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November
10, 2009
U.S.
Securities and Exchange Commission
100 F
Street, N.E.
Mail Stop
4631
Washington,
D.C. 20549
Attention: Mr.
Terence O’Brien, Accounting Branch Chief
Division of Corporation
Finance
CC:
Ms. Tracey Houser,
Staff Accountant
Division of Corporation Finance
RE: Kronos
Worldwide, Inc.
Form 10-K for the Fiscal Year Ended
December 31, 2008, Filed March 12, 2009
Forms 10-Q for the Fiscal Quarters
Ended March 31, 2009 and June 30, 2009
File No. 1-31763
Kronos International, Inc.
Form 10-K for the Fiscal Year Ended
December 31, 2008, Filed March 12, 2009
Forms 10-Q for the Fiscal Quarters
Ended March 31, 2009 and June 30, 2009
File No. 333-100047
Dear Mr.
O’Brien
Reference
is made to the Staff’s letter dated October 27, 2009, (the “Comment Letter”),
which sets forth comments of the Staff regarding the above referenced Form 10-K
and Forms 10-Q of Kronos Worldwide, Inc. (“KWI”) and Kronos International, Inc.
(“KII”). KWI and KII have responded to the Comment Letter as
follows. The responses are numbered to correspond to the numbers of
the Comment Letter.
Kronos Worldwide,
Inc.
Form 10-K for the Fiscal
Year Ended December 31, 2008
Item 7 – Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
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1.
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We
note your statement that Ti02 average selling prices is key performance
indicator. In future filings, please disclose the average
selling prices for each period presented. To the extent that
there is a material increase or decrease in this amount, please provide
investors with an understanding of the factors contributing to the
increase or decrease.
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In our
future filings with the Commission, to the extent there are material increases
or decreases in our average TiO2 selling
prices, we will discuss the factors that we believe contributed to such
increases or decreases for each period presented. We also note that
as part of our existing disclosures, we provide a table indicating the four
major factors that cause our aggregate TiO2 net sales
to change from period to period, quantified as the percentage change in our
aggregate TiO2 net sales
caused by changes in (i) our average TiO2 selling
prices, (ii) our TiO2 sales
volumes, (iii) our product mix and (iv) relative foreign currency exchange
rates. We believe this provides investors with sufficient information
to understand the quantitative impact on our results of operations from changes
in our average TiO2 selling
prices for each period presented.
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2.
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We
note your discussion with the Business section regarding your market share
in certain of the geographical locations in which you sell
Ti02. In future filings, please disclose your market share of
Ti02 in each of your major geographic locations for each period
presented. To the extent that you have gained or lost market
share during the periods presented, please provide investors with the
factors that caused the gain or loss in market
share.
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In our
future filings with the Commission, we will disclose our estimated market share
of TiO2 in each of
the two major geographic locations in which we sell TiO2 (North
America and Europe) for each period presented. In addition, to the
extent such market share has changed materially over the periods presented, we
will also disclose the factors that caused the gain or loss in our market
share.
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Liquidity and Capital
Resources
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3.
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We
note that the Kronos European credit facility was not in compliance with
its financial covenant as of March, 31, 2009 and June 30, 2009, for which
you obtained waivers from the lenders. In future filings,
please disclose the financial covenants required to be met for each of
your debt instruments to the extent that you have determined that it is
reasonably likely you will not meet these financial
covenants. This disclosure should include the minimum/maximum
ratios and amounts permitted under the financial covenants in addition to
the actual ratios amounts achieved for the current reporting
period. This disclosure will allow an investor to easily
understand your current status in meeting your financial
covenants. Refer to Sections 501.13.b.2 and 501.13.c. of the
Financial Reporting Codification for
guidance.
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In our
future filings with the Commission, if we have concluded a violation of any of
the financial covenants required to be met under each of our debt instruments is
reasonably likely, we will disclose and discuss the specific terms of any such
financial covenant, including the maximum/minimum ratios/amounts permitted under
the debt instruments and the actual ratios/amounts achieved for the current
reporting period. With respect to our European credit facility,
effective September 15, 2009 we entered into an amendment to such credit
facility that, among other things, added two additional financial covenants and
temporarily eliminated the financial covenant for which we had obtained waivers
from the lenders, as more fully described on KII’s Current Report on Form 8-K
dated September 15, 2009. We also disclosed the amendment to such
credit facility in KWI’s and KII’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2009. We believe we will be able to comply with
the new financial covenants through the maturity date of the
facility.
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4.
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We
note your disclosure that you have $112.2 million of available credit
under your existing facilities. In future filings, please
disclose the amount available without violating any
covenants.
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In our
future filings with the Commission, we will clarify that the amount we disclose
as available credit under our existing credit facilities is the amount we could
borrow without violating any covenants. We included such
clarification in KWI’s and KII’s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2009.
Debt and Other Contractual
Commitments
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5.
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We
note your disclosure in your last risk factor that you are a party to
various lease and other agreements for which you are committed to pay
$365.5 million in fiscal year 2009, which appears to be in addition to
your indebtedness. However, you have included $346.3 million in
contractual commitments for fiscal year 2009, which includes your
indebtedness and corresponding interest payments. Please
explain to us the differences between these disclosures and why you do not
believe these differences should be included in your contractual
obligations table. Please also revise your disclosures in
future filings to clarify the
differences.
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The
$365.5 million amount disclosed in the last risk factor of Item 1A of KWI’s Form
10-K as the amount we are committed to pay in fiscal year 2009 should have been
$346.3 million, the amount reflected in our table of contractual commitments for
2009 that was included in Item 7. In our future filings with the
Commission, we will ensure that the amount disclosed in our Item 1A risk factor
as the amount we are committed to pay in the next fiscal year agrees with the
amount reflected in our table of contractual commitments for such year that is
included in Item 7.
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Note 9 – Income
Taxes
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6.
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We
note your disclosure regarding the Canadian tax authorities’ proposed
adjustments for the years 2002 – 2004. In future filings,
please disclose the amount of the adjustments the Canadian tax authorities
are proposing along with the impact such adjustment would have to your
consolidated financial statements. Otherwise, please disclose
that the impact is immaterial.
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In our
future filings with the Commission, we will disclose (i) the impact the Canadian
tax authorities’ proposed adjustments for the years 2002 – 2004 would have on
our consolidated financial statements if the full amount of the proposed
adjustments were ultimately to be assessed against us and (ii) the impact any
future tax adjustments that any tax authority may propose against us would have
on our consolidated financial statements if the full amount of such proposed
adjustments were ultimately to be assessed against us, in both cases to the
extent such impact would be material. Alternatively, if such impact
would not be material, we will disclose that such impact would be
immaterial.
Kronos International,
Inc.
Form 10-K for the Fiscal
Year Ended December 31, 2008
General
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7.
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Please
address the comments issued under Kronos Worldwide, Inc.’s periodic
reports in future filings, as
applicable.
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In KII’s
future filings with the Commission, we will address all comments issued under
KWI’s periodic reports, as applicable.
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Exhibit
32.1
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8.
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Please
amend your Form 10-K to include certifications pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 for your Form 20-K for the period ended
December 31, 2008, rather than December 31, 2007. Please note
that the certifications pursuant to Sections 302 and 906 of the
Sarbanes-Oxley Act of 2002 should refer to the amended
form.
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On
November 6, 2009, KII filed a Form 10-K/A (Amendment No. 1) for its fiscal year
ended December 31, 2008 that included (i) correctly dated certifications
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and (ii)
certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 to
properly refer to the Form 10-K/A.
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KWI
and KII acknowledge that:
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KWI
and KII are responsible for the adequacy and accuracy of the disclosures
in our filings with the Commission;
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Staff
comments or changes to disclosure in response to Staff comments do not
foreclose the Commission from taking any action with respect to our
filings with the Commission; and
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KWI
and KII may not assert Staff comments as a defense in any proceeding
initiated by the Commission or any other person under the federal
securities laws of the United
States.
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If you
have any questions regarding our responses to the Comment Letter, please feel
free to call me at (972) 450-4228. I can also be reached via
facsimile at (972) 448-1445 or via email at gswalwell@valhi.net.
Sincerely,
Kronos
Worldwide, Inc.
Kronos
International, Inc.
By: _/s/ Gregory M.
Swalwell
Gregory M. Swalwell
Executive
Vice President and Chief Financial Officer – Kronos Worldwide, Inc.
Vice President, Finance and Chief
Financial Officer – Kronos International, Inc.