Titanium dioxide, or TiO2, is a white pigment used in a wide range of products for its exceptional ability to impart whiteness, brightness and opacity. TiO2 is a critical component of everyday applications, such as coatings, plastics and paper, as well as many specialty products such as inks, foods and cosmetics. Titanium dioxide is widely considered to be superior to alternative white pigments in large part due to its hiding power, which is the ability to cover or mask other materials effectively and efficiently.

Estimate based on reported industry sales by the leading titanium dioxide producers that global sales of titanium dioxide in 2004 exceeded 4.6 million tonnes, generating approximately $9 billion in industry-wide revenues. Because titanium dioxide is a "quality of life" product, its consumption growth is closely tied to a given region's economic health and correlates over time to the growth in its average gross domestic product. According to industry estimates, titanium dioxide consumption has been growing at a compounded annual growth rate of approximately 2.8% over the past decade.

The global end-use market demand for titanium dioxide is cyclical, which closely affects its pricing. The period from late 2000 through 2003, for example, was a period of unusually weak business conditions attributable to various factors, including the global economic recession, exceptionally rainy weather conditions in Europe and the Americas that limited the painting season, and the outbreak of SARS in Asia. These factors reduced demand for titanium dioxide, which resulted in global over-supply. The resulting decline in titanium dioxide prices during this period led several major titanium dioxide producers to reduce production and working capital levels and to engage in other capacity rationalization measures.

The Company is one of the limited numbers of producers in the titanium dioxide industry to hold the rights to a proprietary chloride process for the production of titanium dioxide. Approximately 83% of the Company’s gross production capacity uses this process technology, which is the subject of numerous patents worldwide and is utilized by the Company’s highly skilled and technologically sophisticated workforce. Titanium dioxide produced using chloride process technology is preferred for many of the largest end-use applications. The chloride process generates less waste, uses less energy and is less labor intensive than the sulfate production process.

The Company optimizes its production plan through strategic use of global facilities to save on both transportation and warehousing costs. The Company’s production process is designed with multiple production lines. As a result, the Company can remedy issues with an individual line without shutting down other lines and idling an entire facility. The Company also actively manages production capability across all facilities. For instance, if one plant's finishing lines are already at full capacity, that plant's unfinished titanium dioxide can be transferred to another plant for finishing.

The Company’s other products lines include chemicals for battery materials, sodium chlorate for pulp bleaching and boron-based specialty chemicals. The Company supply titanium dioxide to a diverse customer base that includes market leaders in each of the major end-use markets for titanium dioxide.

The Company produces titanium dioxide using either the chloride process or the sulfate process at five production facilities located in four countries. Two of the Company’s facilities are located in the United States and it has one facility in each of Australia, Germany and the Netherlands. The Company owns its facilities in Germany and the Netherlands, and the land under these facilities is held pursuant to long-term leases. The Company owns its domestic facilities and hold a 50% undivided interest in its Australian facility.

Gross margin for the first six months of 2005 increased $58.9 million compared to the same period in 2004.

Selling, general and administrative expenses increased $7.4 million during the first six months of 2005 compared to the same period in 2004.

Provision for environmental remediation and restoration, net of reimbursements was $16.7 million in the first six months of 2005 compared to $1.2 million in the same period of 2004.

Benefit (Provision) for income taxes for the first six months of 2005 was 43.8%, compared to 38.1% for the first six months of 2004.