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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Number of shares of the registrant’s common stock, $.01 par value per share, outstanding on ~~November 1, 2019: 115,651,706.~~April 30, 2020: 115,529,217.

	December 31,		September 30,		December 31,		March 31,
	2018		2019		2019		2020
			(unaudited)				(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	373.3	$	385.8	$	390.8	$	341.5
Restricted cash		1.4		1.1		1.5		1.2
Accounts and other receivables		312.5		348.3
Accounts and other receivables, net						309.4		330.4
Inventories, net		497.9		434.9		503.0		479.4
Prepaid expenses and other		16.3		16.8		15.0		10.9

Total current assets		1,201.4		1,186.9		1,219.7		1,163.4

Other assets:
Investment in TiO₂ manufacturing joint venture		81.3		83.1		90.2		92.4
Marketable securities		3.4		3.3		3.3		1.8
Note receivable from Valhi		-		5.0
Operating lease right-of-use assets		-		30.1		29.0		27.0
Deferred income taxes		122.0		107.7		127.7		125.6
Other		3.6		3.3		5.3		5.6

Total other assets		210.3		232.5		255.5		252.4

Property and equipment:
Land		41.0		39.3		40.4		39.1
Buildings		211.7		206.1		211.4		203.1
Equipment		1,102.6		1,079.6		1,113.1		1,076.9
Mining properties		114.0		113.2		116.2		98.5
Construction in progress		38.0		45.8		54.9		51.4
		1,507.3		1,484.0		1,536.0		1,469.0
Less accumulated depreciation and amortization		1,020.9		1,018.5		1,045.4		1,010.0

Net property and equipment		486.4		465.5		490.6		459.0

Total assets	$	1,898.1	$	1,884.9	$	1,965.8	$	1,874.8

	December 31,			September 30,			December 31,			March 31,
	2018			2019			2019			2020
				(unaudited)						(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt	$	1.5		$	1.5		$	1.5		$	1.4
Accounts payable and accrued liabilities		222.9			224.4			259.0			216.1
Income taxes		9.0			1.6			10.1			13.7

Total current liabilities		233.4			227.5			270.6			231.2

Noncurrent liabilities:
Long-term debt		455.1			434.6			444.0			436.3
Accrued pension costs		262.9			249.3			307.4			301.4
Payable to affiliate - income taxes		56.6			56.6			56.6			56.6
Operating lease liabilities		-			23.1			22.2			20.3
Deferred income taxes		21.5			22.0			20.7			19.0
Other		28.8			24.9			28.2			27.7

Total noncurrent liabilities		824.9			810.5			879.1			861.3

Stockholders' equity:
Common stock		1.2			1.2			1.2			1.2
Additional paid-in capital		1,399.1			1,397.8			1,396.2			1,396.2
Retained deficit		(136.2	)		(121.0	)		(132.5	)		(126.3	)
Accumulated other comprehensive loss		(424.3	)		(429.5	)		(448.8	)		(487.8	)
Treasury stock		-			(1.6	)		-			(1.0	)

Total stockholders' equity		839.8			846.9			816.1			782.3

Total liabilities and stockholders' equity	$	1,898.1		$	1,884.9		$	1,965.8		$	1,874.8

	Three months ended						Nine months ended						Three months ended
	September 30,						September 30,						March 31,
	2018			2019			2018			2019			2019			2020
	(unaudited)												(unaudited)
Net sales	$	410.3		$	437.4		$	1,312.5		$	1,358.4		$	436.5		$	421.0
Cost of sales		291.2			349.7			846.8			1,051.9			327.2			332.9

Gross margin		119.1			87.7			465.7			306.5			109.3			88.1

Selling, general and administrative expense		57.3			56.9			173.7			172.5			57.7			53.5
Other operating income (expense):
Currency transactions, net		(.6	)		5.8			4.2			5.6			.9			12.2
Other operating expense, net		(3.1	)		(3.5	)		(10.7	)		(11.0	)		(3.5	)		(3.3	)

Income from operations		58.1			33.1			285.5			128.6			49.0			43.5

Other income (expense):
Interest and dividend income		1.5			1.4			3.7			5.2			2.1			1.2
Insurance settlement gain														-			1.5
Marketable equity securities		(4.3	)		(1.9	)		(6.7	)		(.1	)		.6			(1.5	)
Other components of net periodic pension and OPEB cost		(3.7	)		(3.8	)		(11.3	)		(11.4	)		(3.8	)		(4.7	)
Interest expense		(4.9	)		(4.6	)		(14.7	)		(14.1	)		(4.8	)		(4.6	)

Income before income taxes		46.7			24.2			256.5			108.2			43.1			35.4

Income tax expense		14.1			6.3			75.5			30.5			12.8			8.4

Net income	$	32.6		$	17.9		$	181.0		$	77.7		$	30.3		$	27.0

Net income per basic and diluted share	$	.28		$	.16		$	1.56		$	.67		$	.26		$	.23

Weighted average shares used in the calculation of net income per share		115.9			115.7			115.9			115.8			115.9			115.6

	Three months ended					Nine months ended						Three months ended
	September 30,					September 30,						March 31,
	2018		2019			2018			2019			2019			2020
	(unaudited)											(unaudited)
Net income	$	32.6	$	17.9		$	181.0		$	77.7		$	30.3		$	27.0

Other comprehensive income (loss), net of tax:
Currency translation		4.5		(18.7	)		(10.0	)		(11.7	)		(.1	)		(41.9	)
Defined benefit pension plans		2.4		2.2			7.3			6.7			2.3			3.0
Other postretirement benefit plans		-		(.1	)		(.2	)		(.2	)		(.1	)		(.1	)

Total other comprehensive income (loss), net		6.9		(16.6	)		(2.9	)		(5.2	)		2.1			(39.0	)

Comprehensive income	$	39.5	$	1.3		$	178.1		$	72.5
Comprehensive income (loss)												$	32.4		$	(12.0	)

Three and nine months ended September 30, 2018 (unaudited)

Accumulated

Additional

Retained

other

Common

paid-in

earnings

comprehensive

stock

capital

(deficit)

income (loss)

Total

Balance at December 31, 2017
$
1.2

$
1,399.0

$
(267.2
)

$
(378.7
)

$
754.3

Change in accounting principle - ASU 2016-01

-

-

4.8

(4.8
)

-

Balance at January 1, 2018, as adjusted

1.2

1,399.0

(262.4
)

(383.5
)

754.3

Net income

-

-

70.7

-

70.7

Other comprehensive income, net of tax

-

-

-

13.0

13.0

Dividends paid - $.17 per share

-

-

(19.7
)

-

(19.7
)

Balance at March 31, 2018

1.2

1,399.0

(211.4
)

(370.5
)

818.3

Net income

-

-

77.7

-

77.7

Other comprehensive loss, net of tax

-

-

-

(22.8
)

(22.8
)
Issuance of common stock

-

.1

-

-

.1

Dividends paid - $.17 per share

-

-

(19.7
)

-

(19.7
)

Balance at June 30, 2018

1.2

1,399.1

(153.4
)

(393.3
)

853.6

Net income

-

-

32.6

-

32.6

Other comprehensive income, net of tax

-

-

-

6.9

6.9

Dividends paid - $.17 per share

-

-

(19.7
)

-

(19.7
)

Balance at September 30, 2018
$
1.2

$
1,399.1

$
(140.5
)

$
(386.4
)

$
873.4

	Three months ended March 31, 2019 (unaudited)
								Accumulated
			Additional		Retained			other
	Common		paid-in		earnings			comprehensive
	stock		capital		(deficit)			income (loss)			Total

Balance at December 31, 2018	$	1.2	$	1,399.1	$	(136.2	)	$	(424.3	)	$	839.8

Net income		-		-		30.3			-			30.3
Other comprehensive income, net of tax		-		-		-			2.1			2.1
Dividends paid - $.18 per share		-		-		(20.9	)		-			(20.9	)

Balance at March 31, 2019	$	1.2	$	1,399.1	$	(126.8	)	$	(422.2	)	$	851.3

	Three and nine months ended September 30, 2019 (unaudited)																	Three months ended March 31, 2020 (unaudited)
									Accumulated																Accumulated
			Additional			Retained			other											Additional		Retained			other
	Common		paid-in			earnings			comprehensive			Treasury						Common		paid-in		earnings			comprehensive			Treasury
	stock		capital			(deficit)			income (loss)			stock			Total			stock		capital		(deficit)			income (loss)			stock			Total

Balance at December 31, 2018	$	1.2	$	1,399.1		$	(136.2	)	$	(424.3	)	$	-		$	839.8

Net income		-		-			30.3			-			-			30.3
Other comprehensive income, net of tax		-		-			-			2.1			-			2.1
Dividends paid - $.18 per share		-		-			(20.9	)		-			-			(20.9	)

Balance at March 31, 2019		1.2		1,399.1			(126.8	)		(422.2	)		-			851.3

Net income		-		-			29.5			-			-			29.5
Other comprehensive income, net of tax		-		-			-			9.3			-			9.3
Issuance of common stock		-		.1			-			-			-			.1
Dividends paid - $.18 per share		-		-			(20.8	)		-			-			(20.8	)
Treasury stock acquired		-		-			-			-			(1.4	)		(1.4	)

Balance at June 30, 2019		1.2		1,399.2			(118.1	)		(412.9	)		(1.4	)		868.0
Balance at December 31, 2019																		$	1.2	$	1,396.2	$	(132.5	)	$	(448.8	)	$	-		$	816.1

Net income		-		-			17.9			-			-			17.9			-		-		27.0			-			-			27.0
Other comprehensive loss, net of tax		-		-			-			(16.6	)		-			(16.6	)		-		-		-			(39.0	)		-			(39.0	)
Dividends paid - $.18 per share		-		-			(20.8	)		-			-			(20.8	)		-		-		(20.8	)		-			-			(20.8	)
Treasury stock acquired		-		-			-			-			(1.6	)		(1.6	)		-		-		-			-			(1.0	)		(1.0	)
Treasury stock retired		-		(1.4	)		-			-			1.4			-

Balance at September 30, 2019	$	1.2	$	1,397.8		$	(121.0	)	$	(429.5	)	$	(1.6	)	$	846.9
Balance at March 31, 2020																		$	1.2	$	1,396.2	$	(126.3	)	$	(487.8	)	$	(1.0	)	$	782.3

	Nine months ended						Three months ended
	September 30,						March 31,
	2018			2019			2019			2020
	(unaudited)						(unaudited)
Cash flows from operating activities:
Net income	$	181.0		$	77.7		$	30.3		$	27.0
Depreciation		36.9			34.3			10.6			14.9
Amortization of operating lease right-of-use assets		-			5.1			1.7			1.6
Deferred income taxes		20.5			6.7			3.1			(.9	)
Benefit plan expense greater than cash funding		6.5			7.1			1.4			3.0
Marketable equity securities		6.7			.1			(.6	)		1.5
Distributions from (contributions to) TiO₂ manufacturing joint venture, net		5.5			(1.8	)
Contributions to TiO₂ manufacturing joint venture, net								(.8	)		(2.2	)
Other, net		1.8			1.7			.5			(1.1	)
Change in assets and liabilities:
Accounts and other receivables		(25.6	)		(59.9	)
Inventories		(70.3	)		52.1
Accounts and other receivables, net								(45.5	)		(38.7	)
Inventories, net								(2.2	)		3.3
Prepaid expenses		(8.1	)		(1.9	)		2.9			3.6
Accounts payable and accrued liabilities		13.0			5.0			5.4			(30.5	)
Income taxes		11.9			(3.7	)		(.6	)		9.4
Accounts with affiliates		17.1			2.1			.7			(1.5	)
Other, net		2.1			(.8	)		.1			.8

Net cash provided by operating activities		199.0			123.8
Net cash provided by (used in) operating activities								7.0			(9.8	)

Cash flows from investing activities:
Capital expenditures		(35.4	)		(34.2	)		(16.0	)		(15.3	)
Loan to Valhi:
Loans		(2.6	)		(10.9	)		(3.3	)		-
Collections		16.2			5.9			1.8			-
Proceeds from insurance settlement								-			1.5

Net cash used in investing activities		(21.8	)		(39.2	)		(17.5	)		(13.8	)

Cash flows from financing activities:
Payments on long-term debt		(.5	)		(.6	)		(.1	)		(.1	)
Dividends paid		(59.1	)		(62.5	)		(20.9	)		(20.8	)
Treasury stock acquired		-			(3.0	)		-			(1.0	)

Net cash used in financing activities		(59.6	)		(66.1	)		(21.0	)		(21.9	)

Cash, cash equivalents and restricted cash - net change from:
Operating, investing and financing activities		117.6			18.5			(31.5	)		(45.5	)
Currency translation		(7.9	)		(6.3	)		(2.6	)		(3.9	)
Balance at beginning of period		323.7			374.7			374.7			392.3

Balance at end of period	$	433.4		$	386.9		$	340.6		$	342.9

	Nine months ended				Three months ended
	September 30,				March 31,
	2018		2019		2019		2020
	(unaudited)				(unaudited)
Supplemental disclosures:
Cash paid for:
Cash paid (received) for:
Interest, net of amount capitalized	$	18.3	$	17.3	$	8.7	$	8.5
Income taxes		36.4		32.3		9.2		(.1	)
Accrual for capital expenditures		3.5		1.6		2.0		2.3

Organization - At ~~September 30, 2019,~~March 31, 2020, Valhi, Inc. (NYSE: VHI) held approximately 50% of our outstanding common stock and a wholly-owned subsidiary of NL Industries, Inc. (NYSE: NL) held approximately 30% of our common stock. Valhi owned approximately 83% of NL’s outstanding common stock and a wholly-owned subsidiary of Contran Corporation ~~(“Contran”)~~ held approximately 92% of Valhi’s outstanding common stock. At ~~September 30, 2019,~~March 31, 2020, a majority of Contran’s outstanding voting stock iswas held directly by Lisa K. Simmons and Serena Simmons Connelly and various family trusts established for the benefit of Ms. Simmons and Ms. Connelly and their children and for which Ms. Simmons or Ms. Connelly, as applicable, ~~serves~~served as ~~trustee.~~trustee (collectively, the “Other Trusts”). In addition, each of Ms. Simmons and Ms. Connelly ~~serves~~served as co-chair of the Contran board of directors. The remainder of Contran’s outstanding voting stock iswas held by another trust (the “Family Trust”), which was established for the benefit of Ms. Simmons and Ms. Connelly and their children and for which a third-party financial institution serves as trustee. Consequently, at ~~September 30, 2019,~~March 31, 2020, Ms. Simmons, Ms. Connelly and the Family Trust may be deemed to control Contran, and therefore may be deemed to indirectly control the wholly-owned subsidiary of Contran, Valhi, NL and us.

Following the death of Ms. Connelly on April 22, 2020, Ms. Simmons and the Family Trust continue to directly hold their shares of Contran voting stock. Under the terms of the Contran Corporation Amended and Restated Stockholders Agreement dated September 9, 2019 (the “Contran Stockholders Agreement”), and with respect to the shares of Contran voting stock held directly by Ms. Connelly at the time of her death (the “Connelly Direct Shares”), the independent executor of the estate of Ms. Connelly (prior to the completion of the probate of such estate) and the legatee of the Connelly Direct Shares (following completion of the probate of such estate) is required to vote the Connelly Direct Shares in the same manner as Ms. Simmons. Also under the terms of the Contran Stockholders Agreement, and with respect to the shares of Contran voting stock held by the Other Trusts for which Ms. Connelly previously served as trustee and for which her successor trustee is someone other than Ms. Simmons (the “Connelly Indirect Shares”), such successor trustee is also required to vote the Connelly Indirect Shares in the same manner as Ms. Simmons. Such voting rights of Ms. Simmons with respect to the Connelly Direct Shares and the Connelly Indirect Shares last through April 22, 2030 and are personal to Ms. Simmons. Consequently, at April 22, 2020, Ms. Simmons and the Family Trust may be deemed to control Contran, and therefore may be deemed to indirectly control the wholly-owned subsidiary of Contran, Valhi, NL and us.

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, ~~2018~~2019 that we filed with the Securities and Exchange Commission (SEC) on March 11, ~~2019 (2018~~2020 (2019 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 at December 31, ~~2018~~2019 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, ~~2018)~~2019) 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 ~~periods~~period ended ~~September 30, 2019~~March 31, 2020, 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 ~~2018~~2019 Consolidated Financial Statements contained in our ~~2018~~2019 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.

	December 31,			September 30,			December 31,			March 31,
	2018			2019			2019			2020
	(In millions)						(In millions)
Trade receivables	$	273.3		$	333.9		$	270.5		$	306.6
Recoverable VAT and other receivables		23.8			14.3			25.4			19.7
Receivables from affiliates:
Louisiana Pigment Company, L.P. (LPC)		10.2			-			4.7			-
Other		2.8			2.0			2.2			2.0
Refundable income taxes		3.6			.1			7.7			3.4
Allowance for doubtful accounts		(1.2	)		(2.0	)		(1.1	)		(1.3	)
Total	$	312.5		$	348.3		$	309.4		$	330.4

	December 31,		September 30,		December 31,		March 31,
	2018		2019		2019		2020
	(In millions)				(In millions)
Raw materials	$	93.1	$	117.2	$	124.4	$	125.5
Work in process		23.5		29.0		39.0		43.0
Finished products		316.8		222.9		269.9		245.8
Supplies		64.5		65.8		69.7		65.1
Total	$	497.9	$	434.9	$	503.0	$	479.4

Our marketable securities consist of investments in the publicly-traded shares of related parties: Valhi, NL and CompX International Inc. NL owns the majority of CompX’s outstanding common stock. All of our marketable securities are accounted for as available-for-sale securities, which are carried at fair value using quoted market prices in active markets for each marketable ~~security.~~security and represent a Level 1 input within the fair value hierarchy. Any unrealized gains or losses on the securities are recognized in Marketable equity securities on our Condensed Consolidated Statements of Income. ~~The fair value of our equity securities represent a Level 1 input within the fair value hierarchy. See Note 15.~~

	Fair value							Fair value
	measurement	Market		Cost				measurement	Market		Cost
Marketable security	level	value		basis		Unrealized gain		level	value		basis		Unrealized loss
		(In millions)							(In millions)
December 31, 2018:
December 31, 2019:
Valhi common stock	1	$	3.3	$	3.2	$	.1	1	$	3.2	$	3.2	$	-
NL and CompX common stocks	1		.1		.1		-	1		.1		.1		-
Total		$	3.4	$	3.3	$	.1		$	3.3	$	3.3	$	-

September 30, 2019:
March 31, 2020:
Valhi common stock	1	$	3.2	$	3.2	$	-	1	$	1.7	$	3.2	$	(1.5	)
NL and CompX common stocks	1		.1		.1		-	1		.1		.1		-
Total		$	3.3	$	3.3	$	-		$	1.8	$	3.3	$	(1.5	)

At December 31, ~~2018~~2019 and ~~September 30, 2019,~~March 31, 2020, we held approximately 1.7 million shares of Valhi’s common stock. We also held a nominal number of shares of CompX and NL common stocks. At December 31, ~~2018~~2019 and ~~September 30, 2019,~~March 31, 2020, the quoted per share market price of Valhi’s common stock was ~~$1.93~~$1.87 and ~~$1.90,~~$1.03, respectively.

The Valhi, CompX and NL common stocks we own are subject to the restrictions on resale pursuant to certain provisions of SEC Rule 144. In addition, as a majority-owned subsidiary of Valhi we cannot vote our shares of Valhi common stock under Delaware General Corporation law, but we do receive dividends from Valhi on these shares when declared and paid.

We enter into various arrangements (or leases) that convey the rights to use and control identified underlying assets for a period of time in exchange for consideration. We lease various manufacturing facilities and equipment. In addition, o~~ur principal German operating subsidiary leases the land under its Leverkusen TiO~~₂ ~~production facility pursuant to a lease with Bayer AG that expires in 2050. The Leverkusen facility itself, which we own and which represents approximately one-third of our current TiO~~₂ production capacity, is located within Bayer’s extensive manufacturing complex. From time to time, we may also enter into an arrangement in which the right to use and control an identified underlying asset is embedded in another type of contract.

~~On January 1, 2019 we adopted Accounting Standards Update (ASU) 2016-02,~~ ~~Leases (Topic 842)~~. See Note 16. We determine if an arrangement is a lease (including leases embedded in another type of contract) at inception. All of our leases are classified as operating leases under this new ASU. Operating leases are included in operating lease right-of-use assets, current operating lease liabilities and noncurrent operating lease liabilities in our Condensed Consolidated Balance Sheet beginning January 1, 2019. See Note 8.

Right-of-use assets represent our right to use an underlying asset for the lease term and operating lease liabilities represent our obligation to make lease payments arising from the lease. For leases in effect as of the January 1, 2019 date of adoption of the new

ASU, the right-of-use operating lease assets and liabilities were recognized based on the estimated present value of remaining lease payments over the remaining lease term as of the adoption date. For new leases entered into subsequent to the date of adoption of the new ASU, the right-of-use operating lease assets and liabilities are recognized based on the estimated present value of lease payments over the lease term as of the respective lease commencement dates.

We use an estimated incremental borrowing rate to determine the present value of lease payments (unless we can determine the rate implicit in the lease, which is generally not the case). Our incremental borrowing rate for each of our leases is derived from available information, including our current debt and credit facilities and U.S. and European yield curves as well as publicly available data for instruments with similar characteristics, adjusted for factors such as collateralization and term. For leases in effect as of the January 1, 2019 date of adoption of the new ASU, we used an estimated incremental borrowing rate for each lease on the date of adoption. For new leases entered into subsequent to the date of adoption of the new ASU, we use an estimated incremental borrowing rate for each lease as of the respective lease commencement date.

Our leases generally do not include termination or purchase options. Certain of our leases include an option to renew the lease after expiration of the initial lease term, but we have not included such renewal periods in our lease term because it is not reasonably certain that we would exercise the renewal option. Our leases generally have fixed lease payments, with no contingent or incentive payments. Certain of our leases include variable lease payments that depend on a specified index or rate, and in accordance with ASU 2016-02 the determination of the operating lease liabilities is based on the index or rate existing at the date of adoption of the new ASU (for leases in effect as of January 1, 2019) or the index or rate in effect as of the lease commencement date (for leases entered into subsequent to the date of adoption of the new ASU). Our lease agreements do not contain any residual value guarantees.

With respect to our land lease associated with our Leverkusen facility, we periodically establish the amount of rent for such land lease by agreement with Bayer for periods of at least two years at a time. The lease agreement provides for no formula, index or other mechanism to determine changes in the rent of such land lease; rather, any change in the rent is subject solely to periodic negotiation between Bayer and us. As such, we will account for any change in the rent associated with such lease subsequent to the January 1, 2019 adoption of the new ASU as a lease modification.

During the first nine months of 2019, our operating lease expense approximated $6.2 million (which amount approximates the amount of cash paid during the period for our operating leases included in the determination of our cash flows from operating activities). During the first nine months of 2019, variable lease expense and short-term lease expense were not material. During the first nine months of 2019, we entered into new operating leases which resulted in the recognition of $1.4 million in right-of-use operating lease assets and corresponding liabilities on our Condensed Consolidated Balance Sheet. At September 30, 2019, the weighted average remaining lease term of our operating leases was approximately 13 years, and the weighted average discount rate associated with such leases was approximately 4.6%. Such average remaining lease term is weighted based on each arrangement’s lease obligation, and such average discount rate is weighted based on each arrangement’s total remaining lease payments.

~~At September 30, 2019, maturities of our operating lease liabilities were as follows:~~

~~Approximately $6.9 million of the $29.5 million total lease obligations at September 30, 2019 relates to our Leverkusen facility lease discussed above.~~

~~At September 30, 2019, we have no significant lease commitments that have not yet commenced.~~

~~Disclosures related to periods prior to adoption of the New Lease Standard~~Note 5 - Other noncurrent assets:

Net rent expense approximated $14 million in 2016, $16 million in 2017 and $15 million in 2018. At December 31, 2018, future minimum payments under non-cancellable operating leases having an initial or remaining term of more than one year were as follows:

Approximately $17 million of the $42.5 million aggregate future minimum rental commitments at December 31, 2018 relates to our Leverkusen facility lease discussed above. The minimum commitment amounts for such lease included in the table above for each year through the 2050 expiration of the lease are based upon the current annual rental rate as of December 31, 2018.

	December 31,		September 30,		December 31,		March 31,
	2018		2019		2019		2020
	(In millions)				(In millions)
Kronos International, Inc. 3.75% Senior Secured Notes	$	452.4	$	432.3
Kronos International, Inc. 3.75% Senior Notes					$	442.6	$	435.1
Other		4.2		3.8		2.9		2.6
Total debt		456.6		436.1		445.5		437.7
Less current maturities		1.5		1.5		1.5		1.4
Total long-term debt	$	455.1	$	434.6	$	444.0	$	436.3

Senior ~~Secured~~ Notes - At ~~September 30, 2019,~~March 31, 2020, the carrying value of our 3.75% Senior Secured Notes due September 15, 2025 (€400 million aggregate principal amount outstanding) is stated net of unamortized debt issuance costs of ~~$5.3~~$4.9 million.

Revolving credit facilities - During the first ~~nine~~three months of ~~2019,~~2020, we had no borrowings or repayments under our North American revolving credit facility and our European revolving credit facility. At ~~September 30, 2019,~~March 31, 2020, approximately ~~$118.4~~$117.2 million was available for borrowing under the North American revolving credit facility. Our European revolving credit facility requires the maintenance of certain financial ratios, and one of such requirements is based on the ratio of net debt to last twelve months earnings before interest, income tax, ~~interest,~~ depreciation and amortization expense (EBITDA) of the borrowers. Based upon the borrowers’ last twelve months EBITDA as of ~~September 30, 2019~~March 31, 2020 and the net debt to EBITDA financial test, the full €90.0 million amount of the credit facility ($~~98.5~~99.0 million) iswas available for borrowing at ~~September 30, 2019.~~March 31, 2020.

Other - We are in compliance with all of our debt covenants at ~~September 30, 2019.~~March 31, 2020.

The following table disaggregates our net sales by place of manufacture (point of origin) and to the location of the customer (point of destination), which are the categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

	Three months ended							Nine months ended						Three months ended
	September 30,							September 30,						March 31,
	2018			2019				2018			2019			2019			2020
	(In millions)													(In millions)
Net sales - point of origin:
United States														$	245.3		$	237.0
Germany	$	211.9		$	238.3			$	704.1		$	706.0			219.2			229.1
United States		234.5			227.7				640.2			762.3
Canada		82.3			84.0				236.1			258.4			78.5			67.7
Belgium		66.4			58.3		��		205.0			205.7			69.7			66.1
Norway		49.8			46.0				159.4			145.2			51.5			54.3
Eliminations		(234.6	)		(216.9	)			(632.3	)		(719.2	)		(227.7	)		(233.2	)
Total	$	410.3		$	437.4			$	1,312.5		$	1,358.4		$	436.5		$	421.0

Net sales - point of destination:
Europe	$	191.8		$	201.6			$	664.2		$	646.2		$	215.2		$	214.5
North America		142.0			147.8				412.6			456.1			146.8			132.3
Other		76.5			88.0				235.7			256.1			74.5			74.2
Total	$	410.3		$	437.4			$	1,312.5		$	1,358.4		$	436.5		$	421.0

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

	Three months ended						Nine months ended						Three months ended
	September 30,						September 30,						March 31,
	2018			2019			2018			2019			2019			2020
	(In millions)												(In millions)
Service cost	$	2.9		$	2.7		$	8.8		$	8.3		$	2.8		$	3.2
Interest cost		3.5			3.5			10.7			10.5			3.5			2.6
Expected return on plan assets		(3.3	)		(3.1	)		(9.9	)		(9.3	)		(3.2	)		(2.3	)
Amortization of prior service cost		.1			.1			.2			.2			.1			-
Recognized actuarial losses		3.3			3.3			10.3			10.0			3.4			4.4
Total	$	6.5		$	6.5		$	20.1		$	19.7		$	6.6		$	7.9

We expect our ~~2019~~2020 contributions for our pension plans to be approximately $17 million.

	Three months ended						Nine months ended						Three months ended
	September 30,						September 30,						March 31,
	2018			2019			2018			2019			2019			2020
	(In millions)												(In millions)
Expected tax expense, at U.S. federal statutory income tax rate of 21%	$	9.8		$	5.1		$	53.9		$	22.7		$	9.1		$	7.4
Non-U.S. tax rates		3.6			1.2			18.6			5.9			2.4			.9
Incremental net tax expense (benefit) on earnings and losses of U.S. and non-U.S. companies		1.8			(1.1	)		2.9			(2.2	)		(.5	)		(1.3	)
Global intangible low-tax income, net		-			.1			-			1.6			.8			1.2
Transition tax		(1.7	)		-			(1.7	)		-
Valuation allowance														-			(.5	)
Adjustment to reserve for uncertain tax positions, net		-			.2			1.4			.6			.2			.4
Canada-Germany APA		-			-			(1.4	)		-
Other, net		.6			.8			1.8			1.9			.8			.3
Income tax expense	$	14.1		$	6.3		$	75.5		$	30.5		$	12.8		$	8.4

Comprehensive provision for income taxes allocable to:
Net income	$	14.1		$	6.3		$	75.5		$	30.5		$	12.8		$	8.4
Other comprehensive income (loss):
Pension plans		1.0			1.2			3.2			3.6
OPEB plans		-			-			(.1	)		(.1	)
Other comprehensive income - pension plans														1.2			1.4
Total	$	15.1		$	7.5		$	78.6		$	34.0		$	14.0		$	9.8

The amount shown in the above table of our income tax rate reconciliation for non-U.S. tax rates represents the result determined by multiplying the pre-tax earnings or losses of each of our non-U.S. subsidiaries by the difference between the applicable statutory income tax rate for each non-U.S. jurisdiction and the U.S. federal statutory tax ~~rate of 21%.~~rate. The amount shown on such table for incremental net tax expense (benefit) on earnings and losses of U.S. and non-U.S. companies includes, as applicable, (i) deferred state and non-U.S. income taxes (or deferred income tax benefits) and deferred withholding taxes, as applicable, associated with the current-year change in the aggregate amount of undistributed earnings of all of our non-U.S. subsidiaries, which earnings are not permanently reinvested and (ii) current U.S. income taxes (or current income tax benefit) attributable to current-year income (losses) of one of our non-U.S. subsidiaries, which subsidiary is treated as a dual resident for U.S. income tax purposes.

~~We record global intangible low-tax income (GILTI)~~On March 27, 2020, the “Coronavirus Aid, Relief and Economic Security (CARES) Act” was signed into law in response to the COVID-19 pandemic. The CARES Act, among other things, includes provisions relating to refundable payroll tax ~~as a current-period expense when incurred under~~credits, deferment of employer side social security payments, modifications to the ~~period cost method. We have evaluated the tax impact~~limitation of ~~GILTI and base erosion anti abuse tax (BEAT) provisions and related U.S. tax credit provisions applicable to~~business interest for tax years beginning in ~~2018 based on~~2019 and 2020 and technical corrections to tax depreciation methods for qualified improvement property. The modification to the ~~relevant statutes, including final GILTI~~business interest provisions increases the business interest limitation from 30% of adjusted taxable income to 50% of adjusted taxable income which increases our allowable interest expense deduction for 2019 and ~~foreign~~2020. Consequently, in the first quarter of 2020 we recognized a cash tax ~~credit regulations issued by~~benefit of $.5 million related to the ~~IRS~~reversal of the valuation allowance recognized in ~~June~~ 2019 ~~which~~for the portion of the disallowed interest expense we did not ~~materially~~expect to fully utilize at December 31, 2019. Pursuant to the business interest modification provisions, we do not expect our deductible interest expense in 2020 to be limited and, accordingly, we have considered such modifications in our estimate of the effective tax rate. We have determined other provisions of the CARES Act will not have a material impact on our ~~determinations with respect~~provision for income taxes in 2020.

Tax authorities may in the future propose tax deficiencies, including penalties and interest, related to ~~such items.~~

~~None~~examinations of our U.S. and non-U.S. tax returns are currently under examination. As a result of prior audits in certain jurisdictions, which are now settled, in 2008 we filed Advance Pricing Agreement Requests with the tax authorities in the U.S., Canada and Germany. During the first quarter of 2018, our German subsidiary executed and finalized the related Advance Pricing Agreement

~~with the Competent Authority for Germany (the “Canada-Germany APA”) effective for tax years 2005 - 2017. In the first quarter of 2018, we recognized a net $1.4 million non-cash~~ income tax ~~benefit related to an APA~~returns. Because of the uncertainties involved in settlement initiatives and court and tax ~~settlement payment between~~proceedings, we cannot guarantee that these tax matters, if any, will be resolved in our ~~German~~favor, and ~~Canadian subsidiaries.~~

therefore our potential exposure, if any, is also uncertain. We believe we have adequate accruals for additional taxes and related interest expense which could ultimately result from tax examinations. We believe the ultimate disposition of any future tax examinations should not have a material adverse effect on our consolidated financial position, results of operations or liquidity. We ~~do not expect~~currently estimate that our unrecognized tax benefits ~~to materially change~~will decrease by approximately $1.2 million during the next twelve ~~months.~~months primarily due to the expiration of certain statutes of limitations.

Changes in accumulated other comprehensive loss are presented in the table below. See Note 4 for further discussion of our marketable securities and Note 1110 for discussion of our defined benefit pension plans.

	Three months ended						Nine months ended						Three months ended
	September 30,						September 30,						March 31,
	2018			2019			2018			2019			2019			2020
	(In millions)												(In millions)
Accumulated other comprehensive loss, net of tax:
Currency translation:
Balance at beginning of period	$	(226.4	)	$	(238.0	)	$	(211.9	)	$	(245.0	)	$	(245.0	)	$	(246.8	)
Other comprehensive income (loss)		4.5			(18.7	)		(10.0	)		(11.7	)
Other comprehensive loss														(.1	)		(41.9	)
Balance at end of period	$	(221.9	)	$	(256.7	)	$	(221.9	)	$	(256.7	)	$	(245.1	)	$	(288.7	)

Defined benefit pension plans:
Balance at beginning of period	$	(167.9	)	$	(175.5	)	$	(172.8	)	$	(180.0	)	$	(180.0	)	$	(202.2	)
Other comprehensive income - amortization of prior service cost and net losses included in net periodic pension cost		2.4			2.2			7.3			6.7			2.3			3.0
Balance at end of period	$	(165.5	)	$	(173.3	)	$	(165.5	)	$	(173.3	)	$	(177.7	)	$	(199.2	)

OPEB plans:
Balance at beginning of period	$	1.0		$	.6		$	1.2		$	.7		$	.7		$	.2
Other comprehensive loss - amortization of prior service credit and net losses included in net periodic OPEB cost		-			(.1	)		(.2	)		(.2	)		(.1	)		(.1	)
Balance at end of period	$	1.0		$	.5		$	1.0		$	.5		$	.6		$	.1

Marketable securities:
Balance at beginning of period	$	-		$	-		$	4.8		$	-
Change in accounting principle		-			-			(4.8	)		-
Balance at beginning of period, as adjusted		-			-			-			-
Other comprehensive loss - unrealized losses arising during the period		-			-			-			-
Balance at end of period	$	-		$	-		$	-		$	-

Total accumulated other comprehensive loss:
Balance at beginning of period	$	(393.3	)	$	(412.9	)	$	(378.7	)	$	(424.3	)	$	(424.3	)	$	(448.8	)
Change in accounting principle		-			-			(4.8	)		-
Balance at beginning of period, as adjusted		(393.3	)		(412.9	)		(383.5	)		(424.3	)
Other comprehensive income (loss)		6.9			(16.6	)		(2.9	)		(5.2	)		2.1			(39.0	)
Balance at end of period	$	(386.4	)	$	(429.5	)	$	(386.4	)	$	(429.5	)	$	(422.2	)	$	(487.8	)

~~In December 2010,~~Prior to 2019, our board of directors authorized the repurchase of up to 2.0 million shares of our common stock in open market transactions, including block purchases, or in privately-negotiated transactions at unspecified prices and over an unspecified period of time. We may repurchase our common stock from time to time as market conditions permit. The stock repurchase program does not include specific price targets or timetables and may be suspended at any time. Depending on market conditions, we may terminate the program prior to its completion. We use cash on hand or other sources of liquidity to acquire the shares. Repurchased shares are added to our treasury and subsequently cancelled upon approval of the board of directors. At December 31, ~~2018, 1,951,000~~2019, 1,686,008 shares were available for repurchase under this ~~authorization.~~stock repurchase program.

During the first ~~nine~~three months of ~~2019,~~2020, we acquired ~~264,992~~122,489 shares of our common stock in market transactions for an aggregate purchase price of ~~$3.0~~$1.0 million ~~and subsequently cancelled 110,303, representing $1.4 million, of such shares.~~which are accounted for as treasury stock at March 31, 2020. At ~~September 30, 2019~~March 31, 2020 an additional ~~1,686,008~~1,563,519 shares are available for repurchase under this stock repurchase program.

We are involved in various environmental, contractual, product liability, patent (or intellectual property), employment and other claims and disputes incidental to our business. At least quarterly our management discusses and evaluates the status of any pending litigation to which we are a party. The factors considered in such evaluation include, among other things, the nature of such pending cases, the status of such pending cases, the advice of legal counsel and our experience in similar cases (if any). Based on such evaluation, we make a determination as to whether we believe (i) it is probable a loss has been incurred, and if so if the amount of such loss (or a range of loss) is reasonably estimable, or (ii) it is reasonably possible but not probable a loss has been incurred, and if so if the amount of such loss (or a range of loss) is reasonably estimable, or (iii) the probability a loss has been incurred is remote. We have not accrued any amounts for litigation matters because it is not reasonably possible we have incurred a loss that would be material to our consolidated financial condition, results of operations or liquidity.

~~The following table summarizes the valuation~~See Note 4 for information on how we determine fair value of our ~~financial instruments recorded on a fair value basis as of December 31, 2018 and September 30, 2019.~~

Fair Value Measurements

Quoted

Significant

prices in

other

Significant

active

observable

unobservable

markets

inputs

inputs

Total

(Level 1)

(Level 2)

(Level 3)

(In millions)

Asset:

December 31, 2018 -

Noncurrent marketable securities (See Note 4)

$
3.4

$
3.4

$
-

$
-

September 30, 2019 -

Noncurrent marketable securities (See Note 4)

$
3.3

$
3.3

$
-

$
-

Our earnings and cash flows are subject to fluctuations due to changes in currency exchange rates and interest rates. Our risk management policy allows for the use of derivative financial instruments to prudently manage exposure to currency exchange rates and interest rates. Derivatives that we use are primarily currency forward contracts and interest rate swaps. 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.marketable securities.

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

	December 31, 2018				September 30, 2019				December 31, 2019				March 31, 2020
	Carrying amount		Fair value		Carrying amount		Fair value		Carrying amount		Fair value		Carrying amount		Fair value
	(In millions)								(In millions)
Cash, cash equivalents and restricted cash	$	374.7	$	374.7	$	386.9	$	386.9	$	392.3	$	392.3	$	342.9	$	342.9
Long-term debt - Fixed rate Senior Secured Notes		452.4		412.9		432.3		438.0
Long-term debt - Fixed rate Senior Notes										442.6		457.0		435.1		374.8
Common stockholders' equity		839.8		1,335.3		846.9		1,430.6		816.1		1,549.7		782.3		975.1

At ~~September 30, 2019,~~March 31, 2020, the estimated market price of our Senior ~~Secured~~ Notes was ~~€1,001~~€852 per €1,000 principal amount. The fair value of our Senior ~~Secured~~ Notes is based on quoted market prices; however, these quoted market prices represented Level 2 inputs because the markets in which the Senior ~~Secured~~ Notes trade are not active. The fair value of our common stockholders’ equity is based upon quoted market prices at each balance sheet date, which represent Level 1 inputs. Due to their near-term maturities, the carrying amounts of accounts receivable and accounts payable are considered equivalent to fair value. See Notes 2 and 7.

~~On January 1,~~In December 2019, ~~we adopted~~the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2019-12, Simplifying the Accounting for Income Taxes, which changes the accounting for certain income tax transactions and reduces complexity in accounting for income taxes in certain areas. The ASU ~~2016-02,~~ ~~Leases (Topic 842), which~~introduces new guidance including providing a policy election for an entity to not allocate consolidated current and deferred tax expense when a member of a consolidated tax return is not subject to income tax in its separate financial statements and is a ~~comprehensive rewriting~~disregarded entity by the taxing authority; and providing guidance to evaluate whether a step-up in tax basis of goodwill relates to a business combination in which book goodwill was recognized or a separate transaction. The ASU also changes existing guidance in a number of areas, including: the ~~lease~~method of making an intraperiod allocation of total income tax expense if there is a loss in continuing operations and gains outside of continuing operations; determining when a deferred tax liability is recognized after an investor in a non-U.S. entity transitions to or from the equity method of accounting; accounting for tax law changes and year-to-date losses in interim periods; and determining how to apply the income tax guidance ~~which aims~~ to increase comparability and transparency with regard to lease transactions. The primary change was the recognition of lease assets for the right-of-use of the underlying asset and lease liabilities for the obligation to make payments by lesseesfranchise taxes that are partially based on the balance sheet for leases previously classified as operating leases. ASU 2016-02, as amended, also requires increased qualitative disclosure about leases in addition to quantitative disclosures previously required. As permitted, weincome. We adopted this ASU ~~prospectively~~ as of January 1, 2019 with no restatement of prior period financial statements. This ASU permits companies to elect certain practical expedients upon adoption, and at adoption we elected the package of practical expedients related to, among other things, lease classification (in which existing leases classified as operating leases under prior GAAP are classified as an operating lease under the new ASU, and existing leases classified as a capital lease under prior GAAP are classified as a finance lease under the new ASU), nonlease components (in which nonlease components associated with a lease and paid by us to the lessor, such as property taxes, insurance and maintenance, are treated as a lease component and considered part of minimum lease rental payments), and short-term leases (in which leases with an original maturity of 12 months or less are excluded from the recognition requirements of the new ASU). Upon2020. The adoption of this ~~new~~ ASU atin the first quarter of 2020 did not have a material effect on our Condensed Consolidated Financial Statements.

Following the spread of the COVID-19 virus beyond China in late January ~~1, 2019~~2020, various national, state and local governments began to implement a number of increasingly restrictive measures to contain the spread of the virus, including travel restrictions, gathering limitations, event cancellations, border closures and stay-at-home orders, resulting in sharp contractions of vast areas of the global economy beginning in March 2020. While measured efforts are underway to resume commercial activities in most global markets, the impacts of COVID-19, including the efforts to mitigate its spread, are expected to continue to challenge workers, businesses and governments for the foreseeable future. Although the COVID-19 pandemic had limited impact on our operations during the first quarter of 2020, we ~~recognized~~believe U.S. and worldwide gross domestic product will be significantly impacted for an ~~aggregate right-of-use operating lease asset~~indeterminate period, including the demand for our products and those of ~~$35.1 million~~our customers. Consequently, we expect to report lower sales and ~~a corresponding aggregate operating lease liability~~earnings than would otherwise have been expected for the remainder of ~~$34.5 million (there was no~~2020. The extent of the impact ~~to the opening balance of retained earnings at January 1, 2019 as a result of adopting this new ASU). See Note 5.~~will depend on numerous factors, including future developments, and therefore is uncertain and cannot be predicted.

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 paints, plastics, paper and other industrial and specialty products. For the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, approximately one-half of our sales volumes were sold into European markets. Our production facilities are located in Europe and North America.

We consider TiO₂ to be a “quality of life” product, with demand affected by gross domestic product, or GDP, and overall economic conditions in our markets located in various regions of the world. Over the long-term, we expect demand for TiO₂ ~~will grow by 2%~~ to ~~3% per year,~~be 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 global GDP, in part due to relative changes in the TiO₂ inventory levels of our customers. We believe that our customers’ inventory levels are influenced in part by their expectations for future changes in TiO₂market selling prices as well as their expectations for future availability of product. Although certain of our TiO₂grades are considered specialty pigments, the majority of our grades and substantially all of our production are considered commodity pigment products, with price and availability being the most significant competitive factors along with product quality, and customer ~~service.~~and technical support services.

Our key performance indicators are our TiO₂ average selling prices, our level of TiO₂ sales and production volumes and the cost of our third-party feedstock. TiO₂selling prices generally follow industry trends and prices will increase or decrease generally as a result of competitive market pressures.

We reported net income of ~~$17.9~~$27.0 million, or ~~$.16~~$.23 per share, in the ~~third~~first quarter of ~~2019~~2020 as compared to net income of ~~$32.6~~$30.3 million, or ~~$.28 per share, in the third quarter of 2018. For the first nine months of 2019, we reported net income of $77.7 million, or $.67 per share, compared to net income of $181.0 million, or $1.56~~$.26 per share, in the first ~~nine months~~quarter of ~~2018.~~2019. We reported lower net income in the ~~2019 periods as~~first quarter of 2020 compared to the ~~2018 periods~~first quarter of 2019 primarily due to lower income from operations resulting from the effects of lower ~~average selling prices~~sales volumes and higher raw materials and other production ~~costs partially offset~~costs. Comparability of our results was also impacted by ~~higher sales volumes.~~the effects of changes in currency exchange rates.

Our net income in the first quarter of 2020 includes the recognition of a pre-tax insurance settlement gain of $1.5 million ($1.2 million, or $.01 per share, net of income tax expense) related to a property damage claim.

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,” “intends,” “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:

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.

~~We started 2019 with~~At the beginning of 2020, our average TiO₂selling prices 3%were 1% lower than at the beginning of ~~2018. Our average TiO~~₂~~selling prices declined in the first quarter of~~ 2019, ~~compared to the fourth quarter of 2018 before beginning to rise in the second~~ and ~~third quarters of 2019. Our~~our average TiO₂selling prices at the end of the ~~third~~first quarter of ~~2019~~2020 were 2% ~~higher~~lower than at the end of ~~the second quarter of 2019 and were comparable to the end of 2018.~~2019. We experienced lower sales volumes in the North American, Latin American and export markets partially offset by higher sales volumes in ~~all major markets~~the European market in the first ~~nine~~three months of ~~2019~~2020 as compared to the same period of ~~2018.~~2019.

We operated our production facilities at overall average capacity utilization rates of 95% in the first quarter of 2020 compared to 97% in the first ~~nine months~~quarter of ~~2019 compared to 95% in the first nine months of 2018. The table below lists our comparative quarterly production capacity utilization rates.~~2019.

Primarily due to a moderate rise in the cost of third-party feedstock we procured in ~~2018 and~~ 2019, our cost of sales per metric ton of TiO₂ sold in the first ~~nine~~three months of ~~2019~~2020 was higher as compared to the first ~~nine~~three months of ~~2018~~2019 (excluding the effect of changes in currency exchange rates).

Quarter ended ~~September 30, 2019~~March 31, 2020 compared to the quarter ended ~~September 30, 2018~~March 31, 2019

	Three months ended September 30,											Three months ended March 31,
	2018					2019						2019					2020
		(Dollars in millions)											(Dollars in millions)
Net sales	$	410.3		100	%	$	437.4			100	%	$	436.5		100	%	$	421.0			100	%
Cost of sales		291.2		71			349.7			80			327.2		75			332.9			79
Gross margin		119.1		29			87.7			20			109.3		25			88.1			21
Selling, general and administrative expense		57.3		14			56.9			13			57.7		13			53.5			13
Other operating income (expense):
Currency transactions, net		(.6	)	-			5.8			1			.9		-			12.2			3
Other operating expense, net		(3.1	)	(1	)		(3.5	)		-			(3.5	)	(1	)		(3.3	)		(1	)
Income from operations	$	58.1		14	%	$	33.1			8	%	$	49.0		11	%	$	43.5			10	%

									% Change											% Change
TiO₂ operating statistics:
Sales volumes*		123					144			17	%		143					136			(5	)%
Production volumes*		131					136			4	%		134					132			(1	)%
Percentage change in net sales:
TiO₂ sales volumes																					(5	) %
TiO₂ product pricing										(5	)%										-
TiO₂ sales volumes										17
TiO₂ product mix/other										(3	)										3
Changes in currency exchange rates										(2	)										(2	)
Total										7	%										(4	)%

Net sales - Net sales in the ~~third~~first quarter of ~~2019 increased 7%~~2020 decreased 4%, or ~~$27.1~~$15.5 million, compared to the ~~third~~first quarter of ~~2018~~2019 primarily due to ~~the net effect of~~ a 5% decrease in ~~average TiO~~₂ ~~selling prices~~sales volumes (which decreased net sales by approximately ~~$21~~$22 million) ~~and a 17% increase~~. Our average TiO₂selling prices in ~~sales volumes (which increased net sales by approximately $70 million).~~the first quarter of 2020 were comparable to our average TiO₂selling prices in the first quarter of 2019. TiO₂ selling prices will increase or decrease generally as a result of competitive market pressures, changes in the relative level of supply and demand as well as changes in raw material and other manufacturing costs.

Our sales volumes ~~increased 17%~~decreased 5% in the ~~third~~first quarter of ~~2019~~2020 as compared to the ~~third~~first quarter of ~~2018~~2019 primarily due to lower sales volumes in the North American, Latin American and export markets partially offset by higher sales volumes in ~~all major markets.~~ the European market.

In addition to the impact of ~~changes in average TiO~~₂ ~~selling prices and~~lower sales volumes, we estimate that changes in currency exchange rates (primarily the euro) decreased our net sales by approximately $9$7 million in the ~~third~~first quarter of ~~2019~~2020 as compared to the ~~third~~first quarter of ~~2018.~~2019.

Cost of sales and gross margin - Cost of sales increased ~~$58.5~~$5.7 million, or ~~20%~~2%, in the ~~third~~first quarter of ~~2019~~2020 compared to the ~~third~~first quarter of ~~2018~~2019 due to the net effect of ~~a 17% increase in sales volumes,~~ higher raw materials and other production costs of approximately ~~$24~~$23 million ~~(primarily caused by~~(including higher cost for third-party feedstock, ~~costs)~~energy and other raw materials), favorable effects from currency fluctuations (primarily the euro). and a 5% decrease in sales volumes. Our cost of sales as a percentage of net sales increased to ~~80%~~79% in the ~~third~~first quarter of ~~2019~~2020 compared to ~~71%~~75% in the same period of ~~2018~~2019 primarily due to the unfavorable effects of ~~lower average selling prices and~~ higher raw materials and other production costs, as discussed above.

Gross margin as a percentage of net sales decreased to ~~20%~~21% in the ~~third~~first quarter of ~~2019~~2020 compared to ~~29%~~25% in the ~~third~~first quarter of ~~2018.~~2019. As discussed and quantified above, our gross margin decreased primarily due to the ~~net effect~~effects of lower ~~average selling prices, higher~~ sales volumes and higher raw materials and other production costs.

Selling, general and administrative expense - Selling, general and administrative expense was approximately 13% of net sales in the ~~third quarter~~first quarters of 2019 ~~was comparable to the third quarter of 2018.~~and 2020.

Income from operations - Income from operations decreased by ~~$25.0~~$5.5 million, or ~~43%~~11%, in the ~~third~~first quarter of ~~2019~~2020 compared to the ~~third~~first quarter of ~~2018.~~2019. Income from operations as a percentage of net sales decreased to 8%10% in the ~~third~~first quarter of ~~2019~~2020 from ~~14%~~11% in the same period of ~~2018.~~2019. This decrease was driven by the lower gross margin discussed above. We estimate that changes in currency exchange rates increased income from operations by approximately $6$11 million in the ~~third~~first quarter of ~~2019~~2020 as compared to the same period in ~~2018,~~2019, as discussed below.

Other non-operating income (expense) – ~~Our loss~~We recognized a gain of $.6 million on the change in value of our marketable equity securities ~~was $4.3 million~~in the first quarter of 2019 and ~~$1.9~~a loss of $1.5 million in the ~~third quarters~~first quarter of ~~2018 and 2019, respectively.~~2020. See Note 4 to our Condensed Consolidated Financial Statements. Other components of net periodic pension and OPEB cost in the ~~third~~first quarter of 2020 increased $.9 million compared to the first quarter of 2019 ~~was comparable~~primarily due to ~~the third quarter~~increased amortization costs from previously unrecognized actuarial losses as a result of ~~2018~~lower discount rates and ~~we expect this comparability of pension and OPEB cost to continue throughout 2019.~~lower expected returns on plan assets. See Note 1110 to our Condensed Consolidated Financial Statements. Interest expense in the ~~third~~first quarter of ~~2019~~2020 was ~~also~~ comparable to the ~~third~~first quarter of ~~2018~~2019 and we currently expect our interest expense for all of ~~2019~~2020 to be comparable to ~~2018.~~2019.

Income tax expense - We recognized income tax expense of ~~$6.3~~$8.4 million in the ~~third~~first quarter of ~~2019~~2020 compared to income tax expense of ~~$14.1~~$12.8 million in the ~~third~~first quarter of ~~2018.~~2019. The difference is primarily due to lower earnings in ~~2019.~~2020. Our earnings are subject to income tax in various U.S. and non-U.S. jurisdictions, and the income tax rates applicable to the pre-tax earnings (losses) of our non-U.S. operations are generally higher than the income tax rates applicable to our U.S. operations. We would generally expect our overall effective tax rate to be higher than the U.S. federal statutory tax rate of 21% primarily because of our sizeable non-U.S. operations. See Note 1211 to our Condensed Consolidated Financial Statements.

~~Nine months ended September 30, 2019 compared to the nine months ended September 30, 2018~~

Nine months ended September 30,

2018

2019

(Dollars in millions)

Net sales
$
1,312.5

100
%

$
1,358.4

100
%
Cost of sales

846.8

65

1,051.9

77

Gross margin

465.7

35

306.5

23

Selling, general and administrative expense

173.7

13

172.5

13

Other operating income (expense):

Currency transactions, net

4.2

1

5.6

-

Other operating expense, net

(10.7
)

(1
)

(11.0
)

(1
)
Income from operations
$
285.5

22
%

$
128.6

9
%

% Change

TiO₂ operating statistics:

Sales volumes*

385

445

16
%
Production volumes*

400

406

1
%
Percentage change in net sales:

TiO₂ product pricing

(7
)%
TiO₂ sales volumes

16

TiO₂ product mix/other

(3
)
Changes in currency exchange rates

(3
)
Total

3
%

~~Net sales~~ ~~- Net sales in the first nine months of 2019 increased 3%, or $45.9 million, compared to the first nine months of 2018 primarily due to the net effect of a 7% decrease in average TiO~~₂ ~~selling prices (which decreased net sales by approximately $92 million) and a 16% increase in sales volumes (which increased net sales by approximately $210 million). TiO~~₂ selling prices will increase or decrease generally as a result of competitive market pressures, changes in the relative level of supply and demand as well as changes in raw material and other manufacturing costs.

Our sales volumes increased 16% in the first nine months of 2019 as compared to the first nine months of 2018 primarily due to higher sales in all major markets. In addition to the impact of changes in average TiO₂ ~~selling prices and sales volumes, we estimate that changes in currency exchange rates decreased our net sales by approximately $41 million as compared to the first nine months of 2018.~~

~~Cost of sales and gross margin~~ - Cost of sales increased $205.1 million, or 24%, in the first nine months of 2019 compared to the same period in 2018 primarily due to the net impact of a 16% increase in sales volumes, higher raw materials and other production costs of approximately $101 million (including higher cost for third-party feedstock, energy and other raw materials) and currency fluctuations (primarily the euro). Our cost of sales as a percentage of net sales increased to 77% in the first nine months of 2019 compared to 65% in the same period of 2018 primarily due to the unfavorable effects of lower average selling prices and higher raw materials and other production costs, as discussed above.

Gross margin as a percentage of net sales decreased to 23% in the first nine months of 2019 compared to 35% in the first nine months of 2018. As discussed and quantified above, our gross margin decreased primarily due to the net effect of lower average selling prices, higher sales volumes and higher raw materials and other production costs.

~~Selling, general and administrative expense~~ ~~- Selling, general and administrative expense in the first nine months of 2019 was comparable to the first nine months of 2018.~~

~~Income from operations~~ -Income from operations decreased by $156.9 million, or 55%, in the first nine months of 2019 compared to the first nine months of 2018. Income from operations as a percentage of net sales decreased to 9% in the first nine months of 2019 from 22% in the same period of 2018. This decrease was driven by the decrease in gross margin discussed above. We estimate that changes in currency exchange rates increased income from operations by approximately $5 million in the first nine months of 2019 as compared to the same period in 2018.

~~Other non-operating income (expense) -~~ Our loss on marketable equity securities was $6.7 million and $.1 million for the first nine months of 2018 and 2019, respectively. See Note 4 to our Condensed Consolidated Financial Statements. Other components of net periodic pension and OPEB cost in the first nine months of 2019 was comparable to the first nine months of 2018. See Note 11 to our Condensed Consolidated Financial Statements. Interest expense in the first nine months of 2019 was comparable to the first nine months of 2018.

~~Income tax expense~~ - We recognized income tax expense of $30.5 million in the first nine months of 2019 compared to income tax expense of $75.5 million in the first nine months of 2018. The difference is primarily due to lower earnings in 2019. Our earnings are subject to income tax in various U.S. and non-U.S. jurisdictions, and the income tax rates applicable to our pre-tax earnings (losses) of our non-U.S. operations are generally higher than the income tax rates applicable to our U.S. operations. We would generally expect our overall effective tax rate to be higher than the U.S. federal statutory tax rate of 21% primarily because of our sizeable non-U.S. operations. See Note 12 to our Condensed Consolidated Financial Statements.

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 (and consequently our non-U.S. operations will generally hold U.S. dollars from time to time). Certain raw materials used in all our production facilities, primarily titanium-containing feedstocks, are purchased in U.S. dollars, while labor and other production and administrative costs are incurred 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 fluctuations 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 (i) the difference between the currency exchange rates in effect when non-local currency sales or operating costs (primarily U.S. dollar denominated) are initially accrued and when such amounts are settled with the non-local currency, (ii) changes in currency exchange rates during time periods when our non-U.S. operations are holding non-local currency (primarily U.S. dollars), and (iii) relative changes in the aggregate fair value of currency forward contracts held from time to time. We periodically use currency forward contracts to manage a portion of our currency exchange risk, and relative changes in the aggregate fair value of any currency forward contracts we hold from time to time serve in part to mitigate the currency transaction gains or losses we would otherwise recognize from the first two items described above.

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

Impact of changes in currency exchange rates Three months ended September 30, 2019 vs September 30, 2018

Impact of changes in currency exchange rates Three months ended March 31, 2020 vs March 31, 2019															Impact of changes in currency exchange rates Three months ended March 31, 2020 vs March 31, 2019

								Translation losses - impact of rate changes				Total currency impact 2019 vs 2018										Translation loss - impact of rate changes				Total currency impact 2020 vs 2019
	Transaction gains/(losses) recognized										Transaction gains recognized
	2018			2019		Change					2019					2020		Change
	(In millions)														(In millions)
Impact on:
Net sales	$	-		$	-	$	-	$	(9	)			$	(9	)	$	-	$	-	$	-		$	(7	)		$	(7	)
Income from operations		(1	)		6		7		(1	)			6			1		12		11			-				11

The $9$7 million decrease in net sales (translation loss) was caused primarily by a strengthening of the U.S. dollar relative to the euro, as our euro-denominated sales were translated into fewer U.S. dollars in ~~2019~~2020 as compared to ~~2018.~~2019. The strengthening of the U.S. dollar relative to the Canadian dollar and the Norwegian krone in 2019 did not have a significant effect on the reported amount of our net sales, as a substantial portion of the sales generated by our Canadian and Norwegian operations are denominated in the U.S. dollar.

~~The $6 million increase in income from operations was comprised of the following:~~

The $41 million decrease in net sales (translation loss) was caused primarily by a strengthening of the U.S. dollar relative to the euro, as our euro-denominated sales were translated into fewer U.S. dollars in 2019 as compared to 2018. The strengthening of the U.S. dollar relative to the Canadian dollar and the Norwegian krone in 20192020 did not have a significant effect on the reported amount of our net sales, as a substantial portion of the sales generated by our Canadian and Norwegian operations are denominated in the U.S. dollar.

The $5$11 million increase in income from operations ~~was comprised of the following:~~

~~We expect~~reduce our production volumes, resulting in ~~2019~~an increase to our per unit costs of production. If this occurs, spending for raw materials and other production costs would be ~~slightly higher as compared~~reduced, but not enough to ~~2018~~offset the

negative impacts of reduced sales. Depending on the length and severity of the impact of COVID-19 on the global economy, we may decide to curtail production ~~volumes. Assuming global economic conditions remain stable and based on anticipated production levels,~~or temporarily close manufacturing facilities, or we ~~also expect our 2019 sales volumes~~may be required to ~~be higher as compared to 2018 sales volumes.~~temporarily close certain facilities if outbreaks escalate in a particular region. We will continue to monitor current and anticipated near-term customer demand ~~levels~~throughout the year and align our production and ~~inventories~~inventory levels accordingly.

~~The cost of third-party feedstock we purchased in~~Though it is not possible to predict the last half of 2018 and first nine months of 2019 was higher as compared to the first half of 2018 and such higher cost feedstock was reflected in our results of operations in 2019. Consequently, our cost of sales per metric ton of TiO₂ sold in the first nine months of 2019 was higher than our per-metric ton cost in the first nine months of 2018 (excluding the effect of changes in currency exchange rates). We expect our cost of sales per metric ton of TiO₂ ~~sold in 2019 to be higher than our per-metric ton cost in 2018 primarily due to higher feedstock costs.~~

~~We started 2019 with average TiO~~₂~~selling prices 3% lower than the beginning of 2018, and average selling prices at the end~~impact of the ~~third quarter~~COVID-19 pandemic on future demand for our products or those of ~~2019 were comparable~~our customers, we believe that we have sufficient cash on-hand and available borrowing capacity under our revolving credit facilities to ~~the end~~meet our obligations, and we are prepared to implement multiple cash-saving strategies if necessary, including reduction of ~~2018. Average TiO~~₂~~selling prices declined by 4%~~inventories, delays in ~~the first quarter of 2019, then improved by 2%~~capital expenditures and other cost saving initiatives. We commend our employees for their extraordinary efforts and support in ~~each~~these challenging times, as we work together to foster their physical and economic health as well as that of the ~~second and third quarters of 2019. Supplies of certain grades of TiO~~₂ ~~remain tight, while~~

inventories of certain other grades are adequate. Considering all of the foregoing factors, including rising raw material costs, and anticipating seasonal demand fluctuations as we enter the fourth calendar quarter, we expect selling prices to remain stable during the remainder of 2019.

Overall, we expect our sales in 2019 will be higher as compared to 2018, principally as a result of the favorable impact of higher expected sales volumes partially offset by the unfavorable impact of lower expected average selling prices (primarily during the first half of the year). In addition, we expect our income from operations in 2019 will be lower as compared to 2018, as the favorable impact of higher expected sales volumes would be more than offset by the unfavorable impact of lower expected average selling prices and higher raw material and other operating costs in 2019.

~~Due to the constraints of high capital costs and extended lead time associated with adding significant new TiO~~₂ ~~production capacity, especially for premium grades of TiO~~₂ ~~products produced from the chloride process, we believe increased and sustained profit margins will be necessary to financially justify major expansions of TiO~~₂ ~~production capacity required to meet expected future growth in demand. Substantial expansions of TiO~~₂ ~~production capacity generally take several years before such production becomes available to meet demand growth.~~

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

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. In addition to the impact of the operating, investing and financing cash flows discussed below, changes in the amount of cash, cash equivalents and restricted cash we report from period to period can be impacted by changes in currency exchange rates, since a portion of our cash, cash equivalents and restricted cash is held by our non-U.S. subsidiaries.

Cash used in operating activities was $9.8 million in the first three months of 2020 compared to cash provided by operating activities ~~was $123.8~~of $7.0 million in the first ~~nine~~three months of ~~2019 compared to $199.0 million in the first nine months of 2018.~~2019. This ~~$75.2~~$16.8 million decrease in the amount of cash provided was primarily due to the net effect of the following:

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

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

Our capital expenditures of ~~$35.4~~$16.0 million and ~~$34.2~~$15.3 million in the first ~~nine~~three months of ~~2018~~2019 and ~~2019,~~2020, respectively, were primarily to maintain and improve the cost effectiveness of our manufacturing facilities.

In addition, during the first ~~nine~~three months of ~~2019~~2020, we ~~loaned $10.9~~received $1.5 million ~~and subsequently collected $5.9 million under our unsecured revolving demand promissory note with Valhi.~~from an insurance settlement related to a property damage claim.

During the first ~~nine~~three months of 2019 and 2020, we paid quarterly dividends of $.18 per share to stockholders aggregating ~~$62.5 million. We paid quarterly dividends of $.17 per share to stockholders aggregating $59.1~~$20.9 million ~~during the first nine months of 2018.~~and $20.8 million, respectively.

In addition, during the first ~~nine~~three months of ~~2019,~~2020, we acquired ~~264,992~~122,489 shares of our common stock in market transactions for an aggregate purchase price of ~~$3.0~~$1.0 million.

Our North American and European revolvers and our Senior ~~Secured~~ Notes contain a number of covenants and restrictions which, among other things, restrict our ability to incur or guarantee additional debt, incur liens, pay dividends or make other restricted payments, or merge or consolidate with, or sell or transfer substantially all of our assets to, another entity, and contain other provisions and restrictive covenants customary in lending transactions of this type. Certain of our credit agreements contain provisions which could result in the acceleration of indebtedness prior to their stated maturity for reasons other than defaults for failure to comply with typical financial or payment covenants. For example, certain credit agreements allow the lender to accelerate the maturity of the indebtedness upon a change of control (as defined in the agreement) of the borrower. In addition, certain credit agreements could result in the acceleration of all or a portion of the indebtedness following a sale of assets outside the ordinary course of business. Our European revolving credit facility also requires the maintenance of certain financial ratios, and one of such requirements is based on the ratio of net debt to the last twelve months ~~EBITDA~~earnings before interest, income tax, depreciation and amortization expense (EBITDA) of the borrowers. The terms of all of our debt instruments (including revolving lines of credit for which we have no outstanding borrowings at ~~September 30, 2019)~~March 31, 2020) are discussed in Note 8 to our Consolidated Financial Statements included in our ~~2018~~2019 Annual Report. We are in compliance with all of our debt covenants at ~~September 30, 2019.~~March 31, 2020. We believe that we will be able to continue to comply with the financial covenants contained in our credit facilities through their maturity.

Our assets consist primarily of investments in operating subsidiaries, and our ability to service our obligations, including the Senior ~~Secured~~ Notes, depends in 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. Our Senior ~~Secured~~ Notes are collateralized by, among other things, a first priority lien on (i) 100% of the common stock or other ownership interests of each existing and future direct domestic subsidiary of KII and the guarantors, and (ii) 65% of the voting common stock or other ownership interests and 100% of the non-voting common stock or other ownership interests of each non-U.S. subsidiary that is directly owned by KII or any guarantor. Our North American revolving credit facility is collateralized by, among other things, a first priority lien on the borrower’s trade receivables and inventories. Our European revolving credit facility is collateralized by, among other things, the accounts receivable and inventories of the borrowers plus a limited pledge of all the other assets of the Belgian borrower.

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

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

We routinely evaluate our liquidity requirements, alternative uses of capital, capital needs and availability of resources in view of, among other things, our dividend policy, our debt service and capital expenditure requirements and estimated future operating cash flows. As a result of this process, we have in the past and may in the future seek to reduce, refinance, repurchase or restructure indebtedness, raise additional capital, repurchase shares of our common stock, modify our dividend policy, restructure ownership

interests, sell interests in our subsidiaries or other assets, or take a combination of these steps or other steps to manage our liquidity and capital resources. Such activities have in the past and may in the future involve related companies. In the normal course of our business, we may investigate, evaluate, discuss and engage in acquisition, joint venture, strategic relationship and other business combination opportunities in the TiO₂industry. 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 ~~September 30, 2019~~March 31, 2020 we had aggregate cash, cash equivalents and restricted cash on hand of ~~$386.9~~$342.9 million, of which ~~$165.2~~$109.5 million was held by non-U.S. subsidiaries. Following implementation of a territorial tax system under the 2017 Tax Act, repatriation of any cash and cash equivalents held by our non-U.S. subsidiaries would not be expected to result in any material income tax liability as a result of such repatriation. At ~~September 30, 2019,~~March 31, 2020, we had approximately ~~$118.4~~$117.2 million available for additional borrowing under our North American revolving credit facility. Based on the terms of our European revolving credit facility (including the net debt to EBITDA financial test discussed above) and the borrowers’ EBITDA over the last twelve months ended ~~September 30, 2019,~~March 31, 2020, the full €90.0 million amount of the credit facility ($~~98.5~~99.0 million) was available for borrowing at ~~September 30, 2019.~~March 31, 2020. We could borrow all available amounts under each of our credit facilities without violating our existing debt covenants. Based upon our expectation for the TiO₂industry and anticipated demands on cash resources, we expect to have sufficient liquidity to meet our short term obligations (defined as the twelve-month period ending ~~September 30, 2020)~~March 31, 2021) and our long-term obligations (defined as the five-year period ending ~~September 30, 2024,~~March 31, 2025, our time period for long-term budgeting). If actual developments differ from our expectations, our liquidity could be adversely affected.

We currently estimate that we will invest approximately ~~$75~~$60 million in capital expenditures primarily to maintain and improve our existing facilities during ~~2019,~~2020, including the ~~$34.2~~$15.3 million we have spent through ~~September 30, 2019.~~March 31, 2020.

At ~~September 30, 2019,~~March 31, 2020, we have ~~1,686,008~~1,563,519 shares available for repurchase under a stock repurchase program authorized by our board of directors. See Note ~~13.~~12 to our Condensed Consolidated Financial Statements.

~~Following the January 1, 2019 adoption of ASU 2016-02,~~ ~~Leases (Topic 842), we~~We do not have any off-balance sheet financing arrangements. ~~See Notes 5 and 16.~~

See Notes 1211 and 1413 to ~~the~~our Condensed Consolidated Financial Statements for a description of certain income tax contingencies and legal proceedings.

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 ~~2018~~2019 Annual Report. There have been no changes in our critical accounting policies during the first ~~nine~~three months of ~~2019.~~

We are exposed to market risk, including currency exchange rates, interest rates, equity security and raw material prices. There have been no material changes in these market risks since we filed our ~~2018~~2019 Annual Report. See also Part I, Item 7A. - “Quantitative and Qualitative Disclosure About Market Risk” in our ~~2018~~2019 Annual Report and Note 1514 to our Condensed Consolidated Financial Statements.

We maintain disclosure controls and procedures which, as defined in 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 “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 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 Robert D. Graham, our Vice Chairman of the Board, President and Chief Executive Officer and James W. Brown, our Senior Vice President and Chief Financial Officer, have evaluated the design and effectiveness of our disclosure controls and procedures as of ~~September 30, 2019.~~March 31, 2020. Based upon their evaluation, these executive officers have concluded that our disclosure controls and procedures are effective as of the date of such evaluation.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting which, 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 the 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 generally accepted accounting principles, and includes those policies and procedures that:

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 any financial statement schedules which would be 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.

There has been no change to our internal control over financial reporting during the quarter ended ~~September 30, 2019~~March 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Refer to Note 1413 to our Condensed Consolidated Financial Statements and our ~~2018~~2019 Annual Report for descriptions of certain legal proceedings.

For a discussion of the risk factors related to our businesses, refer to Part I, Item 1A, “Risk Factors,” in our ~~2018~~2019 Annual Report. There have been no material changes to such risk factors during the ~~nine~~three months ended ~~September 30, 2019.~~March 31, 2020.

The following table discloses certain information regarding the shares of our common stock we purchased during the ~~third~~first quarter of ~~2019~~2020 (we made no purchases ~~during July~~in January and ~~September 2019)~~February 2020). All of these purchases were made under the repurchase program in open market transactions. See Note ~~13.~~12 to our Condensed Consolidated Financial Statements.


Period	Total number of shares purchased (1)	Average price paid per share		Total number of shares purchased as part of the publicly announced plan	Maximum number of shares that may yet be purchased under the publicly announced plan	Total number of shares purchased (1)	Average price paid per share		Total number of shares purchased as part of the publicly announced plan	Maximum number of shares that may yet be purchased under the publicly announced plan
August 2019	154,689		$10.52	154,689	1,686,008
March 2020						122,489		$8.00	122,489	1,563,519

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.

		Page number
Part I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets - December 31, ~~2018; September 30, 2019~~2019; March 31, 2020 (unaudited)	3
	Condensed Consolidated Statements of Income (unaudited) - Three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 and ~~2019~~2020	5
	Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) - Three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 and ~~2019~~2020	6
	Condensed Consolidated Statements of Stockholders’ Equity (unaudited) - Three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 and ~~2019~~2020	7
	Condensed Consolidated Statements of Cash Flows (unaudited) - ~~Nine~~Three months ended ~~September 30, 2018~~March 31, 2019 and ~~2019~~2020	98
	Notes to Condensed Consolidated Financial Statements (unaudited)	1110
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		2017
Item 3.	Quantitative and Qualitative Disclosure About Market Risk		3024
Item 4.	Controls and Procedures		3025
Part II.	OTHER INFORMATION
Item 1.	Legal Proceedings		3126
Item 1A.	Risk Factors		3126
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3126
Item 6.	Exhibits	3126
Items 3, 4 and 5 of Part II are omitted because there is no information to report.

Years ending December 31,	Amount
	(In millions)
2019 (remainder of year)	$	2.0
2020		6.9
2021		6.1
2022		3.5
2023		2.3
2024 and thereafter		20.8
Total remaining lease payments		41.6
Less imputed interest		12.1
Total lease obligations		29.5
Less current obligations		6.4
Long term lease obligations	$	23.1

	December 31, ~~2017~~2018	~~September 30,~~March 31, ~~2018~~2019	December 31, ~~2018~~2019	~~September 30,~~March 31, ~~2019~~2020
DSO	~~63 days~~	~~74 days~~	76 days	~~71 days~~
~~DSI~~	6270 days	7771 days	69 days
DSI	113 days	5782 days	83 days	66 days


31.1		Certification

31.2		Certification

32.1		Certification

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.DEF		XBRL Taxonomy Extension Definition Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase

		Kronos Worldwide, Inc.
		(Registrant)



Date: ~~November 7, 2019~~May 6, 2020		/s/ James W. Brown
		James W. Brown
		Senior Vice President and Chief Financial Officer (Principal Financial Officer)



Date: ~~November 7, 2019~~May 6, 2020		/s/ Tim C. Hafer
		Tim C. Hafer
		Senior Vice President and Controller (Principal Accounting Officer)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock	KRO	NYSE


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

	Fair Value Measurements
			Quoted		Significant
			prices in		other		Significant
			active		observable		unobservable
			markets		inputs		inputs
	Total		(Level 1)		(Level 2)		(Level 3)
	(In millions)
Asset:
December 31, 2018 -
Noncurrent marketable securities (See Note 4)	$	3.4	$	3.4	$	-	$	-

September 30, 2019 -
Noncurrent marketable securities (See Note 4)	$	3.3	$	3.3	$	-	$	-

	Production Capacity Utilization Rates
	2018	2019
First quarter	95%	97%
Second quarter	97%	97%
Third quarter	92%	97%

	Nine months ended September 30,
	2018					2019
		(Dollars in millions)
Net sales	$	1,312.5		100	%	$	1,358.4			100	%
Cost of sales		846.8		65			1,051.9			77
Gross margin		465.7		35			306.5			23
Selling, general and administrative expense		173.7		13			172.5			13
Other operating income (expense):
Currency transactions, net		4.2		1			5.6			-
Other operating expense, net		(10.7	)	(1	)		(11.0	)		(1	)
Income from operations	$	285.5		22	%	$	128.6			9	%

									% Change
TiO₂ operating statistics:
Sales volumes*		385					445			16	%
Production volumes*		400					406			1	%
Percentage change in net sales:
TiO₂ product pricing										(7	)%
TiO₂ sales volumes										16
TiO₂ product mix/other										(3	)
Changes in currency exchange rates										(3	)
Total										3	%

Impact of changes in currency exchange rates Nine months ended September 30, 2019 vs September 30 2018

							Translation gains (losses) - impact of rate changes			Total currency impact 2019 vs 2018
	Transaction gains recognized
	2018		2019		Change
	(In millions)
Impact on:
Net sales	$	-	$	-	$	-	$	(41	)	$	(41	)
Income from operations		4		6		2		3			5