SEC Filing | Kronos Worldwide, Inc.

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kwiform10q1q2010.htm

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

FORM 10-Q



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


For the quarter ended March 31, 2010
Commission file number 1-31763


KRONOS WORLDWIDE, INC.
(Exact name of Registrant as specified in its charter)


DELAWARE	76-0294959
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)


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



Registrant's telephone number, including area code: (972) 233-1700

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

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

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

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

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

Number of shares of the Registrant's common stock outstanding on April 30, 2010: 48,970,549.

KRONOS WORLDWIDE, INC. AND SUBSIDIARIES

INDEX

		Page
		number

Part I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets -
	December 31, 2009; March 31, 2010 (Unaudited)	3

	Condensed Consolidated Statements of Operations (Unaudited) -
	Three months ended March 31, 2009 and 2010	5

	Condensed Consolidated Statement of Stockholders'
	Equity and Comprehensive Income (Loss) (Unaudited) –
	Three months ended March 31, 2010	6

	Condensed Consolidated Statements of Cash Flows (Unaudited) -
	Three months ended March 31, 2009 and 2010	7

	Notes to Condensed Consolidated Financial Statements (Unaudited)	8

Item 2.	Management's Discussion and Analysis of Financial
	Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosure About Market Risk	23

Item 4.	Controls and Procedures	24

Part II.	OTHER INFORMATION

Item 1.	Legal Proceedings	25

Item 1A.	Risk Factors	25

Item 6.	Exhibits	25



Items 2, 3, 4 and 5 of Part II are omitted because there is no information to report.

KRONOS WORLDWIDE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

ASSETS	December 31,		March 31,
	2009		2010
			(Unaudited)

Current assets:
Cash and cash equivalents	$	31.1	$	22.8
Restricted cash		1.7		1.1
Accounts and other receivables		189.6		218.3
Inventories		294.8		276.5
Prepaid expenses and other		9.0		9.5
Deferred income taxes		3.7		3.7

Total current assets		529.9		531.9

Other assets:
Investment in TiO2 manufacturing joint venture		98.7		98.0
Deferred income taxes		185.5		205.0
Other		11.2		10.4

Total other assets		295.4		313.4

Property and equipment:
Land		46.8		44.2
Buildings		233.0		223.3
Equipment		1,027.4		982.5
Mining properties		115.7		111.3
Construction in progress		14.6		16.5

		1,437.5		1,377.8
Less accumulated depreciation and amortization		937.8		906.3

Net property and equipment		499.7		471.5

Total assets	$	1,325.0	$	1,316.8

KRONOS WORLDWIDE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

(In millions)

LIABILITIES AND STOCKHOLDERS' EQUITY	December 31, 2009			March 31, 2010
				(Unaudited)

Current liabilities:
Current maturities of long-term debt	$	2.1		$	2.1
Accounts payable and accrued liabilities		205.0			188.3
Income taxes		3.6			2.2
Deferred income taxes		4.7			4.3

Total current liabilities		215.4			196.9

Noncurrent liabilities:
Long-term debt		611.1			589.8
Deferred income taxes		31.1			31.6
Accrued pension cost		118.3			110.8
Accrued postretirement benefit cost		13.4			13.9
Other		23.2			22.4

Total noncurrent liabilities		797.1			768.5

Stockholders' equity:
Common stock		.5			.5
Additional paid-in capital		1,061.9			1,061.9
Retained deficit		(602.6	)		(559.8	)
Accumulated other comprehensive loss		(147.3	)		(151.2	)

Total stockholders' equity		312.5			351.4

Total liabilities and stockholders’ equity	$	1,325.0		$	1,316.8

Commitments and contingencies (Notes 7 and 10)

See accompanying Notes to Condensed Consolidated Financial Statements.

KRONOS WORLDWIDE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

	Three months ended March 31,
	2009			2010
	(Unaudited)

Net sales	$	248.0		$	319.7
Cost of sales		243.9			259.2

Gross margin		4.1			60.5

Selling, general and administrative expense		34.3			40.1
Currency transaction gains, net		5.3			2.6
Other operating income (expense), net		(1.4	)		(1.3	)

Income (loss) from operations		(26.3	)		21.7

Interest expense		(9.7	)		(10.4	)

Income (loss) before income taxes		(36.0	)		11.3

Income tax benefit		(9.4	)		(31.5	)

Net income (loss)	$	(26.6	)	$	42.8


Net income (loss) per basic and diluted share	$	(.54	)	$	.87

Basic and diluted weighted-average shares used in the calculation of net income (loss) per share		49.0			49.0

See accompanying Notes to Condensed Consolidated Financial Statements.

KRONOS WORLDWIDE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME (LOSS)

Three months ended March 31, 2010

(In millions)

			Additional					Accumulated other			Total
	Common stock		paid-in capital		Retained deficit			comprehensive loss			stockholders' equity			Comprehensive income(loss)
	(Unaudited)

Balance at December 31, 2009	$	.5	$	1,061.9	$	(602.6	)	$	(147.3	)	$	312.5

Net income		-		-		42.8			-			42.8		$	42.8

Other comprehensive loss, net		-		-		-			(3.9	)		(3.9	)		(3.9	)


Balance at March 31, 2010	$	.5	$	1,061.9	$	(559.8	)	$	(151.2	)	$	351.4

Comprehensive income														$	38.9

See accompanying Notes to Condensed Consolidated Financial Statements.

KRONOS WORLDWIDE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

	Three months ended March 31,
	2009			2010
	(Unaudited)
Cash flows from operating activities:
Net income (loss)	$	(26.6	)	$	42.8
Depreciation and amortization		11.0			11.6
Deferred income taxes		(14.6	)		(33.4	)
Benefit plan expense greater (less) than cash funding:
Defined benefit pension plans		(1.2	)		1.2
Other postretirement benefits		-			.2
Distributions from (contribution to) TiO2 manufacturing joint venture, net		(1.8	)		.8
Other, net		(.1	)		-
Change in assets and liabilities:
Accounts and other receivables		(16.0	)		(39.6	)
Inventories		79.8			7.3
Prepaid expenses		(2.1	)		(.8	)
Accounts payable and accrued liabilities		(45.3	)		(6.2	)
Income taxes		3.4			(.6	)
Accounts with affiliates		(9.7	)		1.2
Other, net		5.7			(.5	)

Net cash used in operating activities		(17.5	)		(16.0	)

Cash flows from investing activities:
Capital expenditures		(11.4	)		(8.5	)
Change in restricted cash equivalents		.6			.5

Net cash used in investing activities		(10.8	)		(8.0	)

Cash flows from financing activities:
Indebtedness:
Borrowings		94.4			88.9
Principal payments		(51.5	)		(71.4	)

Net cash provided by financing activities		42.9			17.5

Cash and cash equivalents - net change from:
Operating, investing and financing activities		14.6			(6.5	)
Currency translation		(.6	)		(1.8	)
Balance at beginning of period		13.6			31.1

Balance at end of period	$	27.6		$	22.8

Supplemental disclosures:
Cash paid for:
Interest	$	.7		$	.4
Income taxes		.2			1.1
Accrual for capital expenditures		1.3			1.9

See accompanying Notes to Condensed Consolidated Financial Statements.

KRONOS WORLDWIDE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2010

(Unaudited)

Note 1 - Organization and basis of presentation:

Organization – We are a majority-owned subsidiary of Valhi, Inc. (NYSE: VHI). At March 31, 2010, Valhi held approximately 59% of our outstanding common stock and NL Industries, Inc. (NYSE: NL) held an additional 36% of our common stock. Valhi owns approximately 83% of NL's outstanding common stock. Approximately 93% of Valhi's outstanding common stock is held by subsidiaries of Contran Corporation. Substantially all of Contran's outstanding voting stock is held by trusts established for the benefit of certain children and grandchildren of Harold C. Simmons (for which Mr. Simmons is sole trustee), or is held directly by Mr. Simmons or other persons or entities related to Mr. Simmons. Consequently, Mr. Simmons may be deemed to control each of these companies.

Basis of presentation – The unaudited Condensed Consolidated Financial Statements contained in this Quarterly Report have been prepared on the same basis as the audited Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2009 that we filed with the Securities and Exchange Commission (“SEC”) on March 9, 2010 (the “2009 Annual Report”). In our opinion, we have made all necessary adjustments (which include only normal recurring adjustments) in order to state fairly, in all material respects, our consolidated financial position, results of operations and cash flows as of the dates and for the periods presented. We have condensed the Consolidated Balance Sheet and Statement of Stockholders’ Equity and Comprehensive Income (Loss) at December 31, 2009 contained in this Quarterly Report as compared to our audited Consolidated Financial Statements at that date, and we have omitted certain information and footnote disclosures (including those related to the Consolidated Balance Sheet at December 31, 2009) normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Our results of operations for the interim period ended March 31, 2010 may not be indicative of our operating results for the full year. The Condensed Consolidated Financial Statements contained in this Quarterly Report should be read in conjunction with our 2009 Consolidated Financial Statements contained in our 2009 Annual Report.

Unless otherwise indicated, references in this report to “we,” “us” or “our” refer to Kronos Worldwide, Inc. and its subsidiaries (NYSE: KRO) taken as a whole.

Note 2 – Accounts and other receivables:

	December 31, 2009			March 31, 2010
	(In millions)

Trade receivables	$	172.4		$	194.0
Recoverable VAT and other receivables		19.0			26.0
Refundable income taxes		.7			.3
Receivable from affiliate		.1			.1
Allowance for doubtful accounts		(2.6	)		(2.1	)

Total	$	189.6		$	218.3

Note 3 - Inventories:

	December 31, 2009		March 31, 2010
	(In millions)

Raw materials	$	56.4	$	45.2
Work in process		18.2		15.0
Finished products		161.0		161.1
Supplies		59.2		55.2

Total	$	294.8	$	276.5

Note 4 - Other noncurrent assets:

	December 31, 2009		March 31, 2010
	(In millions)

Deferred financing costs, net	$	5.9	$	5.2
Pension asset		.3		.3
Other		5.0		4.9

Total	$	11.2	$	10.4

Note 5 – Accounts payable and accrued liabilities:


	December 31, 2009		March 31, 2010
	(In millions)

Accounts payable	$	117.1	$	98.8
Employee benefits		26.2		26.4
Accrued sales discounts and rebates		21.4		10.6
Accrued interest		8.0		16.3
Payable to affiliates:
Louisiana Pigment Company, L.P.		12.0		11.0
Income taxes, net - Valhi		.4		2.0
Other		.2		-
Other		19.7		23.2

Total	$	205.0	$	188.3

Note 6 - Long-term debt:

	December 31, 2009		March 31, 2010
	(In millions)


Kronos International, Inc. - 6.5% Senior Secured Notes	$	574.6	$	538.0
Revolving credit facilities:
European credit facility		13.0		24.3
U.S. bank credit facility		16.7		21.4
Other		8.9		8.2

Total debt		613.2		591.9
Less current maturities		2.1		2.1

Total long-term debt	$	611.1	$	589.8

Revolving credit facilities – During the first three months of 2010, we borrowed a net euro 9.0 million ($13.2 million when borrowed/repaid) under our European credit facility and a net $4.7 million under our U.S. credit facility. The average interest rates on these outstanding borrowings at March 31, 2010 were 3.62% and 3.25%, respectively.

From time to time, companies related to Contran will have loans and advances outstanding between them and various related parties pursuant to term and demand notes. These loans and advances are generally entered into for cash management purposes, in which the lender is generally able to earn a higher rate of return on the loan than would have been earned if the lender invested the funds in other investments, and the borrower is able to pay a lower rate of interest than would be paid if the borrower had incurred third-party indebtedness. While certain of these loans may be of a lesser credit quality than cash equivalent instruments otherwise available to the lender, the lender will evaluate the credit risks involved and appropriately reflect those credit risks in the terms of the applicable loan. In this regard, in April 2010 we entered into an unsecured revolving credit facility with Contran pursuant to which we may borrow up to $40.0 million from Contran. Our loans from Contran will bear interest, payable quarterly, at the prime rate minus 0.5%, with all outstanding principal due on demand and in any event no later than December 31, 2011. The amount of our outstanding borrowing at any time is solely at the discretion of Contran. As of April 30, 2010, we had aggregate borrowings outstanding from Contran of $25.0 million, which we primarily used to repay outstanding borrowings under our U.S. bank credit facility.

Restrictions and Other. Certain of the credit facilities described above require the respective borrowers to maintain minimum levels of equity, require the maintenance of certain financial ratios, limit dividends and additional indebtedness and contain other provisions and restrictive covenants customary in lending transactions of this type. We are in compliance with all of our debt covenants at March 31, 2010. We believe we will be able to comply with the financial covenants contained in all of our credit facilities through the maturity of the respective facilities; however if future operating results differ materially from our expectations we may be unable to maintain compliance.

At March 31, 2010, there were no restrictions on our ability to pay dividends. The terms of the indenture governing the 6.5% Notes limits the ability of our wholly owned subsidiary, Kronos International, Inc. (“KII”), to pay dividends and make other restricted payments. At March 31, 2010, the maximum amount of dividends and other restricted payments that KII could make (the “Restricted Payment Basket”) was $2.9 million. The indenture currently prohibits KII from utilizing such Restricted Payment Basket because KII has not met a specified financial ratio contained in this indenture; such prohibition will continue until such time as KII meets the specified financial ratio.

Note 7 - Income taxes:

	Three months ended March 31,
	2009			2010
	(In millions)

Expected tax expense (benefit), at U.S. Federal statutory income tax rate of 35%	$	(12.6	)	$	4.0
Non-U.S. tax rates		1.3			(.1	)
Nondeductible expenses		2.1			.7
U.S. state income taxes, net		.9			.3
German tax attribute adjustment		.1			(35.2	)
Prior year adjustment		-			(.7	)
Nontaxable income		(1.0	)		(.2	)
Other, net		(.2	)		(.3	)

Total	$	(9.4	)	$	(31.5	)

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

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

Note 8 – Employee benefit plans:

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

	Three months ended
	March 31,
	2009			2010
	(In millions)

Service cost	$	1.8		$	2.7
Interest cost		5.4			5.8
Expected return on plan assets		(3.9	)		(4.5	)
Amortization of prior service cost		.3			.3
Amortization of net transition obligations		.1			.1
Recognized actuarial losses		1.3			1.4

Total	$	5.0		$	5.8

Postretirement benefits - The components of net periodic postretirement benefits other than pension (“OPEB”) cost are presented in the table below.

	Three months ended March 31,
	2009			2010
	(In millions)

Service cost	$	.1		$	.1
Interest cost		.1			.2
Amortization of prior service credit		(.1	)		(.1	)
Recognized actuarial losses		-			.1

Total	$	.1		$	.3

Contributions – We expect our 2010 contributions for our pension and other postretirement plans to be approximately $25 million.

Note 9 – Other noncurrent liabilities:

	December 31, 2009		March 31, 2010
	(In millions)

Reserve for uncertain tax positions	$	9.5	$	9.5
Employee benefits		9.2		8.6
Insurance claims and expenses		.3		.3
Other		4.2		4.0

Total	$	23.2	$	22.4

Note 10 – Commitments and contingencies:

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

Please refer to our 2009 Annual Report for a discussion of certain other legal proceedings to which we are a party.

Note 11 – Financial instruments:

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

	Fair Value Measurements
	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in millions)

Currency forward contracts
December 31, 2009	$	1.6	$	1.6	$	-	$	-
March 31, 2010		1.8		1.8		-		-

Certain of our sales generated by our non-U.S. operations are denominated in U.S. dollars. We periodically use currency forward contracts to manage a nominal portion of currency exchange rate risk associated with trade receivables denominated in a currency other than the holder's functional currency or similar exchange rate risk associated with future sales. We have not entered into these contracts for trading or speculative purposes in the past, nor do we currently anticipate entering into such contracts for trading or speculative purposes in the future. The fair value of the currency forward contracts is determined using Level 1 inputs based on the currency spot forward rates quoted by banks or currency dealers. At March 31, 2010, we had currency forward contracts to exchange:

an aggregate of $36 million for an equivalent value of Canadian dollars at an exchange rate of Cdn. $1.04 per U.S. dollar. These contracts with Wachovia Bank, National Association, mature from April 2010 through December 2010 at a rate of $4 million per month, subject to early redemption provisions at our option. At March 31, 2010, the actual exchange rate was Cdn. $1.02 per U.S. dollar;

an aggregate $58 million for an equivalent value of Norwegian kroner at exchange rates ranging from kroner 5.85 to kroner 6.13 per U.S. dollar. These contracts with DnB Nor Bank ASA mature from April 2010 through March 2011 at a rate of $1 million to $2.3 million per month. At March 31, 2010, the actual exchange rate was kroner 6.00 per U.S. dollar; and

an aggregate euro 16 million for an equivalent value of Norwegian kroner at exchange rates ranging from kroner 8.47 to kroner 9.13 per euro. These contracts with DnB Nor Bank ASA mature from April 2010 through December 2010 at a rate of euro .1 million to euro 1.8 million per month, subject to early redemption provisions at our option. At March 31, 2010, the actual exchange rate was kroner 8.01 per euro.

The estimated fair value of our currency forward contracts at March 31, 2010 was a $1.8 million net asset, which is the result of $2.7 million recognized as part of Prepaid Expenses and Other and $.9 million recognized as a part of Accounts Payable and Accrued Liabilities in our Condensed Consolidated Balance Sheets. There is also a corresponding $1.8 million currency transaction gain in our Condensed Consolidated Statements of Operations. To the extent we held such contracts during 2009, we did not use hedge accounting for any of such contracts and we are not currently using hedge accounting for our existing contracts.

The following table presents the financial instruments that are not carried at fair value but which require fair value disclosure.

	December 31,				March 31,
	2009				2010
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In millions)

Cash, cash equivalents and restricted cash	$	32.8	$	32.8	$	23.9	$	23.9

Long-term debt (excluding capitalized leases):
Fixed rate with market quotes -
6.5% Senior Secured Notes	$	574.6	$	466.2	$	538.0	$	455.0
Variable rate bank debt – European revolving credit facility		13.0		13.0		24.3		24.3
U.S. Bank revolving credit facility		16.7		16.7		21.4		21.4
Common stockholders’ equity		312.5		795.8		351.4		732.1

At March 31, 2010, the estimated market price of the 6.5% Senior Secured Notes was approximately euro 843 per euro 1,000 principal amount. The fair value of our common stockholders’ equity is based upon quoted market prices at the balance sheet date, which represent Level 1 inputs. The fair value of our 6.5% Senior Secured Notes is also based on quoted market price at the balance sheet date; however, this quoted market price represents Level 2 inputs because the markets in which the Senior Secured Notes trade are not active. The fair values of variable interest rate debt are deemed to approximate book value. Due to their near-term maturities, the carrying amounts of accounts receivable and accounts payable are considered equivalent to fai r value.

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

RESULTS OF OPERATIONS:

Business and results of operations overview

We are a leading global producer and marketer of value-added titanium dioxide pigments (“TiO2”). TiO2 is used for a variety of manufacturing applications, including plastics, paints, paper and other industrial products. For the three months ended March 31, 2010, approximately one-half of our sales volumes were into European markets. We believe we are the second largest producer of TiO2 in Europe with an estimated 19% share of European TiO2 sales volumes . In addition, we estimate that we have a 16% share of North American TiO2 sales volumes. Our production facilities are located throughout Europe and North America.

We reported net income of $42.8 million, or $.87 per diluted share, in the first quarter of 2010 as compared to a net loss of $26.6 million, or $.54 per diluted share, in the first quarter of 2009. Our net income for the first quarter 2010 is due to higher income from operations resulting principally from higher sales and production volumes as well as a $35.2 million (or $.72 per diluted share) non-cash deferred income tax benefit recognized in the first quarter of 2010.

Forward-looking information

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

·	Future supply and demand for our products

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

·	The cyclicality of our businesses

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

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

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

·	Competitive products and substitute products

·	Customer and competitor strategies

·	Potential consolidation or solvency of our competitors

·	The impact of pricing and production decisions

·	Competitive technology positions

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

·	The introduction of trade barriers

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

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

·	The timing and amounts of insurance recoveries

·	Our ability to renew or refinance credit facilities

·	Our ability to maintain sufficient liquidity

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

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

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

·	Government laws and regulations and possible changes therein

·	The ultimate resolution of pending litigation

·	Possible future litigation

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

Results of operations

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

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

·	Our TiO2 sales and production volumes,

·	TiO2 selling prices,

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

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

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

Quarter ended March 31, 2009 compared to the

Quarter ended March 31, 2010 -

	Three months ended March 31,
	2009					2010
	(Dollars in millions)

Net sales	$	248.0		100	%	$	319.7		100	%
Cost of sales		243.9		98			259.2		81
Gross margin		4.1		2			60.5		19
Other operating income and expenses, net		30.4		12			38.8		12
Income (loss) from operations	$	(26.3	)	(10	)%	$	21.7		7	%

								%
								Change
TiO2 operating statistics:
Sales volumes*		97					122		26	%
Production volumes*		64					124		94	%

Percent change in net sales:
TiO2 product pricing									(1	)%
TiO2 sales volumes									26
TiO2 product mix									-
Changes in currency exchange rates									4

Total									29	%

* Thousands of metric tons

Net sales – Net sales increased 29% or $71.7 million compared to the first quarter of 2009 primarily due to a 26% increase in sales volumes along with the positive impact of currency exchange rates, partially offset by a 1% decrease in average TiO2 selling prices. We estimate the favorable effect of changes in currency exchange rates increased our net sales by approximately $10 million, or 4%, as compared to the same period in 2009. TiO2 selling prices will increase or decrease generally as a result of competitive market pressures and changes in the relative level of supply and demand. We are cu rrently in a period of generally rising industry prices and we expect average selling prices in the second quarter of 2010 to be higher than the average selling prices in the first quarter of 2010.

Our 26% increase in sales volumes in the first quarter of 2010 is due to higher demand, primarily in European and export markets resulting from the improvement in current economic conditions. We expect demand will continue to remain above 2009 levels for the remainder of the year.

Cost of sales - Cost of sales increased $15.3 million or 6% in the first quarter of 2010 compared to 2009 due to the net impact of a 26% increase in sales volumes, a 94% increase in TiO2 production volumes, lower raw material costs of $8.1 million, lower utility costs of $9.4 million, an increase in maintenance costs of $4.7 million and currency fluctuations (primarily the euro). In addition, cost of sales in the first quarter of 2010 was negatively impacted by approximately $4 million as a result of a higher waste-to-ore ratio in the ore we produce at our ilmenite mines in Norwa y. Cost of sales as a percentage of net sales decreased to 81% in the first quarter of 2010 compared to 98% in the first quarter of 2009 primarily due to the significantly higher production volumes in 2010, as we implemented temporary plant curtailments during the first half of 2009 in order to reduce our finished goods inventories to an appropriate level. Such temporary plant curtailments resulted in approximately $50 million of unabsorbed fixed production costs which were charged directly to cost of sales in the first quarter of 2009.

Income (loss) from operations – Income (loss) from operations increased by $48 million from an operating loss of $26.3 million in the first quarter of 2009 to an operating income of $21.7 million in the first quarter of 2010. Income (loss) from operations as a percentage of net sales increased to 7% in the first quarter of 2010 from (10)% in the same period for 2009. This increase is driven by the improvement in gross margin, which increased to 19% for the first quarter of 2010 compared to 2% for the first quarter of 2009. Our gross margin has increased primarily because of higher sales volumes and lower manufacturing costs per ton resulting from higher production volumes. However, changes in currency rates have negatively affected our gross margin and income (loss) from operations. We estimate that changes in currency exchange rates decreased income (loss) from operations by approximately $8 million in the first quarter of 2010 as compared to the same period in 2009.

Interest expense – Interest expense increased $.7 million from $9.7 million in the first quarter of 2009 to $10.4 million in the first quarter of 2010 due to higher interest rates on our European credit facility and changes in currency exchange rates which offset the effect of decreased average borrowings under our revolving credit facilities. The interest expense we recognize will vary with fluctuations in the euro exchange rate.

Income tax benefit – Our income tax benefit was $31.5 million in the first quarter of 2010 compared to $9.4 million in the same period last year. Our income tax benefit in 2010 includes a $35.2 million income tax benefit related to a European Court ruling that resulted in the favorable resolution of certain income tax issues in Germany and an increase in the amount of our German corporate and trade tax net operating loss carryforwards. See Note 7 to our Condensed Consolidated Financial Statements for a tabular reconciliation of our statutory income tax benefit to our actual tax benefit.

We have substantial net operating loss carryforwards in Germany (the equivalent of $941 million for German corporate purposes and $288 million for German trade tax purposes at December 31, 2009), which amounts exclude the adjustment to such carryforwards recognized in the first quarter of 2010 (See Note 7 to our Condensed Consolidated Financial Statements). At March 31, 2010, we have concluded that no deferred income tax asset valuation allowance is required to be recognized with respect to such carryforwards, principally because (i) such carryforwards have an indefinite carryforward period, (ii) we have utilized a portion of such carryforwards during the most recent three-year period and (iii) we currently expect to utilize the remainder of such carryforwards over the long term. However, prior to the complete ut ilization of such carryforwards, particularly if the economic recovery were to be short-lived or we were to generate losses in our German operations for an extended period of time, it is possible that we might conclude the benefit of such carryforwards would no longer meet the more-likely-than-not recognition criteria, at which point we would be required to recognize a valuation allowance against some or all of the then-remaining tax benefit associated with the carryforwards.

Effects of Currency Exchange Rates

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

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

Impact of changes in currency exchange rates Three months ended March 31, 2009 vs March 31, 2010
	Transaction gains/(losses) recognized							Translation gain/loss- impact of rate changes			Total currency impact 2009 vs 2010
	2009		2010		Change			Translation gain/loss- impact of rate changes			Total currency impact 2009 vs 2010
	(in millions)
Impact on:
Net sales	$	-	$	-	$	-		$	10		$	10
Income (loss) from operations		5		3		(2	)		(6	)		(8	)

Outlook

During 2009 and 2010, we announced various TiO2 price increases, a portion of which were implemented during the second half of 2009 and the first quarter of 2010, with portions of the remainder expected to be implemented later in 2010. While our average TiO2 selling prices were 1% lower in the first quarter of 2010 as compared to the first quarter of 2009, our average selling prices at the end of the first quarter of 2010 were 1% higher as compared to the end of 2009. As a result of expected continued implementation of price increases, we anticipate our average selling prices will continue to increase during the remainder of 2010.

In response to the worldwide economic slowdown and weak consumer confidence, we reduced our production volumes during the first half of 2009 in order to reduce our finished goods inventory, improve our liquidity and match production to market demand. Overall industry pigment demand is expected to be higher in 2010 as compared to 2009 as a result of improving worldwide economic conditions. While we operated our facilities at approximately 58% of capacity during the first half of 2009 (50% during the first quarter), we increased our capacity utilization to approximately 94% during the second half of 2009. We operated our plants at near full capacity utilization during the first quarter of 2010, and we currently expect to operate our facilities at such near full capacity levels during the remainder of 201 0. Our expected capacity utilization levels could be adjusted upwards or downwards to match changes in demand for our product. We also expect raw material, energy and freight costs will relatively increase during the remainder of 2010, and a portion of future price increases we expect to implement are intended to compensate for such increases in our operating costs.

We currently expect income from operations will be higher in 2010 as compared to 2009, as the favorable effects of the worldwide economic recovery and improving consumer confidence will continue to improve demand in all of our key market segments. The expected increase in our sales volumes for 2010 should allow us to maintain our near full capacity utilization for the remainder of the year. With such improved capacity utilization levels and higher expected selling prices, we expect to report improved operating and financial performance in 2010.

Overall, we expect to report net income in 2010 as compared to reporting a net loss in 2009 due to higher expected income from operations in 2010 as well as the impact of the $35.2 million non-cash income tax benefit recognized in the first quarter of 2010, as discussed above.

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

LIQUIDITY AND CAPITAL RESOURCES

Consolidated cash flows

Operating activities

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

Our cash used in operating activities was $16.0 million in the first three months of 2010 compared to $17.5 million in the first three months of 2009. This $.4 million increase in the amount of cash used was primarily due to the net effects of the following items:

·	Higher income from operations in 2010 of $48.0 million and

·	Higher net cash used from relative changes in our inventories, receivables, payables and accruals of $44.1 million in the first three months at 2010 as compared to the first three months of 2009.

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

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

·	Our average days sales in inventory (“DSI”) decreased from December 31, 2009 to March 31, 2010.

For comparative purposes, we have also provided comparable prior year numbers below.

	December 31,	March 31,	December 31,	March 31,
	2008	2009	2009	2010

DSO	64 days	68 days	56 days	61 days
DSI	113 days	64 days	58 days	56 days

Investing activities

Our capital expenditures of $11.4 million and $8.5 million in the three months ended March 31, 2009 and 2010, respectively, were primarily for improvements and upgrades to existing facilities.

Financing activities

During the three months ended March 31, 2010, we:

·	had net borrowings of $4.7 million on our U.S. revolving credit facility; and

·	had net borrowings of euro 9 million ($13.2 million when borrowed/repaid) on our European credit facility.

Outstanding debt obligations

At March 31, 2010, our consolidated debt was comprised principally of:

·	euro 400 million principal amount of our 6.5% Senior Secured Notes ($538.0 million) due in 2013;

·	euro 18.0 million ($24.3 million) under our European revolving credit facility which matures in May 2011;

·	$21.4 million under our U.S. revolving credit facility which matures in September 2011; and

·	Approximately $8.2 million of other indebtedness.

In April 2010, we entered into an unsecured revolving credit facility with Contran pursuant to which we may borrow up to $40.0 million from Contran. See Note 6 to our Condensed Consolidated Financial Statements.

Certain of our revolving credit facilities require the respective borrowers to maintain minimum levels of equity, require the maintenance of certain financial ratios, limit dividends and additional indebtedness and contain other provisions and restrictive covenants customary in lending transactions of this type. We are in compliance with all of our debt covenants at March 31, 2010. We believe we will be able to comply with the financial covenants contained in all of our credit facilities through the maturity of the respective facilities; however if future operating results differ materially from our expectations we may be unable to maintain compliance.

Our assets consist primarily of investments in operating subsidiaries and our ability to service parent level obligations, including the Senior Secured Notes, depends in large part upon the distribution of earnings of our subsidiaries, whether in the form of dividends, advances or payments on account of intercompany obligations or otherwise. None of our subsidiaries have guaranteed the Senior Secured Notes, although KII has pledged 65% of the common stock or other ownership interests of certain of KII’s first-tier operating subsidiaries as collateral for the Senior Secured Notes. The terms of the indenture governing the 6.5% Senior Secured Notes limits KII’s ability to pay dividends and make other restricted payments. At March 31, 2010, the maximum amount of dividends and other restricted p ayments that KII could make (the “Restricted Payment Basket”) was $2.9 million. The indenture currently prohibits KII from utilizing the Restricted Payment Basket because KII has not met a specified financial ratio contained in this indenture; such prohibition will continue until such time as KII meets the specified financial ratio.

Future cash requirements

Liquidity

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

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

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

At March 31, 2010, unused credit available under all of our existing revolving credit facilities was approximately $81.1 million, consisting principally of $44.5 million under our European credit facility, $11.9 million under our Canadian credit facility and $24.7 million under our U.S. credit facility. At March 31, 2010, we could borrow all such amounts without violating any covenants in such facilities. At March 31, 2010, the borrowing availability under our European revolving credit facility was limited to euro 51 million ($68.9 million), and the $44.5 million amount of our unused borrowing availability at March 31, 2010 is based on this euro 51 million maximum borrowing availability. In accordance with the terms of the European revolving credit facility, in May 2010 we satisfied certain specified c ovenants in such facility, and as a result the maximum borrowing availability under such facility has now returned to the full euro 80 million facility size. Had such full euro 80 million been available at March 31, 2010, the borrowing availability under our European revolver would have increased from $44.5 million to $83.6 million. Based upon our expectation for the TiO2 industry and anticipated demands on cash resources, we expect to have sufficient liquidity to meet our future obligations including operations, capital expenditures and debt service for the next 12-months.

Capital expenditures

We currently estimate that we will invest approximately $43 million in capital expenditures for major improvements and upgrades to our existing facilities during 2010, including the $8.5 million we have spent through March 31, 2010. Compared to 2009, we have increased our planned capital expenditures in 2010, as we had significantly lowered our capital expenditures in 2009 in response to the economic conditions and as part of our efforts to improve our liquidity.

Off-balance sheet financing

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

Commitments and contingencies

See Notes 7 and 10 to the Condensed Consolidated Financial Statements for a description of certain income tax examinations currently underway and legal proceedings.

Recent accounting pronouncements

There have been no recent accounting pronouncements for the period ended March 31, 2010.

Critical accounting policies

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

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

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

Certain of our sales generated by our non-U.S. operations are denominated in U.S. dollars. We periodically use currency forward contracts to manage a very nominal portion of currency exchange rate risk associated with trade receivables denominated in a currency other than the holder's functional currency or similar exchange rate risk associated with future sales. We have not entered into these contracts for trading or speculative purposes in the past, nor do we currently anticipate entering into such contracts for trading or speculative purposes in the future. See Note 11 to our Condensed Consolidated Financial Statements.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

We maintain a system of disclosure controls and procedures. The term "disclosure controls and procedures," as defined by Exchange Act Rule 13a-15(e), means controls and other procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit to the SEC under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information we are required to disclose in the reports we file or submit to the SEC under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions to be made regarding required disclosure. Each of Steven L. Watson, our Chief Executive Officer, and Gregory M. Swalwell, our Executive Vice President and Chief Financial Officer, have evaluated the design and operating effectiveness of our disclosure controls and procedures as of March 31, 2010. Based upon their evaluation, these executive officers have concluded that our disclosure controls and procedures are effective as of March 31, 2010.

Internal control over financial reporting

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

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

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

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

As permitted by the SEC, our assessment of internal control over financial reporting excludes (i) internal control over financial reporting of our equity method investees and (ii) internal control over the preparation of our financial statement schedules required by Article 12 of Regulation S-X. However, our assessment of internal control over financial reporting with respect to our equity method investees did include our controls over the recording of amounts related to our investment that are recorded in our Condensed Consolidated Financial Statements, including controls over the selection of accounting methods for our investments, the recognition of equity method earnings and losses and the determination, valuation and recording of our investment account balances.

Changes in internal control over financial reporting

There has been no change to our internal control over financial reporting during the quarter ended March 31, 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

Refer to Note 10 of the Condensed Consolidated Financial Statements and to our 2009 Annual Report for descriptions of certain legal proceedings.

Item 1A. Risk Factors

For a discussion of the risk factors related to our businesses, refer to Part I, Item 1A., “Risk Factors,” in our 2009 Annual report. There have been no material changes to such risk factors during the three months ended March 31, 2010.

Item 6. Exhibits

31.1 - Certification

31.2 - Certification

32.1 - Certification

SIGNATURES

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

Kronos Worldwide, Inc. (Registrant)

Date May 4, 2010		/s/ Gregory M. Swalwell
		Gregory M. Swalwell
		Executive Vice President and Chief Financial Officer (Principal Financial Officer)


Date May 4, 2010		/s/ Tim C. Hafer
		Tim C. Hafer
		Vice President and Controller (Principal Accounting Officer)

kwi10q1q2010ex31-1.htm

EXHIBIT 31.1

CERTIFICATION

I, Steven L. Watson, certify that:

1)	I have reviewed this quarterly report on Form 10-Q of Kronos Worldwide, Inc.;

2)	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3)	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5)	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)	Any fraud, whether or not material, that involves management or other

employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 4, 2010

/s/ Steven L. Watson

Steven L. Watson

Chief Executive Officer

kwi10q1q2010ex31-2.htm

EXHIBIT 31.2

CERTIFICATION

I, Gregory M. Swalwell, certify that:

1)	I have reviewed this quarterly report on Form 10-Q of Kronos Worldwide, Inc.;

2)	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3)	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

5)	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)	Any fraud, whether or not material, that involves management or other

employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 4, 2010

/s/ Gregory M. Swalwell

Gregory M. Swalwell

Chief Financial Officer

kwi10w1q2010ex32-1.htm

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Kronos Worldwide, Inc. (the Company) on Form 10-Q for the quarter ended March 31, 2010 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Steven L. Watson, Chief Executive Officer of the Company, and I, Gregory M. Swalwell, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Steven L. Watson

Steven L. Watson

Chief Executive Officer

/s/ Gregory M. Swalwell

Gregory M. Swalwell

Chief Financial Officer

May 4, 2010

Note: The certification the registrant furnishes in this exhibit is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. Registration Statements or other documents filed with the Securities and Exchange Commission shall not incorporate this exhibit by reference, except as otherwise expressly stated in such filing.