased, ~~Pennsylvania;~~ ~~and~~at ~~Texarkana~~open market prices, ~~Texas.~~raw ~~All~~materials ofused ~~these~~in ~~lawsuits~~its ~~seek recoveries~~production ~~under~~of aTiO2 ~~variety~~and Exxaro’s share of ~~common~~TiO2 ~~law~~produced ~~and~~by ~~statutory~~the ~~legal theories~~Tiwest ~~for~~Joint ~~personal~~Venture. ~~injuries and/or property~~The ~~damages~~Company ~~allegedly~~also ~~caused~~provided byadministrative ~~exposure~~services to and~~/or~~ product research and ~~release~~development ofactivities, ~~chemicals~~which ~~used~~were inreimbursed by Exxaro. For the ~~wood-treatment~~three ~~process~~months ended March 31, ~~primarily~~ ~~creosote.~~2012, ~~The~~two ~~company~~months ~~currently~~ended ~~believes~~March 31, ~~that~~2011 ~~claims asserted~~and inone ~~these~~month ~~lawsuits~~ended ~~are~~January 31, ~~without~~2011, ~~substantial~~the ~~merit~~Company ~~and~~made ispayments of $82.9 million, $12.8 million ~~vigorously~~and ~~defending~~$44.0 ~~them~~million, ~~except~~respectively, ~~where~~and ~~reasonable~~received ~~resolutions can~~payments beof ~~achieved~~$7. 0 million, $2.0 million and nil, respectively, related to these transactions.

At Columbus, Mississippi, the consolidated federal case, which had been set for the initial trial of two plaintiffs in November 2007, was stricken from the court’s docket so that the parties could pursue mediation. On October 3, 2007, the judge entered an order dismissing the consolidated litigation without prejudice, limiting future litigation to individual cases that are not settled through mediation. In December 2007, negotiations on the terms of a mediation agreement concluded with the execution of a mediation agreement. The first mediation hearing, for the

~~TRONOX INCORPORATED~~ 22. Segment Information

The Company has one reportable segment representing its pigment business. The pigment segment primarily produces and markets TiO2 and has production ~~NOTES TO~~facilities in the United States, Australia, and the Netherlands. The pigment segment also includes heavy minerals production operated through Exxaro. The heavy minerals production is integrated with the Company’s Australian pigment plant, but ~~CONDENSED~~also ~~CONSOLIDATED~~has ~~FINANCIAL~~third-party sales of minerals not utilized by its pigment operations. Electrolytic and other chemical products (which do not constitute reportable segments) represent the Company’s other operations which are comprised of electrolytic ~~STATEMENTS —~~ manufacturing and marketing operations, all of which are located in the United States, and are reported in “Other Activities” when reconciling segmented information. Segment performance is evaluated based on segment operating profit (~~Continued~~loss), which represents the results of segment operations before unallocated costs, such as general corporate expenses not identified to a specific segment, environmental provisions related to sites no longer in operation, gains on land sales from properties not used in current operations, income tax expense or benefit and other income (expense).

two plaintiffs who were set for trial in 2007, is set for August 26, 2008. The second hearing, for eleven plaintiffs who claim brain cancer, is set for October 6, 2008. The venue of the Maranatha Faith Center property damage lawsuit was transferred in February 2008 from Columbus to Starkville, Mississippi. Mediation is scheduled for September 2, 2008, and trial is set for October 27, 2008.


			Other Activities
	Pigment Segment		Electrolytic			Corporate and Other			Total
Successor: January 1 through March 31, 2012
Net Sales	$	402.5	$	30.8		$	0.3		$	433.6
Income (Loss) from operations		141.1		(1.1	)		(27.0	)		113.0
Interest and debt expense										(7.9	)
Other income (expense)										(1.4	)
Income (Loss) from Continuing Operations before Income Taxes									$	103.7
Total Assets	$	1,650.7	$	85.5		$	166.8		$	1,903.0
Depreciation, Depletion and Amortization		19.0		2.0			1.1			22.1
Capital Expenditures		12.1		0.8			7.8			20.7

Successor: February 1 through March 31, 2011
Net Sales	$	244.0	$	22.9		$	0.2		$	267.1
Income (Loss) from operations		24.5		0.3			(7.0	)		17.8
Interest and debt expense										(5.3	)
Other income										1.0
Income from Continuing Operations before Income Taxes									$	13.5
Total Assets	$	1,238.9	$	86.9		$	121.5		$	1,447.3
Depreciation, Depletion and Amortization		11.1		1.2			0.8			13.1
Capital Expenditures		14.7		1.1			0.5			16.3

Predecessor: January 1 through January 31, 2011
Net Sales	$	93.1	$	12.1		$	2.4		$	107.6
Income (Loss) from operations		21.4		0.7			(2.2	)		19.9
Interest and debt expense										(2.9	)
Other income										1.6
Reorganization income										613.6
Income from Continuing Operations before Income Taxes										632.2
Total Assets	$	714.7	$	117.5		$	258.3		$	1,090.5
Depreciation, Depletion and Amortization		3.3		0.6			0.2			4.1
Capital Expenditures		4.2		0.8			0.5			5.5

At Avoca, Pennsylvania, 35 state court lawsuits were filed in 2005 by over 4,000 plaintiffs. The plaintiffs have classified their claims into various alleged disease categories. In September 2005, the judge ordered that discovery and the first trial will focus on plaintiffs who allege pre-cancerous skin lesions. The first trial was scheduled for August 2007, but in May 2007 the parties agreed on arbitration as an alternative to this litigation. The judge approved arbitration and placed the lawsuits on an inactive docket. The first arbitration hearing, to address plaintiffs who claim pre-cancerous skin lesions, was conducted from October 1 — 10, 2007, with a single arbitrator to decide whether plaintiffs’ claims should be compensated. On April 18, 2008, the arbitrator entered nine individual awards which together total $0.2 million. The company challenged one award and paid the other eight awards in June 2008. The second arbitration hearing for plaintiffs claiming skin cancer is set for August 5, 2008.

At Texarkana, Texas, the six plaintiffs and the insurer in Jeans v. Tronox reached an agreement in principle to settle in January 2008. The agreement was confirmed in writing by plaintiff’s counsel on March 4, and the final settlement agreement was approved by plaintiff’s counsel on June 26, 2008. The case is in the process of being dismissed. It is expected that the settlement will be fully funded by the insurer.

Financial Reserves — As of June 30, 2008, the company had reserves of $8.9 million related to certain forest products litigation. Although actual costs may differ from the current reserves, the amount of any revisions in litigation costs cannot be reasonably estimated at this time. The company currently believes that the ultimate resolution of this forest products litigation is not likely to have a material adverse effect on the company.

Savannah Plant

On September 8, 2003, the Environmental Protection Division of the Georgia Department of Natural Resources (the “EPD”) issued a unilateral Administrative Order to our subsidiary, Tronox Pigments (Savannah) Inc., claiming that the Savannah plant exceeded emission allowances provided for in the facility’s Title V air permit. On October 8, 2003, Tronox filed an Administrative Appeal of the Administrative Order. On September 19, 2005, the EPD rescinded the Administrative Order and filed a Withdrawal of Petition for Hearing on Civil Penalties. Accordingly, the proceeding on the merits of the Administrative Order and the administrative penalties were dismissed, without prejudice. After dismissal of the Administrative Order, representatives of the EPD, the EPA and Tronox continued with their discussions regarding a resolution of the alleged violations, with the EPA taking the lead role in these discussions. On December 6, 2006, the EPA informed Tronox Pigments (Savannah) Inc. that it had submitted a civil referral to the U.S. Department of Justice (the “DOJ”) with respect to the air quality issues and for matters stemming from an EPA led Resource Conservation and Recovery Act (“RCRA”) Compliance Evaluation Inspection (“CEI”) that occurred in January 2006. Prior to the filing of any formal action, the DOJ has agreed to a series of settlement negotiations to determine if the matter can be resolved. Discussions with the EPA, EPD and the DOJ, have focused on proposed compliance measures that may be required at the Savannah Plant and appropriate civil penalties. Tronox Pigments (Savannah) Inc. provided the EPA with data related to its position on the proposed civil penalties. The EPA is now reviewing the data submitted. Discussions regarding the offer of settlement and compromise are ongoing.

On March 10, 2008, the parties entered into an amended agreement to toll the statute of limitations, which expired on July 31, 2008. Discussions with the EPA continue. If we are unable to reach a resolution of this matter through this process, we will vigorously defend against the EPA’s claims.

Financial Reserves — As of June 30, 2008, the company had reserves of $0.6 million related to Savannah plant emission litigation. Although actual costs may differ from the current reserves, the amount of any revisions in litigation costs cannot be reasonably estimated at this time.

TRONOX INCORPORATED


	Successor				Predecessor
	Three Months Ended March 31,		Two Months Ended March 31,		One Month Ended January 31,
	2012		2011		2011
Net Sales(1)
U.S. operations	$	230.1	$	137.9	$	60.1
International operations
The Netherlands		78.7		46.9		15.1
Australia		124.8		82.3		32.4

Total	$	433.6	$	267.1	$	107.6

Net Property, Plant and Equipment
U.S. operations	$	201.2	$	196.7	$	164.4
International operations
The Netherlands		54.9		58.0		49.0
Australia		302.7		193.3		104.1

Total	$	558.8	$	448.0	$	317.5

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —~~ (~~Continued~~1) Based on country of production.

Table Mountain Site

On June 20, 2007, Cyprus Amax Minerals Company and Amax Research Development, Inc. filed a lawsuit against Tronox Incorporated in Colorado’s Federal District Court seeking a claim of contribution and cost recovery under CERCLA. Kerr-McGee Oil Industries, Inc. at one time owned and operated the site now known as the Amax R & D Site. The company’s operations at the site consisted of an acid-leach pilot plant and solvent extraction of uranium and potash ores. During its operations, the company generated a small quantity of tailings on-site. In 1965, the property was sold to the Colorado School of Mines Research Foundation (n/k/a Colorado School of Mines Research Institute (“CSMRI”). In 1969, CSMRI sold the property to Cyprus Amax Minerals Company. Cyprus Amax generated, relocated and stored other wastes on-site including Chromium, Yttrium and radioactive wastes. For several years, Cyprus Amax conducted an environmental response and cleanup action at the site. In 1998, Cyprus Amax sent a demand letter for cost recovery to Tronox and the parties subsequently entered into a tolling agreement with regard to the claims. Under that agreement, Cyprus Amax was to provide information for Tronox to use in analyzing the claims and discussing settlement. No such information was provided and, as a result, no meaningful settlement discussions occurred and the tolling agreement was terminated. To preserve its claims, Cyprus Amax filed this action. The plaintiffs claim that they have already spent in excess of $11 million in remediation costs and that Tronox is responsible for a portion of the costs. Based on historical records, there are substantial uncertainties about the plaintiff’s claim for remediation costs and the amount, if any, attributable to Tronox. Discovery and settlement discussions in the case are ongoing.

Other Matters

The company is party to a number of legal and administrative proceedings involving environmental and/or other matters pending in various courts or agencies. These proceedings, individually and in the aggregate, are not expected to have a material adverse effect on the company. These proceedings are also associated with facilities currently or previously owned, operated or used by the company and/or its predecessors, some of which include claims for personal injuries, property damages, cleanup costs and other environmental matters. Current and former operations of the company also involve management of regulated materials and are subject to various environmental laws and regulations. These laws and regulations will obligate the company to clean up various sites at which petroleum and other hydrocarbons, chemicals, low-level radioactive substances and/or other materials have been contained, disposed of or released. Some of these sites have been designated Superfund sites by the EPA pursuant to CERCLA or state equivalents. Similar environmental laws and regulations and other requirements exist in foreign countries in which the company operates.

14. Commitments

At June 30, 2008, the company had outstanding letters of credit in the amount of approximately $70.6 million. These letters of credit have been granted by financial institutions to support our environmental clean-up costs and miscellaneous operational and severance requirements in international locations.

The company has entered into certain agreements that require it to indemnify third parties for losses related to environmental matters, litigation and other claims. No material obligations are presently known and, thus, no reserve has been recorded in connection with such indemnification agreements.

During the first quarter of 2008, the company’s Australian joint venture has entered into new long-term contracts for the supply of process chemicals and utilities. The impact of these new contracts, which are for periods ranging from five to ten years, increased the company’s commitments under purchase obligations beginning in 2009 by a total of $39.3 million and increased operating lease payments by a total of $49.3 million compared to the amounts disclosed in the company’s 2007 Annual Report on Form 10-K .

Item 2. Management’s Discussion and Analysis of Financial Condition ~~TRONOX INCORPORATED~~ and Results of Operations

The following discussion and analysis should be read in conjunction with the information ~~NOTES~~contained in the audited Consolidated Financial Statements for the years ended December ~~TO CONDENSED~~31, ~~CONSOLIDATED~~2011, ~~FINANCIAL~~2010 and 2009 and the related notes thereto. This discussion contains forward-looking statements that involve risks and uncertainties, and actual ~~STATEMENTS — (Continued)~~ results could differ materially from those discussed in the forward-looking statements as a result of numerous factors. See “Cautionary Note Regarding Forward-Looking Statements.”

15This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains certain financial measures, in particular the presentation of Income (Loss) from Operations, which are not presented in accordance with accounting principles generally accepted in the United States (“U.S. ~~Reporting~~GAAP”). byWe ~~Business~~are ~~Segment~~presenting these non-U.S. GAAP financial measures because they provide us and ~~Geographic~~readers ~~Locations~~of this annual statement with additional insight into our operational performance relative to earlier periods and relative to our competitors. We do not intend for these non-U.S GAAP financial measures to be a substitute for any U.S. GAAP financial information. Readers of this annual statement should use these non-U.S. GAAP financial measures only in conjunction with the comparable U.S. GAAP financial measures. Reconciliations of Income (Loss) from Operations to Income (Loss) from Continuing Operations, the most comparable U.S. GAAP measure, are provided herein.

General The company has one reportable segment representing the company’s pigment business. The pigment segment primarily produces and markets TiO2 and has production facilities in the United States, Australia, Germany and The Netherlands. The pigment segment also includes heavy minerals production operated through our joint venture. The heavy minerals production is integrated with our Australian pigment plant, but also has third-party sales of minerals not utilized by the company’s pigment operations. Electrolytic and other chemical products (which does not constitute a reportable segment) represents the company’s other operations which are comprised of electrolytic manufacturing and marketing operations, all of which are located in the United States. Segment performance is evaluated based on segment operating profit (loss), which represents results of segment operations before considering general expenses, environmental provisions, and land sales; interest and debt expense; other income, net, and income tax provision.

	Three Months						Six Months
	Ended						Ended
	June 30,						June 30,
	2008			2007			2008			2007
	(In millions)
Net sales
Pigment	$	374.4		$	340.2		$	696.0		$	655.6
Electrolytic and other chemical products		29.4			26.3			56.9			50.0
Total net sales	$	403.8		$	366.5		$	752.9		$	705.6
Operating profit (loss)
Pigment (1)	$	(42.3	)	$	3.7		$	(45.3	)	$	11.2
Electrolytic and other chemical products (2)		0.8			0.6			2.5			(0.2	)
		(41.5	)		4.3			(42.8	)		11.0
Provision for environmental remediation and restoration		(0.5	)		(1.4	)		(0.5	)		(1.6	)
Gain on land sales		(12.4	)		—			(17.7	)		—
Corporate and nonoperating sites (3)		(3.2	)		(4.4	)		(4.0	)		(8.9	)
Total operating profit (loss)		(32.8	)		(1.5	)		(29.6	)		0.5
Interest and debt expense		(12.7	)		(12.4	)		(25.0	)		(24.7	)
Other income, net		0.7			0.7			6.8			2.4
Income tax benefit (provision)		14.9			(6.8	)		16.5			(7.2	)
Loss from continuing operations	$	(29.9	)	$	(20.0	)	$	(31.3	)	$	(29.0	)

Tronox, Incorporated (“Tronox” or the “Company”) is one of the leading producers and marketers of titanium dioxide (“TiO₂”) pigment, which is used in consumer products such as paint, plastic and certain specialty products. We are one of the few TiO₂ manufacturers with global operations having production facilities and sales and marketing presence in the Americas, Europe and the Asia-Pacific regions.

(1)		The three and six months ended June 30, 2008, includes goodwill impairment of $13.5 million as described in Note 4.
(2)		The three and six months ended June 30, 2008, includes restructuring charges of $0.3. million related to the company’s work force reduction described in Note 6.
(3)		The three and six months ended June 30, 2008, includes restructuring charges of $3.9 million related to the company’s work force reduction described in Note 6.

We operate chloride process TiO₂production facilities in Hamilton, Mississippi, Botlek, the Netherlands, and Kwinana, Western Australia. The Hamilton, Mississippi facility is the third largest plant of its kind and the facility in Kwinana, Western Australia is a fully integrated facility that is part of our joint venture. The joint venture is an integral aspect of our operations due to its backward integration into titanium ore raw materials. See our discussion of the Tiwest Joint Venture below.

16Our global presence enables us to sell our products to a diverse portfolio of customers with whom we have well-established relationships. ~~Related~~Our ~~Party~~customer ~~Transactions~~base consists of more than 1,000 customers in approximately 90 countries and includes market leaders in each of the major end-use markets for TiO2. In addition, we have supplied each of our top ten customers with TiO2 for more than ten years.

~~Tronox~~In ~~conducted~~addition ~~transactions~~to ~~with~~our ~~Exxaro~~pigment ~~Australia Sands Pty Ltd (“Exxaro”)~~business, ~~the~~we have other ~~50%~~operations ~~partner~~that inmanufacture ~~the~~and ~~Tiwest Joint~~market ~~Venture.~~electrolytic ~~The company purchased raw materials used in its production of TiO2~~ and ~~also~~specialty ~~purchased~~chemical ~~Exxaro’s share of TiO2 produced by the Tiwest Joint Venture~~products. ~~The company also provided~~ ~~administrative~~Our ~~services~~electrolytic and ~~product~~other ~~research~~chemical ~~and~~products ~~development activities~~businesses ~~which~~produce ~~were~~electrolytic ~~reimbursed~~manganese bydioxide, ~~Exxaro.~~sodium ~~The~~chlorate, ~~company~~boron-based ~~made total~~and ~~net~~other ~~payments~~specialty ofchemicals ~~$58.7 million~~ and ~~$54.5 million during~~is ~~the~~focused ~~six~~on ~~months~~three ~~ended~~end-use ~~June 30,~~markets: ~~2008~~advanced ~~and~~battery ~~2007~~materials, ~~respectively,~~ ~~for~~sodium ~~these~~chlorate ~~activities~~for pulp and ~~had~~paper amanufacture ~~net~~and ~~payable~~specialty ~~to Exxaro~~boron ~~totaling~~products ~~$35.2 million~~serving ~~at June 30, 2008. Additionally,~~ the ~~outstanding note payable to Exxaro with a balance of $7.9 million at December 31~~semi-conductor, ~~2007,~~pharmaceutical ~~was~~and ~~paid off~~igniter ~~in January 2008 along with applicable interest of $0~~industries.~~8 million.~~

Tiwest Joint Venture


	Nature of Business	2011 %			2010 %			2009 %
Tiwest Joint Venture	Titanium minerals, and pigment production		50	%		50	%		50	%

The Company operates the Tiwest Joint Venture with Exxaro Australia Sands Pty Ltd., which is a subsidiary of Exxaro. The Tiwest Joint Venture operates a chloride process TiO₂ plant located in Kwinana, Western Australia (the “Kwinana Facility”), a mining operation in Cooljarloo, Western Australia, and a mineral separation plant and a synthetic rutile processing facility, both in Chandala, Western Australia.

The Tiwest Joint Venture is a contractual relationship between Tronox and Exxaro whereby each party hold an undivided interest in each asset of the joint venture, and are proportionally liable for each of the joint venture’s liabilities. The Tiwest Joint Venture is not a separate legal entity and does not enter into any transactions. Transactions are entered into by the joint venture partners who have the right to sell their own product, collect their proportional share of the revenues and absorb their share of costs. As such, the Company does not account for the Tiwest Joint Venture under the equity method.

~~Item~~The 2.Company ~~Management~~accounts for its share of the Tiwest Joint Venture’s ~~Discussion~~assets that are jointly controlled and ~~Analysis~~its share of ~~Financial~~liabilities ~~Condition~~for which it is jointly responsible on a proportionate gross basis in its Condensed Consolidated Balance Sheet. Additionally, the Company accounts for the revenues generated from its share of the products sold and ~~Results~~its share the expenses of the joint venture on a gross basis in its Condensed Consolidated Statements of Operations.

~~This~~Through ~~discussion~~a separate agreement, the Company is responsible for the marketing of ~~management~~Exxaro’s ~~views~~TiO2, onin ~~the~~which ~~financial condition~~capacity ~~and~~it ~~results~~acts ofas ~~operations~~principal ofand bears the ~~company~~credit ~~should~~risk ~~be read~~for insuch ~~conjunction~~sales. ~~with~~As the ~~audited~~Company ~~consolidated~~acts ~~and~~as ~~combined~~principal, the ~~financial~~total ~~statements~~tonnes ~~and~~of TiO2 from the ~~related~~Tiwest ~~notes~~Joint ~~which~~Venture ~~are~~sold are included in the ~~company~~Company’s ~~Annual~~net ~~Report~~sales ~~on Form 10-K for~~and the ~~year~~cost ~~ended~~to ~~December 31,~~acquire ~~2007~~any tonnes from Exxaro is included in the Company’s cost of goods sold.

~~Overview~~ Segment Evaluation

~~Tronox~~Our Incorporated (“Tronox” or the “company”), a Delaware Corporation, was formed on May 17, 2005, in preparation for the contribution and transfer by Kerr-McGee Corporation (“Kerr-McGee”) of certain entities, including those comprising substantially all of its chemical business ~~(the~~has ~~“Contribution”). We have~~ one reportable segment, ~~representing the company’s~~ pigment ~~business~~. The pigment segment primarily produces and markets ~~titanium~~ ~~dioxide pigment (“~~TiO2”) and has production facilities in the United States, Australia, ~~Germany~~ and ~~The~~the Netherlands. ~~The~~Our ~~pigment~~other ~~segment~~business ~~also~~line, ~~includes~~electrolytic ~~heavy~~and ~~minerals~~other ~~production~~chemical ~~operated~~products, ~~through~~is ~~our~~comprised ~~joint~~of ~~venture (“Tiwest”).~~our ~~The~~electrolytic ~~heavy~~manufacturing ~~minerals~~and ~~production~~marketing ~~is integrated~~operations. ~~with~~Corporate ~~our~~and ~~Australian~~other ~~pigment~~is ~~plant,~~comprised ~~but~~of ~~also~~corporate ~~has third-party~~activities ~~sales~~and ofbusinesses ~~minerals~~that ~~not~~are ~~utilized~~no bylonger ~~our~~in ~~pigment operations~~operation. ~~Electrolytic~~Although electrolytic and other chemical products ~~(which~~and ~~does not~~corporate ~~constitute~~and aother ~~reportable~~do ~~segment)~~not ~~represents~~constitute ~~the company’s~~reportable ~~other~~segments ~~operations~~under ~~which~~Accounting ~~are~~Standards ~~comprised~~Codification ~~of electrolytic~~(“ASC”) 280, ~~manufacturing~~Segment ~~and marketing operations~~Reporting, ~~all~~they ~~of which~~ are ~~located~~discussed inand ~~the~~disclosed ~~United~~separately ~~States.~~herein Weas ~~have~~management inbelieves ~~the past~~that ~~operated~~providing orthis ~~held~~information ~~businesses~~is oruseful ~~properties, or currently hold properties, that do not relate~~ to the ~~current chemical business~~readers.

~~The~~We ~~Contribution~~evaluate ~~was~~the ~~completed~~pigment insegment’s ~~November~~performance ~~2005~~separately based on segment income (loss) from operations, ~~along~~which ~~with~~represents the ~~recapitalization~~ results of ~~the~~segment ~~company~~operations before unallocated costs, ~~whereby~~such ~~common~~as ~~stock~~general ~~held~~corporate ~~by Kerr-McGee~~expenses ~~converted~~not ~~into~~identified ~~approximately~~to ~~22.9 million~~a ~~shares of~~specific ~~Class B~~segment, ~~common~~environmental ~~stock.~~provisions Anrelated ~~initial~~to ~~public~~sites ~~offering~~no longer in ~~(“IPO”)~~operation, ofinterest ~~Class A~~and ~~common~~debt ~~stock~~expense, ~~was~~income ~~completed~~tax ~~on November 28~~expense or benefit, ~~2005.~~reorganization ~~Prior~~income to(expense) ~~the~~and ~~IPO,~~other ~~Tronox~~income ~~was~~(expense). aTotal ~~wholly owned~~income ~~subsidiary~~(loss) from operations of ~~Kerr-McGee.~~our ~~Pursuant~~segment toand ~~the~~other ~~terms~~business lines is a financial measure of ~~the~~our performance, ~~Master~~which ~~Separation~~is ~~Agreement~~not ~~dated~~determined ~~November 28,~~in ~~2005~~accordance U.S. GAAP, ~~among Kerr-McGee~~as it excludes the items listed above, ~~Kerr-McGee~~all ~~Worldwide~~of ~~Corporation~~which ~~and~~are ~~Tronox~~components ~~(the~~ of “~~MSA”~~Income (Loss), ~~the~~from ~~net~~Continuing ~~proceeds~~Operations” ~~from~~on the ~~IPO~~Condensed Consolidated Statements of ~~$224.7 million~~ ~~were~~Operations, ~~distributed~~the tomost ~~Kerr-McGee.~~comparable U.S. GAAP measure.

~~Following~~Acquisition ~~the IPO, approximately 43.3%~~ of ~~the~~Exxaro ~~total~~Mineral ~~outstanding common~~Sands ~~stock~~Operations of Tronox was held by the general public and 56.7% was held by Kerr-McGee. The holders of Class A common stock and Class B common stock have identical rights, except that holders of Class A common stock are entitled to one vote per share, while holders of Class B common stock are entitled to six votes per share on all matters to be voted on by stockholders.

On ~~March~~September 825, ~~2006~~2011, ~~Kerr-McGee’s~~we ~~Board~~entered ofinto ~~Directors declared~~ a ~~dividend~~definitive ofagreement (the ~~company’s~~“Transaction ~~Class B~~Agreement”) ~~common~~with Exxaro Resources Limited ~~stock~~(“Exxaro”) ~~owned~~and bycertain ~~Kerr-McGee~~of its affiliated companies, to acquire 74% of its ~~stockholders~~South ~~(the “Distribution”).~~African ~~The~~mineral ~~Distribution~~sands ~~was~~operations, ~~completed~~including ~~on March 30~~its Namakwa and KZN Sands mines, ~~2006~~separation facilities and slag furnaces, ~~resulting~~along inwith ~~Kerr-McGee~~Exxaro’s ~~having~~50% noshare ~~ownership~~of the orTiwest ~~voting~~Joint ~~interest~~Venture in Western Australia (together “Exxaro Mineral Sands”), which we refer to as the ~~company~~Transaction (the “Transaction”).

Pursuant to a Registration Statement on Form S-4 (File No. 333-178835) declared effective by the Securities and Exchange Commission (the “SEC”) on May 4, 2012 (the “Registration Statement”) for the initial public offering of shares of Tronox Limited’s Class A common stock, par value $0.01 per share (“New Common Stock”), Tronox Limited will issue 16,445,827 shares of its Class A common stock in ~~General Factors~~a ~~Affecting~~registered initial public offering (the ~~Results~~“equity public offering”). On May 30, 2012, the Company will hold a special meeting of ~~Operations~~the stockholders of Tronox Incorporated to adopt the Transaction Agreement for the purpose of approving the Transaction, and therefore become subject to the Constitution of Tronox Limited and applicable provisions of Australian law.

~~Operating~~In ~~results~~the inTransaction, the ~~first~~existing ~~half~~business ~~2008~~of ~~were~~Tronox ~~unfavorably~~Incorporated will be combined with the Exxaro Mineral Sands business under a new Australian holding company, Tronox Limited. The Transaction will be ~~impacted~~effectuated byin two primary steps. In the first step, ~~among~~Tronox ~~other~~Incorporated ~~reasons~~will become a subsidiary of Tronox Limited, ~~significant~~with ~~increases~~Tronox Incorporated stockholders receiving one Class A Share and $12.50 in cash for each share of Tronox Incorporated ~~process~~common ~~chemical~~stock, ~~energy~~unless ~~and~~the ~~transportation~~holder ~~costs~~elects to receive an exchangeable share of Tronox Limited (subject to proration), ~~unplanned production~~which ~~difficulties~~will be exchangeable for one Class A Share of Tronox Limited and aan ~~non-~~amount in cash ~~impairment~~equal ~~charge~~to ~~related~~$12.50 without interest (the to“Exchangeable ~~goodwill~~Shares”). ~~These~~The ~~adverse~~Exchangeable ~~effects~~Shares ~~were~~will ~~partially~~not ~~offset~~be bytransferable until after December 31, 2012, but the Tronox Limited Class A Shares, including those delivered upon the exchange of an Exchangeable Share, will be ~~demand~~transferable. ~~increases~~In the second step, Tronox Limited will acquire Exxaro Mineral Sands in ~~Asia~~exchange for issuance of Class B Shares to Exxaro and ~~gains~~one onof ~~land~~its ~~sales~~subsidiaries. Upon completion of the Transaction, assuming no Tronox Incorporated stockholders elect to receive Exchangeable Shares, former Tronox Incorporated stockholders and Exxaro will hold 15,238,612 Class A Shares and 9,950,856 Class B Shares, respectively, representing approximately 61.5% and 38.5%, respectively, of the voting power in Tronox Limited.

We experienced productions difficulties at our Kwinana, Western Australia, and Uerdingen, Germany, TiO2 facilities during the second quarter. The Tiwest Joint Venture TiO2 facility in Kwinana experienced production difficulties after a planned shutdown. The shutdown had to be extended due to operational difficulties and subsequent challenges that arose during start-up of the plant. We also experienced processing difficulties at our Uerdingen facility following a planned maintenance outage that resulted in reduced production volumes and higher costs. The impact of the Kwinana and Uerdingen difficulties was approximately $11 million (pretax) in the second quarter.

We reduced our U.S. salaried work force by approximately 13% or 69 positions of which approximately half of the positions had already been vacated this year. In addition, we suspended our employee cash bonus incentive plan and 401(k) matching contribution program. Our second quarter charge for the work force reduction was $4.2 million (pretax) related to severance and special termination benefits.

~~Our~~As ~~Tiwest~~of the closing of the Transaction, Tronox Limited will be the world’s third-largest producer and marketer of TiO2 ~~facility~~manufactured via chloride technology, as well as was ~~impacted~~the bythird-largest titanium feedstock producer and the ~~June 3~~second largest zircon producer. Tronox Limited will have global operations in the Americas, ~~2008~~Europe, ~~fire~~South Africa and the Asia-Pacific region. ~~subsequent~~Its ~~shutdown~~assured offeedstock ~~Apache’s~~supply ~~Varanus~~and ~~Island~~global ~~natural~~presence, ~~gas processing~~combined ~~facility.~~with ~~The~~a ~~facility~~focus ~~continued~~on toproviding ~~produce~~customers ~~by securing~~with ~~short~~world-~~term~~class ~~natural~~products, ~~gas~~end-use ~~supplies~~market atexpertise ~~increased~~and ~~costs.~~strong ~~The increased~~technical ~~cost~~support, ~~for~~will ~~the~~allow ~~natural~~it ~~gas~~to ascontinue to sell products to a ~~result~~diverse portfolio of customers in various regions of the ~~Apache shutdown~~world, ~~was~~with ~~approximately~~most ~~$2 million~~of ~~pretax~~whom init ~~the~~has ~~second quarter~~well-established relationships. WeTronox ~~expect~~Limited awill ~~similar~~operate ~~impact~~three ~~for~~TiO2 facilities at the ~~third~~following ~~quarter~~locations: asHamilton, ~~the TiO2 facility~~Mississippi, ~~has~~Botlek, ~~been~~The ~~purchasing~~Netherlands ~~their~~and ~~natural~~Kwinana, ~~gas~~Australia ~~requirements~~representing 465,000 attonnes of annual TiO2 production capacity. ~~these~~Additionally, ~~increased~~Tronox ~~pricing~~Limited ~~levels~~will ~~for~~operate ~~the~~three ~~month~~separate ofmining ~~July.~~operations: WeKZN ~~are~~Sands located in ~~the~~ ~~process~~South ofAfrica, ~~pursuing~~Namakwa ~~insurance~~Sands ~~recovery,~~located in South Africa and ~~our~~Tiwest ~~insurance carrier~~located ~~has~~in ~~provided~~Australia, ~~initial~~which ~~acceptance~~have ofa ~~the~~combined ~~claim~~production ~~although~~capacity ~~we have~~of ~~not~~723,000 ~~finalized~~tonnes ~~the~~of titanium ~~amount~~feedstock ~~that~~and ~~may~~265,000 betonnes ~~recovered~~of zircon.

InTiwest Joint Venture — As noted above, in the ~~first~~second ~~half~~step, Tronox Limited will acquire Exxaro Mineral Sands. Exxaro Mineral Sands is composed of ~~2008~~Exxaro Sands and Exxaro TSA Sands in South Africa, weand ~~have~~Exxaro’s ~~made~~50.0% interest in the ~~following~~Tiwest Joint Venture. As such, Tronox Limited will own 100% of the ~~announcements:~~ Tiwest Joint Venture as of the date of the Transaction.

	•	We, along with our 50% joint venture partner, a subsidiary of Exxaro Resources Limited, have given final approval for the expansion of the Tiwest TiO2 pigment plant in Kwinana, Western Australia, which was announced last year. The project, which will increase the plant’s current annual capacity from 110,000 tonnes per year to approximately 150,000 tonnes per year is expected to cost approximately A$100 million. Construction is expected to begin in 2008, subject to appropriate regulatory approvals, with the additional capacity expected to come on line in early 2010. The joint venture partners have signed an agreement under which Exxaro will provide funding for the expansion. Tronox has the option to contribute its share of the capital at its discretion throughout the project and until a date two years after commissioning, which will be taken into account when calculating its final interest in the expanded production.
	•	We signed a definitive agreement with RTI International Metals, Inc. under which RTI will purchase titanium tetrachloride (TiCl4) from our Hamilton, Mississippi, titanium dioxide plant. The TiCl4 will be used in the manufacture of titanium sponge at a new plant that RTI will build adjacent to our Hamilton facility. We expect to generate annual operating profits from TiCl4 sales and incremental cost savings in the range of $12 million to $15 million once the plant reaches full production. RTI estimates the plant will come on line in 2010, ramping up production over the next several years.

Segment Evaluation — Subsequent to the Transaction, Tronox Limited will have two reportable segments, Pigment and Minerals. The Pigment segment will primarily produce and market TiO_2, and will have production facilities in the United States, Australia, and the Netherlands. The Minerals segment will include the exploration, mining and beneficiation of mineral sands deposits. These operations will produce titanium feedstock, including ilmenite, chloride slag, slag fines and rutile, as well as the co-products pig iron and zircon. Tronox Limited’s Other business line will be comprised of its electrolytic manufacturing and marketing operations and corporate and other, which will be comprised of corporate activities, as well as businesses that are no longer in operation.

~~Results of~~Recent ~~Operations~~ Developments

~~Three Months~~Exit ~~Ended~~Facility ~~June~~Refinancing — On February 308, ~~2008~~2012, ~~Compared~~the toCompany ~~Three~~refinanced ~~Months~~the ~~Ended~~Exit Financing Facility. The Company obtained a new Goldman Sachs facility comprised of a $550.0 million Senior ~~June 30~~Secured Term Loan and a $150.0 million Senior Secured Delayed Draw Term Loan (together, ~~2007~~the Term Facility). The Term Facility expressly permits the Transaction and, together with existing cash, is expected to fund the cash needs of the combined business, including any cash needs arising from the Transaction.

~~Total~~Wells ~~net~~Revolver ~~sales~~Amendment ~~were~~— ~~$403.8~~On February ~~million~~8, 2012, ~~during~~ the ~~three~~Company ~~months ended~~amended ~~June 30,~~the ~~2008,~~Wells anRevolver ~~increase~~to ofallow ~~10.2%~~for ~~from~~ the ~~2007 period.~~Transaction ~~The~~to ~~following~~occur ~~table~~while ~~presents~~keeping ~~net~~the ~~sales~~revolver ~~for~~in ~~the~~force. ~~periods indicated:~~

	Three Months Ended
	June 30,
	2008		2007		$ Change
	(In millions)
Net sales
Pigment	$	374.4	$	340.2	$	34.2
Electrolytic and other chemical products		29.4		26.3		3.1
Total	$	403.8	$	366.5	$	37.3

Emergence from Chapter 11

~~Pigment~~On ~~segment~~January 12, ~~net~~2009 ~~sales~~(the ~~increased~~“Petition ~~$34.2 million~~Date”), orTronox and certain of its subsidiaries ~~10.1%~~(collectively, tothe ~~$374.4 million~~“Debtors”) ~~during~~filed ~~the~~voluntary ~~three~~petitions ~~months~~in ~~ended June 30,~~the ~~2008,~~United ~~from~~States ~~$340.2 million~~Bankruptcy ~~during~~Court for the ~~three months~~Southern ~~ended~~District ~~June 30,~~of ~~2007.~~New ~~The~~York ~~increase~~(the ~~was~~“Bankruptcy ~~primarily~~Court”) ~~due to~~seeking ~~higher TiO2 and~~reorganization ~~minerals~~relief ~~sales~~under ~~volumes,~~the ~~favorable~~provisions ~~foreign~~of ~~currency~~Chapter 11 ~~rate~~of ~~changes~~Title 11 ~~and~~of ~~increased~~the ~~sales~~United States ~~prices~~Code ~~for~~(the ~~minerals~~“Bankruptcy ~~and acid~~Code”). ~~Partially~~ ~~offsetting~~On ~~these~~November 30, ~~increases~~2010 ~~were~~(the ~~lower TiO2 selling~~“Confirmation ~~prices.~~Date”), ~~While~~the Bankruptcy Court confirmed (the ~~foreign~~“Confirmation ~~exchange~~Order”) ~~impact~~the ~~was~~Debtors’ anFirst Amended Joint ~~increase~~Plan of Reorganization pursuant to ~~sales~~Chapter 11 of ~~approximately~~the ~~$17.2 million~~Bankruptcy Code, ~~higher overall~~dated ~~prices~~November 5, ~~and~~2010 ~~volumes~~(as ~~increased~~amended ~~sales~~and byconfirmed, ~~approximately $17~~the “Plan”).~~0 million.~~

~~Electrolytic~~Material ~~and~~conditions ~~other~~to ~~chemical~~the ~~products~~Plan ~~net~~were ~~sales~~resolved ~~increased $3.1 million, or 11.8%, to $29.4 million~~ during the ~~three~~ ~~months~~period ~~ended June 30, 2008,~~ from ~~$26.3 million during~~ the ~~three~~Confirmation ~~months~~Date ~~ended~~until ~~June~~January 3026, ~~2007~~2011. ~~The~~Subsequently, ~~increase was~~on ~~primarily~~February 14, ~~due~~2011 to(the ~~higher~~“Effective ~~sales~~Date”), ~~prices~~Tronox Incorporated ~~for~~emerged ~~sodium~~from ~~chlorate~~bankruptcy and an ~~improved~~continued ~~mix~~operations ofas ~~higher~~reorganized ~~end~~Tronox ~~EMD products over the prior year~~Incorporated.

The consummation of the Plan resulted in a substantial realignment of the interests in the Company between existing prepetition creditors and stockholders. As a result, we were required to adopt fresh-start accounting. Having resolved the material contingencies related to implementing the Plan on January 26, 2011 and due to the proximity to the end of month accounting period, which closed on January 31, 2011, we applied fresh-start accounting as of January 31, 2011. We evaluated the activity between January 26, 2011 and January 31, 2011 and, based upon the immateriality of such activity, concluded that the use of January 31, 2011 to reflect the fresh-start accounting adjustments was appropriate for financial reporting purposes. The use of the January 31, 2011 date is for financial reporting purposes only and does not affect the Effective Date of the Plan. Accordingly, the financial information set forth in this report, unless otherwise expressly set forth or as the context otherwise indicates, reflects the consolidated results of operations and financial condition of Tronox and its subsidiaries on a fresh-start basis for the period following January 31, 2011 (“Successor”), and of Tronox and its subsidiaries on a historical basis for the periods through January 31, 2011 (“Predecessor”).

~~Gross~~Business ~~margin~~Environment decreased $29.8 million to $0.2 million during the three months ended June 30, 2008, from $30.0 million during the three months ended June 30, 2007. Gross margin percentage decreased to nil during the three months ended June 30, 2008, from 8.2% during the three months ended June 30, 2007. Higher costs, including shipping and handling costs and changes in foreign currency rates were the primary reasons. Costs were higher during the period due to increased process chemical, energy and transportation costs as well as production difficulties at our Uerdingen and Kwinana TiO2 plants, both after planned maintenance outages. In addition, the Kwinana facility experienced significantly higher natural gas costs during the quarter due to a fire and subsequent shutdown of Apache’s Varanus Island natural gas processing facility. Partially offsetting the higher costs were improved pricing mainly on minerals and acid products. While production and shipping and handling costs accounted for a $34.1 million decrease in gross margin, improved pricing and volumes provided an offset of $8.3 million. The net foreign currency rate impact reduced gross margin by $4.0 million.

Selling, general and administrative expenses decreased $2.8 million, or 9.3%, to $27.2 million during the three months ended June 30, 2008, from $30.0 million during the three months ended June 30, 2007. The ~~decrease was~~following ~~mainly~~discussion ~~due~~includes totrends ~~the reversal of variable compensation related costs~~ and ~~lower~~factors ~~employee~~that ~~benefit~~may ~~costs~~affect ~~partially~~future ~~offset~~operating ~~by unfavorable foreign currency rate changes~~results.

~~Total~~Supply ~~operating~~and ~~loss~~Demand ~~for~~— The majority of our revenue has come from the ~~three~~sale ~~months~~of ~~ended~~TiO2 ~~June 30, 2008,~~(85.1% ~~was~~in ~~$41~~the first quarter of 2012 and 83.~~5 million,~~4% ain ~~decrease~~the first quarter of ~~$45~~2011).~~8 million~~ TiO2 is a chemical used in many “quality of life” products, such as ~~from~~paints, ~~the~~plastics, ~~2007~~paper, ~~period~~inks and rubber as well as in various specialty applications. ~~The~~Supply ~~following~~and ~~table~~demand ~~presents~~for TiO2 ~~operating~~products is currently in balance globally allowing ~~profit~~producers to maintain high capacity utilization rates (~~loss~~production levels). Over the long-term, ~~with~~we aexpect ~~reconciliation~~demand for TiO2 to ~~consolidated~~grow ~~loss~~by ~~from continuing~~approximately ~~operations~~3% ~~before~~to ~~income~~4% per ~~taxes,~~year. This is consistent with our expectation for the ~~periods indicated:~~ long-term growth in GDP.

	Three Months Ended
	June 30,
	2008			2007			$ Change
	(In millions)
Operating profit (loss)
Pigment	$	(42.3	)	$	3.7		$	(46.0	)
Electrolytic and other chemical products		0.8			0.6			0.2
Subtotal		(41.5	)		4.3			(45.8	)
Provision for environmental remediation and restoration		(0.5	)		(1.4	)		0.9
Gain on land sales		12.4			—			12.4
Corporate and nonoperating sites		(3.2	)		(4.4	)		1.2
Total operating loss		(32.8	)		(1.5	)		(31.3	)
Interest and debt expense		(12.7	)		(12.4	)		(0.3	)
Other income, net		0.7			0.7			—
Loss from continuing operations before income taxes	$	(44.8	)	$	(13.2	)	$	(31.6	)

Pricing — Due to supply and demand dynamics, TiO₂ prices rose significantly during 2011 but increases have moderated in early 2012 in part due to normal seasonality and therefore pricing increased modestly over the fourth quarter of 2011, while being significantly higher than the first quarter of 2011. Going forward, we expect the market to remain in balance enabling prices to remain at current levels and/or increase at moderate rates.

Raw Materials ~~Pigment~~— ~~segment~~The ~~operating~~primary ~~profit~~raw ~~decreased~~materials ~~$46.0 million~~used ~~to a~~in ~~loss~~the production of ~~$42.3 million~~TiO2, ~~during~~titanium ~~the~~feedstock ~~three~~ore, ~~months~~experienced ~~ended June 30,~~significant ~~2008~~increases in price during 2011, ~~from~~which ahave ~~profit~~continued ofinto $32012.~~7 million~~ Our price for raw materials during the ~~three~~first ~~months~~quarter ~~ended~~of ~~June 30,~~2012 ~~2007.~~increased ~~The~~over ~~decrease~~100% ~~was~~compared ~~mainly~~to ~~due~~the tofirst ~~increased~~quarter ~~process~~of ~~chemical,~~2011. ~~energy~~As ~~and transportation~~the ~~costs~~cost of titanium feedstock continues to rise, ~~production~~our ~~difficulties~~operating atexpenses will continue to increase. Due to the ~~Uerdingen and~~constraints ~~Kwinana~~of ~~plants,~~adding ansignificant ~~impairment~~new ~~charge~~production capacity for ~~goodwill~~titanium ~~of $13.5 million~~feedstock, ~~and~~we ~~unfavorable~~expect ~~foreign~~titanium feedstock ~~currency~~production ~~rate changes~~to ofremain ~~$5.0 million,~~constrained ~~partially~~thereby ~~offset~~putting byupward ~~higher~~pressure ~~selling prices~~on ~~and~~our ~~volumes~~raw material costs.

~~Electrolytic~~Seasonality ~~and~~— ~~other~~The ~~chemical~~demand ~~products~~for ~~businesses~~TiO2 ~~operating profit~~during ~~increased~~any ~~$0.2 million~~given year is subject to $0seasonal fluctuations.~~8 million~~ ~~during~~ TiO2 sales are generally higher in the ~~three~~second ~~months~~and ~~ended~~third ~~June 30,~~quarters ~~2008,~~of the year primarily due to the increase in paint production to meet demand resulting from athe ~~profit~~spring ofand summer painting season in North $0America and Europe.~~6 million~~ ~~during~~We continue to believe that in the ~~three~~absence ~~months~~of ~~ended~~material ~~June 30~~new supply and the continued long term development of demand, ~~2007~~ the medium and long term supply and demand fundamentals of the TiO2 market will remain strong. The ~~increase~~impacts ~~was~~from ~~primarily~~the ~~due~~seasonality toof ~~improved~~the fourth ~~pricing~~quarter 2011 and ~~product~~ ~~mix~~the ~~but~~first ~~was~~quarter ~~partially~~of ~~offset~~2012, compounded by ~~increased~~destocking ~~energy, restructuring~~of inventory by customers and ~~freight~~the ~~costs~~impact of the economic slowdown in China, are still present in the market as of the date of this filing. However, we believe those issues will improve in the coming months.

~~Corporate~~Currency ~~and~~Exchange ~~nonoperating~~Rates ~~sites~~— ~~improved~~The ~~$1.2 million~~financial tocondition aand ~~loss~~results of $3operations of our operating entities in the Netherlands and Australia are reported in various foreign currencies and then converted into U.~~2 million~~S. ~~for~~dollars at the ~~three~~applicable ~~months~~exchange ~~ended~~rate for inclusion in our consolidated financial statements. ~~June 30,~~As ~~2008~~a result, ~~versus~~any volatility of the U.S. dollar against these foreign currencies creates uncertainty for and may have a ~~loss~~positive ofor $4negative impact on reported sales and operating margin.~~4 million~~ ~~during~~ During the ~~three~~first ~~months~~quarter ~~ended~~of ~~June 30~~2012, ~~2007~~we experienced unfavorable foreign currency effects. ~~The~~Foreign ~~improvement~~currency ~~was primarily~~effects ~~due~~appear toin ~~lower~~our ~~selling~~financial statements in several ways. First, ~~general~~they impact reported amounts of revenues and ~~administrative~~ expenses ~~partially~~and ~~offset~~are byembedded ain ~~restructuring~~each ~~charge~~line item of $3 the financials.~~9 million~~ ~~related~~Second, tofor achanges ~~reduction~~in reported asset and liability amounts in ~~force~~either ~~implemented during~~income and expense or in cumulative translation adjustments in “Accumulated other comprehensive income (loss)” on the ~~quarter~~Condensed Consolidated Balance Sheets. Foreign currency losses recognized in “Other income (expense)” on the Condensed Consolidated Statements of Operations was $2.2 million for the three months ended March 31, 2012.

Competition — Each of the markets in which we compete is highly competitive. Competition is based on a number of factors such as price, product quality and service. We face significant competition from major international and smaller regional competitors. Our most significant competitors include major chemical and materials manufacturers and diversified companies, a number of which have substantially larger financial resources, greater personnel and larger facilities than we do.

Within the end-use markets in which we compete, competition between products is intense. We face substantial risk that certain events, such as new product development by competitors, changing customer needs, production advances for competing products or price changes in raw materials, could cause our customers to switch to our competitors’ products.

Government Regulations and Environmental Matters — We are subject to extensive regulation by federal, state, local and foreign governments. Governmental authorities regulate the generation and treatment of waste and air emissions at our operations and facilities. At many of our operations, we also comply with worldwide, voluntary standards developed by the International Organization for Standardization (“ISO”) a nongovernmental organization that promotes the development of standards and serves as a bridging organization for quality and environmental standards, such as ISO 9002 for quality management and ISO 14001 for environmental management. We are in compliance with applicable environmental rules and regulations. Currently, we do not have any outstanding notices of violations or orders from regulatory agencies.

~~Gain~~Consolidated onResults land sales during the three months ended June 30, 2008, was $12.4 million compared to nil during the three months ended June 30, 2007 as there were no such transactions during the prior period. Properties sold include a parcel of ~~land~~Operations ~~in Henderson, Nevada, and a parcel of land in Oklahoma City, Oklahoma.~~

~~Interest~~The ~~and~~Three ~~debt~~Months ~~expense~~Ended ~~increased $0.3~~March ~~million to $12.7 million during the three months ended June 30~~31, ~~2008,~~ ~~from~~2012 ~~$12.4 million~~Compared ~~during the three months ended June 30, 2007. The increase was primarily related~~ to ~~a decrease in~~ the ~~amount~~Combined ofThree ~~interest~~Month ~~capitalized~~Period ~~due~~Ended toMarch 31, ~~lower capital~~2011 ~~expenditures in the current period.~~

~~Other~~The ~~income,~~following ~~net~~table ~~was~~presents $0results of operations for the periods indicated.~~7 million~~ ~~during~~References ~~both~~to 2011 refer to the combined three ~~months~~ month period ended ~~June~~March 3031, ~~2008~~2011, ~~and~~which include the ~~three~~Successor ~~months~~period ~~ended~~and ~~June 30~~the Predecessor period, ~~2007~~unless otherwise indicated.

The effective income tax rate was 33.3% for the three months ended June 30, 2008, compared to (51.5)% for the three months ended June 30, 2007. The income tax benefit for the quarter was favorably impacted as a result of income in taxing jurisdictions where income tax expense was fully offset by reductions to previously recognized valuation allowances. The increase in benefit was more than offset by the impact of losses in foreign jurisdictions with an effective income tax rate lower than the U.S. statutory rate, additional accruals under FIN 48 provisions, and prior year accrual adjustments.


	Successor						Predecessor
	Three Months Ended March 31, 2012			Two Months Ended March 31, 2011			One Month Ended January 31, 2011			Change, 2012 from Combined Three Months 2011
	(Millions of dollars)
Net Sales	$	433.6		$	267.1		$	107.6		$	58.9
Cost of goods sold		(276.3	)		(229.8	)		(82.3	)		35.8

Gross Margin		157.3			37.3			25.3			94.7
Selling, general and administrative expenses		(44.3	)		(19.5	)		(5.4	)		(19.4	)

Income from Operations		113.0			17.8			19.9			75.3
Interest and debt expense		(7.9	)		(5.3	)		(2.9	)		0.3
Other income (expense)		(1.4	)		1.0			1.6			(4.0	)
Reorganization income		—			—			613.6			(613.6	)

Income from Continuing Operations before Income Taxes		103.7			13.5			632.2			(542.0	)
Income tax provision		(17.4	)		(3.3	)		(0.7	)		(13.4	)

Income from Continuing Operations	$	86.3		$	10.2		$	631.5		$	(555.4	)

~~Loss~~Net ~~from~~sales ~~discontinued operations~~ increased $358.39 million, or 15.7%, to $433.6 million for 2012, from $4374.57 million for 2011. Pigment segment sales accounted for approximately 92.8% of our total sales during ~~the~~2012 ~~three~~and ~~months~~approximately ~~ended~~90.0% ~~June 30, 2008,~~in ~~from~~2011. Increases in sales price of both TiO2 and mineral products during 2012 resulted in a $1130.24 million increase ~~during~~in ~~the~~net ~~three~~sales, ~~months~~while ~~ended June 30,~~decreases ~~2007.~~in ~~The~~sales ~~change~~volumes ~~was~~of ~~primarily~~both ~~attributable~~TiO2 ~~to provisions~~and ~~required~~mineral products resulted in ~~2008~~a $61.7 million decrease in net sales. Additionally, the impact of foreign currency exchange rate changes related to ~~additional~~TiO2 ~~environmental reserves~~decreased ~~for~~net asales ~~former~~by ~~refinery~~$3.3 ~~site~~million. ~~due~~See ~~primarily~~discussion toof ~~increased~~Net Sales by ~~soil~~business ~~disposal~~line ~~costs~~for further information.

~~Six Months~~Costs ~~Ended~~of ~~June~~goods sold decreased $35.8 30million, ~~2008~~or ~~Compared~~11.5%, to $276.3 million ~~Six~~for ~~Months~~2012, ~~Ended June~~from $312.1 30million for 2011. The decrease is primarily due to a decrease in volume, ~~2007~~offset by higher raw material, chemicals, energy and employee related costs year over year. Also contributing to the increase is unfavorable exchange rate changes primarily due to movements in the Australian dollar versus the U.S. dollar. Cost of goods sold as a percentage of net sales was 63.7% during 2012 down from 83.3% during 2011 primarily due to increased sales prices partially offset by the higher costs.

Gross margin increased $94.7 million, or 151.3%, ~~Total~~to ~~net~~$157.3 million ~~sales~~for ~~were~~2012, from $~~752~~62.96 million ~~during~~for ~~the~~2011. ~~six~~Gross ~~months ended~~margin ~~June 30,~~percentage ~~2008,~~improved anto ~~increase~~36.3% ofduring 62012, up from 16.7% ~~from~~during 2011. Gross margin and gross margin percentage improved primarily due to the ~~2007~~increased selling prices, ~~period.~~discussed ~~The~~above, ~~following~~partially ~~table~~offset ~~presents~~by ~~net~~decreased sales volumes, higher costs and unfavorable exchange rate changes. See discussion of Income (Loss) from Operations by business line for ~~the~~further ~~periods indicated:~~ information.

	Six Months Ended
	June 30,
	2008		2007		$ Change
	(In millions)
Net sales
Pigment	$	696.0	$	655.6	$	40.4
Electrolytic and other chemical products		56.9		50.0		6.9
Total	$	752.9	$	705.6	$	47.3

Selling, general and administrative expenses increased $19.4 million, or 77.9%, to $44.3 million for 2012, from $24.9 million for 2011. The increase was primarily due to costs associated with the acquisition of Exxaro’s mineral sands operations, as well as increased employee variable compensation and benefit costs.

~~Pigment~~Costs ~~segment~~associated ~~net~~with ~~sales~~the ~~increased~~acquisition ~~$40.4 million,~~of orExxaro ~~6.2%~~Mineral Sands, to ~~$696.0 million~~including ~~during~~banker ~~the~~fees, ~~six~~legal ~~months~~and ~~ended~~professional ~~June 30~~fees, as well as costs ~~2008,~~associated ~~from~~with ~~$655.6 million~~the ~~during~~preparation and amending of the ~~six~~Form ~~months~~S-4 ~~ended June 30,~~and ~~2007.~~costs ~~The~~associated ~~increase~~with ~~was~~the ~~primarily~~integration ~~due~~of toExxaro ~~higher TiO2 volumes,~~Mineral ~~favorable~~Sands ~~changes~~that ~~from~~will ~~foreign~~occur ~~currency~~after ~~rates~~the ~~and increased~~closing ~~prices~~of the transaction amounted to approximately $9.1 million. Employee variable compensation and ~~volumes~~benefit ofcosts ~~acid~~increased costs by approximately $9.1 ~~While~~million due to the ~~foreign~~implementation ~~currency impact~~of ~~was~~incentive ancash ~~increase~~and tostock ~~sales~~compensation programs. Amortization of ~~approximately~~ intangible assets increased $~~30.~~2.0 million, ~~prices~~due ~~and~~to ~~volumes~~an ~~resulted~~additional month of amortization in an2012 ~~increase to~~and ~~sales~~travel ofand ~~approximately~~entertainment increased $101.20 million. Other costs decreased $1.8 million.

~~Electrolytic~~Interest and ~~other~~Debt ~~chemical~~expense ~~products~~decreased ~~businesses net sales increased~~ $60.93 million, or 133.87%, to $567.9 million for 2012, from $8.2 million for ~~during~~2011. The decreased costs are primarily attributable to lower interest rates and lower amortization of debt issuance costs on the ~~six~~Term ~~months~~Facility ~~ended~~in ~~June 30~~existence in 2012. Additionally, ~~2008~~during 2011, ~~from~~ interest expense excluded $502.0 8 million ~~during~~that ~~the~~would ~~six~~have been ~~months~~payable ~~ended~~under ~~June 30, 2007.~~the ~~Sales~~terms ~~increased~~of ~~due~~the to$350.0 ~~higher~~million ~~sales~~9.5% ~~prices~~senior ~~for~~unsecured ~~sodium chlorate~~notes, ~~higher~~which ~~volumes~~was ~~for~~not ~~boron~~accrued ~~specialties~~while ~~and~~we anwere ~~improved mix~~in ofbankruptcy ~~higher~~in ~~end~~accordance ~~manganese~~with ~~dioxide~~ASC ~~products~~852, Reorganizations.

Gross margin decreased $41.5 million, or 61.8%, to $25.7 million during the six months ended June 30, 2008, from $67.2 million during the six months ended June 30, 2007. Gross margin percentage decreased to 3.4% during the six months ended June 30, 2008, from 9.5% during the six months ended June 30, 2007. Higher costs, including shipping and handling costs and changes in foreign currency rates were the primary reasons. Costs were higher during the period due to increased process chemical, energy and transportations costs as well as production difficulties at our Uerdingen and Kwinana TiO2 plants, both after planned maintenance outages. In addition, the Kwinana facility experienced significantly higher natural gas costs, during the quarter, due to a fire and subsequent shutdown of Apache’s Varanus Island natural gas processing facility. Higher production and freight costs reduced gross margin by $38.2 million while the net foreign exchange impact further reduced gross margin by $6.8 million.

~~Selling,~~Other ~~general~~income ~~and~~(expense) ~~administrative expenses~~ decreased $104.20 million, orto ~~15.7%,~~an toexpense of $541.84 million ~~during~~for ~~the six months ended June 30~~2012, ~~2008,~~ from income of $652.06 million ~~during~~ ~~the~~for ~~six months ended June 30, 2007~~2011. The ~~decrease~~change was ~~mainly~~ primarily due to ~~lower~~foreign ~~employee~~currency ~~related~~losses ~~costs~~of ~~including~~$2.2 million ~~salaries and~~during ~~variable~~2012 ~~compensation,~~ as ~~well~~compared asto ~~reduced~~foreign ~~employee~~currency ~~benefit costs.~~gains ~~Lower~~of ~~salaries~~$2.4 million ~~and~~in ~~benefit~~2011. ~~costs~~The ~~are primarily the result~~remaining increase of ~~the~~$0.8 million ~~company’s~~is ~~cost~~attributable ~~reduction~~to ~~efforts~~increases ~~while~~and ~~reduced variable~~decreases ~~compensation~~in isother ~~the~~miscellaneous ~~result~~items ofsuch ~~suspension~~as ofinterest ~~the~~income ~~cash incentive~~and ~~compensation~~other ~~plan~~non-operating ~~for the remainder of the year~~income.

~~The~~Reorganization ~~total~~income ~~operating~~was ~~loss~~income ~~was~~of $29613.6 million for 2011. The 2011 income is primarily the ~~six months~~result ~~ended~~of ~~June~~the application of fresh-start accounting as of January 3031, ~~2008~~2011, awhich ~~decrease of~~resulted in a $30659.1 million ~~from~~gain being recognized due to implementation of fresh-start accounting and the ~~2007~~discharge ~~period~~of debt and satisfaction of claims that was only partially offset by $45.5 million ~~The~~of ~~following~~reorganization ~~table presents~~items ~~operating~~including ~~profit~~legal ~~(loss)~~and professional fees, ~~with~~claims aadjustments ~~reconciliation~~and other fees related to ~~consolidated~~ ~~income~~the ~~(loss)~~rights ~~from~~offering ~~continuing~~and ~~operations~~debt ~~before income~~financing. ~~taxes~~As of emergence, ~~for~~we ~~the~~no ~~periods~~longer ~~indicated:~~report reorganization expense. Any residual reorganization costs are primarily included in selling, general and administrative expenses.

	Six Months Ended
	June 30,
	2008			2007			$ Change
	(In millions)
Operating profit (loss)
Pigment	$	(45.3	)	$	11.2		$	(56.5	)
Electrolytic and other chemical products		2.5			(0.2	)		2.7
Subtotal		(42.8	)		11.0			(53.8	)
Provision for environmental remediation and restoration		(0.5	)		(1.6	)		1.1
Gain on land sales		17.7			—			17.7
Corporate and nonoperating sites		(4.0	)		(8.9	)		4.9
Total operating profit (loss)		(29.6	)		0.5			(30.1	)
Interest and debt expense		(25.0	)		(24.7	)		(0.3	)
Other income, net		6.8			2.4			4.4
Income (loss) from continuing operations before income taxes	$	(47.8	)	$	(21.8	)	$	(26.0	)

Income tax provision was $17.4 million for the three months ended March 31, 2012, representing an effective tax rate of 16.8% on pre-tax income of $103.7 million. In the two months ended March 31, 2011, we recorded a tax provision of $3.3 million, representing an effective tax rate of 24.4% on pre-tax income of $13.5 million. In the one month ended January 31, 2011, we recorded a tax provision of $0.7 million, representing an effective tax rate of 0.1% on pre-tax income of $632.2 million.

~~Pigment~~The ~~segment~~tax ~~operating~~provisions ~~profit~~for ~~decreased $56.5 million, to a loss of $45.3 million during~~ the ~~six~~three months ended ~~June~~ March 3031, ~~2008,~~2012 ~~from~~and ~~a profit of $11.2 million during~~ the ~~six~~two months ended ~~June~~March 3031, ~~2007.~~2011 ~~The~~differ ~~decrease~~from ~~was mainly~~the ~~due~~U.S. statutory torate ~~higher~~of ~~production~~35% ~~and~~primarily ~~shipping~~due ~~and~~to ~~handling~~valuation ~~costs,~~allowances ~~an impairment~~in ~~charge~~the ~~for goodwill of $13~~U.~~5 million~~S. and ~~unfavorable~~ ~~foreign~~income ~~currency~~in ~~rate~~foreign ~~changes~~jurisdictions oftaxed ~~$9.1 million, partially~~at ~~offset~~rates bylower anthan ~~increase in volume~~35%.

~~Electrolytic~~In ~~and other chemical products operating profit increased $2.7 million to a profit of $2.5 million during~~ the ~~six~~one ~~months~~month ended ~~June~~January 3031, ~~2008~~2011, ~~from~~the atax ~~loss~~provision ~~of $0.2 million~~differs ~~during~~from the ~~six months ended June 30, 2007~~U.S. ~~The~~statutory ~~improvement~~rate ~~was~~of 35% primarily ~~driven by increased sales~~ due to ~~higher~~fresh-start ~~prices~~adjustments, ~~for~~which ~~sodium~~were ~~chlorate~~booked ~~and~~net ~~an improved mix~~ of ~~higher~~ ~~end manganese dioxide products~~tax. ~~While pricing and product mix was better, increased energy, restructuring and freight costs partially offset these gains.~~

~~Corporate~~Discussion ~~and~~by ~~nonoperating~~business ~~sites~~lines ~~improved $4.9 million to a loss of $4.0 million~~ for the ~~six~~Three ~~months~~Months ~~ended~~Ended ~~June~~March 3031, ~~2008,~~ ~~versus~~2012 aCompared ~~loss~~to ~~of $8.9 million during~~ the ~~six~~Combined ~~months ended~~Three ~~June 30,~~Month ~~2007.~~Period ~~The~~Ended ~~improvement was primarily due to lower selling, general and administrative expenses partially offset by a restructuring charge of $3.9~~March ~~million related to a reduction in force implemented during the second quarter. Lower selling~~31, ~~general and administrative expenses were mainly~~2011 ~~due to lower employee related costs including salaries and variable compensation, as well as reduced benefit costs.~~

~~Gain~~The onfollowing ~~land~~table ~~sales~~presents ~~for~~results ~~the~~of ~~six~~operations ~~months~~for ~~ended~~the ~~June 30,~~periods ~~2008, was $17~~indicated.~~7 million~~ ~~compared~~References to ~~nil~~2011 ~~during~~refer ~~the~~to ~~six months~~the ~~ended~~combined ~~June 30,~~three ~~2007~~month ~~as there were no such transactions during the prior~~ period. ~~Properties~~ended ~~sold include several parcels of land in Henderson~~March 31, ~~Nevada~~2011, awhich ~~former~~include ~~terminal~~the ~~site~~Successor inperiod ~~Mobile, Alabama, several former gas station sites~~ and athe ~~parcel~~Predecessor ofperiod, ~~land in~~unless ~~Oklahoma~~otherwise ~~City, Oklahoma~~indicated.

Interest and debt expense increased $0.3 million, or 1.2% percent, to $25.0 million during the six months ended June 30, 2008, from $24.7 million during the six months ended June 30, 2007. The increase was primarily related to a decrease in the amount of interest capitalized due to lower capital expenditures in the current period.


	Successor						Predecessor
	Three Months Ended March 31, 2012			Two Months Ended March 31, 2011			One Month Ended January 31, 2011			Change, 2012 from Combined Three Months 2011
	(Millions of dollars)
Net Sales
Pigment segment	$	402.5		$	244.0		$	93.1		$	65.4
Electrolytic and other chemical products		30.8			22.9			12.1			(4.2	)
Corporate and Other		0.3			0.2			2.4			(2.3	)

*Net Sales*	$	433.6		$	267.1		$	107.6		$	58.9

Income from Operations
Pigment segment	$	141.1		$	24.5		$	21.4		$	95.2
Electrolytic and other chemical products		(1.1	)		0.3			0.7			(2.1	)
Corporate and Other		(27.0	)		(7.0	)		(2.2	)		(17.8	)

*Income from Operations*	$	113.0		$	17.8		$	19.9		$	75.3

Net Sales

Pigment segment net sales increased $65.4 million, or 19.4%, to $402.5 million for 2012, from $337.1 million during 2011. Net sales include the sale of TiO₂, as well as the sale of heavy minerals, such as ilmenite, rutile, synthetic rutile, leucoxene, zircon, activated carbon and staurolite, produced by the Tiwest Joint Venture.

~~Other~~During ~~income~~

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