SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q


  X     QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR 15(d) OF THE  SECURITIES
- -----   EXCHANGE ACT OF 1934 - For the quarterly period ended June 30, 2003

                                       OR

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

                        Commission file number 333-100047


                           KRONOS INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


       Delaware                                                  22-2949593
- -------------------------------                           ----------------------
(State or other jurisdiction of                                (IRS Employer
incorporation or organization)                               Identification No.)


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

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

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

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Exchange Act Rule 12b-2). Yes        No   X
                                         ------    ------

The  Registrant is a wholly owned  subsidiary of NL  Industries,  Inc. (File No.
1-640) and meets the  conditions set forth in General  Instructions  H(1)(a) and
H(1)(b) of Form 10-Q for reduced disclosure format.



                   KRONOS INTERNATIONAL, INC. AND SUBSIDIARIES

                                      INDEX




                                                                            Page
                                                                            ----
PART I.        FINANCIAL INFORMATION

Item 1.        Financial Statements.

               Consolidated Balance Sheets - June 30, 2003
                 and December 31, 2002                                         3

               Consolidated Statements of Income - Three months and
                 six months ended June 30, 2003 and 2002                       5

               Consolidated Statements of Comprehensive Income - Three
                 months and six months ended June 30, 2003 and 2002            6

               Consolidated Statement of Common Stockholder's
                 Equity - Six months ended June 30, 2003                       7

               Consolidated Statements of Cash Flows - Six
                 months ended June 30, 2003 and 2002                           8

               Notes to Consolidated Financial Statements                     10

Item 2.        Management's Discussion and Analysis of Financial
                 Condition and Results of Operations                          19

Item 3.        Quantitative and Qualitative Disclosures About Market Risk     26

Item 4.        Controls and Procedures                                        26


PART II.       OTHER INFORMATION

Item 1.        Legal Proceedings                                              27

Item 6.        Exhibits and Reports on Form 8-K                               27


                                      -2-



                   KRONOS INTERNATIONAL, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                      (In thousands, except per share data)





                                                           June 30,    December 31,
              ASSETS                                         2003          2002
                                                           --------    ------------

                                                                  
Current assets:
    Cash and cash equivalents ........................     $ 15,797     $ 15,023
    Restricted cash equivalents ......................          956         --
    Accounts and notes receivable ....................      119,264       92,493
    Receivable from affiliates .......................        2,253          972
    Refundable income taxes ..........................       24,754        1,718
    Inventories ......................................      143,666      143,664
    Prepaid expenses .................................        2,154        5,266
    Deferred income taxes ............................          753          695
                                                           --------     --------

        Total current assets .........................      309,597      259,831
                                                           --------     --------

Other assets:
    Prepaid pension cost .............................       17,209       17,572
    Other ............................................       13,709       16,135
                                                           --------     --------

        Total other assets ...........................       30,918       33,707
                                                           --------     --------

Property and equipment:
    Land .............................................       28,199       25,487
    Buildings ........................................      125,787      115,812
    Machinery and equipment ..........................      578,009      536,835
    Mining properties ................................       63,114       65,296
    Construction in progress .........................       12,025        7,749
                                                           --------     --------
                                                            807,134      751,179
    Less accumulated depreciation and depletion ......      470,649      433,416
                                                           --------     --------

        Net property and equipment ...................      336,485      317,763
                                                           --------     --------

                                                           $677,000     $611,301
                                                           ========     ========


                                      -3-




                   KRONOS INTERNATIONAL, INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS (CONTINUED)

                      (In thousands, except per share data)




                                                       June 30,     December 31,
    LIABILITIES AND STOCKHOLDER'S EQUITY                 2003          2002
                                                     -----------    ------------

                                                              
Current liabilities:
    Current maturities of long-term debt .........   $       781    $     1,298
    Accounts payable and accrued liabilities .....       102,407         93,563
    Payable to affiliates ........................         6,479         21,430
    Income taxes .................................         5,570          5,845
    Deferred income taxes ........................         1,711          3,219
                                                     -----------    -----------

        Total current liabilities ................       116,948        125,355
                                                     -----------    -----------

Noncurrent liabilities:
    Long-term debt ...............................       360,444        324,608
    Deferred income taxes ........................        59,393         49,688
    Accrued pension cost .........................        21,270         21,486
    Other ........................................        13,932         12,933
                                                     -----------    -----------

        Total noncurrent liabilities .............       455,039        408,715
                                                     -----------    -----------

Minority interest ................................           465            383
                                                     -----------    -----------

Common stockholder's equity:
    Common stock - $100 par value; 100,000 shares
      authorized; 2,968 shares issued ............           297            297
    Additional paid-in capital ...................     1,944,185      1,944,185
    Accumulated deficit ..........................    (1,695,423)    (1,721,859)
    Accumulated other comprehensive loss:
        Currency translation adjustment ..........      (137,761)      (139,025)
        Pension liabilities ......................        (6,750)        (6,750)
                                                     -----------    -----------

        Total common stockholder's equity ........       104,548         76,848
                                                     -----------    -----------

                                                     $   677,000    $   611,301
                                                     ===========    ===========


Commitments and contingencies (Notes 10 and 11)


          See accompanying notes to consolidated financial statements.
                                       -4-



                   KRONOS INTERNATIONAL, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

                                 (In thousands)



                                         Three months ended         Six months ended
                                              June 30,                  June 30,
                                        ---------------------    ----------------------
                                          2003         2002        2003         2002
                                        ---------   ---------    ---------   ---------

                                                                 
Revenues and other income:
    Net sales .......................   $ 182,878   $ 146,145    $ 361,075   $ 285,714
    Interest income from affiliates .          30      10,262           30      19,157
    Other income, net ...............         738      19,135        2,770      18,930
                                        ---------   ---------    ---------   ---------

                                          183,646     175,542      363,875     323,801
                                        ---------   ---------    ---------   ---------

Costs and expenses:
    Cost of sales ...................     134,200     113,945      264,970     224,668
    Selling, general and
      administrative ................      21,712      16,733       42,207      33,401
    Interest ........................       8,226         997       16,136       1,697
    Interest expense to affiliates ..           6       8,925           70      18,699
                                        ---------   ---------    ---------   ---------

                                          164,144     140,600      323,383     278,465

        Income before income taxes
          and minority interest .....      19,502      34,942       40,492      45,336

Income tax benefit (expense) ........      17,199      (5,330)      10,987      (7,732)
                                        ---------   ---------    ---------   ---------

        Income before minority
          interest ..................      36,701      29,612       51,479      37,604

Minority interest ...................          19          17           43          27
                                        ---------   ---------    ---------   ---------

        Net income ..................      36,682      29,595       51,436      37,577

Dividends and accretion applicable to
  redeemable preferred stock and
  profit participation certificates .        --        (3,930)        --       (77,372)
                                        ---------   ---------    ---------   ---------

Net income (loss) available to common
  stock .............................   $  36,682   $  25,665    $  51,436   $ (39,795)
                                        =========   =========    =========   =========

          See accompanying notes to consolidated financial statements.
                                       -5-




                   KRONOS INTERNATIONAL, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                                 (In thousands)





                                           Three months ended   Six months ended
                                                June 30,             June 30,
                                           ------------------  -----------------
                                             2003      2002      2003      2002
                                           -------   -------   -------   -------

                                                             
Net income .............................   $36,682   $29,595   $51,436   $37,577
                                           -------   -------   -------   -------

Other comprehensive income:

    Currency translation adjustment ....     3,291    23,052     1,264    22,654
                                           -------   -------   -------   -------

        Total other comprehensive
          income .......................     3,291    23,052     1,264    22,654
                                           -------   -------   -------   -------

            Comprehensive income .......   $39,973   $52,647   $52,700   $60,231
                                           =======   =======   =======   =======


          See accompanying notes to consolidated financial statements.
                                       -6-






                   KRONOS INTERNATIONAL, INC. AND SUBSIDIARIES

              CONSOLIDATED STATEMENT OF COMMON STOCKHOLDER'S EQUITY

                         Six months ended June 30, 2003

                                 (In thousands)


                                                                              Accumulated other
                                                                              comprehensive loss
                                                                          --------------------------       Total
                                             Additional                    Currency                        common
                                 Common       paid-in      Accumulated    translation      Pension     stockholder's
                                  stock       capital        deficit      adjustment     liabilities       equity
                               -----------   -----------   -----------    -----------    -----------   -------------


                                                                                      
Balance at December 31, 2002   $       297   $ 1,944,185   $(1,721,859)   $  (139,025)   $    (6,750)   $    76,848

Net income .................          --            --          51,436           --             --           51,436
Dividends ..................          --            --         (25,000)          --             --          (25,000)
Other comprehensive loss ...          --            --            --            1,264           --            1,264
                               -----------   -----------   -----------    -----------    -----------    -----------


Balance at June 30, 2003 ...   $       297   $ 1,944,185   $(1,695,423)   $  (137,761)   $    (6,750)   $   104,548
                               ===========   ===========   ===========    ===========    ===========    ===========



          See accompanying notes to consolidated financial statements.
                                       -7-





                   KRONOS INTERNATIONAL, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                     Six months ended June 30, 2003 and 2002

                                 (In thousands)





                                                             2003        2002
                                                           --------    --------

                                                                 
Cash flows from operating activities:
    Net income .........................................   $ 51,436    $ 37,577
    Depreciation, depletion and amortization ...........     16,526      12,837
    Noncash currency transaction gain ..................       --       (13,121)
    Noncash interest income from affiliates ............       --       (18,254)
    Noncash interest expense to affiliates .............       --         5,521
    Noncash interest expense ...........................        948        --
    Deferred income taxes ..............................      6,826       5,096
    Minority interest ..................................         43          27
    Net  loss (gain) from disposition of property
      and equipment amortization .......................         44        (597)
    Pension, net .......................................     (1,954)     (2,001)
                                                           --------    --------

                                                             73,869      27,085

Change in assets and liabilities:
    Accounts and notes receivable ......................    (18,136)    (13,448)
    Insurance receivable ...............................       (124)     11,053
    Inventories ........................................     10,855      20,703
    Prepaid expenses ...................................      3,359        (759)
    Accounts payable and accrued liabilities ...........      2,598      (2,179)
    Income taxes .......................................    (23,086)     (2,987)
    Accounts with affiliates ...........................    (16,746)     (6,282)
    Other, net .........................................        253       2,590
                                                           --------    --------

        Net cash provided by operating activities ......     32,842      35,776
                                                           --------    --------

Cash flows from investing activities:
    Capital expenditures ...............................    (11,948)    (10,078)
    Change in restricted cash equivalents ..............     (1,005)     (1,554)
    Proceeds from disposition of property and equipment          47         832
                                                           --------    --------

        Net cash used by investing activities ..........    (12,906)    (10,800)
                                                           --------    --------


                                      -8-



                   KRONOS INTERNATIONAL, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                     Six months ended June 30, 2003 and 2002

                                 (In thousands)




                                                            2003         2002
                                                         ---------    ---------

                                                                
Cash flows from financing activities:
    Indebtedness:
        Borrowings ...................................   $  16,106    $ 319,275
        Principal payments ...........................     (11,615)     (53,688)
        Deferred financing costs .....................        --         (9,342)
    Repayments of loans from affiliates ..............        --       (301,432)
    Other capital transactions with affiliates, net ..        --          2,925
    Distribution to minority interest ................        --            (11)
    Dividends paid ...................................     (25,000)        --
                                                         ---------    ---------

    Net cash used by financing activities ............     (20,509)     (42,273)
                                                         ---------    ---------

Cash and cash equivalents:
    Net change from:
        Operating, investing and financing activities         (573)     (17,297)
        Currency translation .........................       1,347        2,965
                                                         ---------    ---------
                                                               774      (14,332)

    Balance at beginning of period ...................      15,023       30,343
                                                         ---------    ---------

    Balance at end of period .........................   $  15,797    $  16,011
                                                         =========    =========


Supplemental disclosures - cash paid for:
    Interest .........................................   $  16,321    $  19,835
    Income taxes .....................................       5,233        5,623




          See accompanying notes to consolidated financial statements.
                                       -9-








                   KRONOS INTERNATIONAL, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Organization and basis of presentation:

        Kronos  International,  Inc.  ("KII")  is  incorporated  in the state of
Delaware,  U.S.A., with its seat of management in Leverkusen,  Germany. KII is a
wholly owned subsidiary of Kronos, Inc. ("Kronos"), a wholly owned subsidiary of
NL Industries,  Inc. ("NL").  NL conducts its titanium dioxide pigments ("TiO2")
operations  through Kronos.  KII conducts Kronos'  European TiO2 operations.  At
June 30, 2003, Valhi,  Inc.,  ("Valhi") and its subsidiaries held  approximately
85% of NL's outstanding  common stock, and Contran  Corporation  ("Contran") and
its subsidiaries  held  approximately 90% of Valhi's  outstanding  common stock.
Substantially  all of  Contran's  outstanding  voting  stock  is held by  trusts
established for the benefit of certain  children and  grandchildren of Harold C.
Simmons, of which Mr. Simmons is sole trustee.  Mr. Simmons, the Chairman of the
Board and Chief Executive  Officer of NL, the Chief Executive Officer of KII and
the Chairman of the Board of each of Contran and Valhi, may be deemed to control
each of such companies and KII.

        KII's operations are conducted primarily through its German, Belgian and
Norwegian  subsidiaries  with three TiO2  plants in  Germany,  one TiO2 plant in
Belgium and one TiO2 plant and an ilmenite ore mining  operation in Norway.  KII
also operates TiO2 sales and distribution facilities in England, France, Denmark
and the Netherlands.  Prior to April 30, 2002, KII also conducted  operations in
Canada  through  Kronos  Canada,  Inc.  ("KC"),  its  wholly  owned  subsidiary.
Effective  April  30,  2002,  in  anticipation  of a  proposed  debt  securities
offering,  KII sold  100% of KC's  capital  stock to Kronos  in  exchange  for a
promissory  note  receivable in the amount of $217 million  bearing  interest of
7.87% per annum with a maturity  date of April 30, 2012.  KII has  accounted for
the  disposition  of KC as a change in  accounting  entity.  Accordingly,  KII's
consolidated  financial  statements have been retroactively  restated to exclude
the results of operations and cash flows of KC for all periods presented.  KII's
cash dividends  received from KC and cash capital  contributions  to KC prior to
April  30,  2002 are  reflected  as part of  "other  capital  transactions  with
affiliates, net" in the accompanying consolidated statement of cash flows.

        The    consolidated    balance   sheet   of   KII   and   its   majority
owned-subsidiaries  (collectively,  the "Company") at December 31, 2002 has been
condensed from the Company's audited  consolidated  financial statements at that
date.  The  consolidated  balance  sheet at June 30,  2003 and the  consolidated
statements of income,  comprehensive income, stockholder's equity and cash flows
for the interim  periods  ended June 30, 2003 and 2002 have been prepared by the
Company without audit. In the opinion of management all adjustments,  consisting
only  of  normal  recurring   adjustments,   necessary  to  present  fairly  the
consolidated financial position,  results of operations and cash flows have been
made.  The results of  operations  for the interim  periods are not  necessarily
indicative of the operating results for a full year or of future operations.

        Certain  information  and  footnote  disclosures  normally  included  in
financial  statements  prepared in accordance with generally accepted accounting
principles  in the  U.S.  ("GAAP")  have  been  condensed  or  omitted.  Certain
prior-year  amounts  have been  reclassified  to  conform  to the  current  year
presentation.  The accompanying consolidated financial statements should be read


                                      -10-


in  conjunction  with the  consolidated  financial  statements  included  in the
Company's  Annual Report on Form 10-K for the year ended  December 31, 2002 (the
"2002 Annual Report").

        While the  Company has not issued any stock  options to  purchase  KII's
common stock,  certain  employees of the Company have been granted options by NL
to purchase NL common stock. The Company has elected the disclosure  alternative
prescribed  by  Statement of Financial  Accounting  Standards  ("SFAS") No. 123,
"Accounting  for  Stock-Based   Compensation,"  as  amended  by  SFAS  No.  148,
"Accounting for Stock-Based  Compensation - Transition and  Disclosure,"  and to
account  for its  stock-based  employee  compensation  related to these NL stock
options in accordance with Accounting  Principles Board Opinion ("APBO") No. 25,
"Accounting  for Stock Issued to  Employees,"  and its various  interpretations.
Under APBO No. 25, no compensation cost is generally  recognized for fixed stock
options in which the  exercise  price is not less than the  market  price on the
grant  date.  During the fourth  quarter of 2002,  NL,  including  the  Company,
commenced accounting for its stock options, including options granted to Company
employees,  using the variable  accounting method,  which requires the intrinsic
value of all unexercised  stock options  (including those with an exercise price
at least  equal to the  market  price on the date of grant) to be  accrued as an
expense, with subsequent increases (decreases) in NL's market price resulting in
additional compensation expense (income). Net compensation expense recognized by
the Company in accordance  with APBO No. 25 in the second quarter and first half
of 2003  was $.2  million  and  nil,  respectively,  and net  compensation  cost
recognized  by the Company in the second  quarter and first half of 2002 was nil
for both  periods.  The  Company  pays NL when stock  options are  exercised  by
employees  of the  Company  in an  amount  equal to the  intrinsic  value of the
options on the date of exercise.

        The  following  table  illustrates  the  effect  on  net  income  (loss)
available to common stock if the Company had applied the fair value  recognition
provisions of SFAS No. 123 to stock-based employee compensation.



                                           Three months ended       Six months ended
                                                June 30,                June 30,
                                          --------------------    --------------------
                                            2003        2002        2003        2002
                                          --------    --------    --------    --------
                                                          (In thousands)

                                                                  
Net income (loss) available to common
  stock - as reported .................   $ 36,682    $ 25,665    $ 51,436    $(39,795)
Add:  Stock-based compensation cost,
  net of tax, included in reported net
  income ..............................        180        --          --          --
Deduct:  Stock-based compensation cost,
  net of tax, determined under fair
  value based method for all awards ...        (36)        (77)        (70)       (155)
                                          --------    --------    --------    --------

Net income (loss) available to common
  stock - pro forma ...................   $ 36,826    $ 25,588    $ 51,366    $(39,950)
                                          ========    ========    ========    ========


        The Company  adopted  SFAS No.  143,  "Accounting  for Asset  Retirement
Obligations," effective January 1, 2003. Under SFAS No. 143, the fair value of a
liability for an asset retirement obligation covered under the scope of SFAS No.
143 is  recognized  in the period in which the  liability is  incurred,  with an
offsetting increase in the carrying amount of the related long-lived asset. Over
time, the liability is accreted to its future value, and the capitalized cost is

                                      -11-


depreciated  over the useful life of the related asset.  Upon  settlement of the
liability,  an entity would either settle the obligation for its recorded amount
or incur a gain or loss upon settlement.

        Under the transition provisions of SFAS No. 143, at the date of adoption
on  January  1,  2003  the  Company  recognized  (i) an  asset  retirement  cost
capitalized  as an increase to the  carrying  value of its  property,  plant and
equipment,  (ii)  accumulated  depreciation on such capitalized cost and (iii) a
liability  for the  asset  retirement  obligation.  Amounts  resulting  from the
initial application of SFAS No. 143 were measured using information, assumptions
and interest rates all as of January 1, 2003. The amount recognized as the asset
retirement cost was measured as of the date the asset retirement  obligation was
incurred.   Cumulative  accretion  on  the  asset  retirement  obligation,   and
accumulated  depreciation on the asset  retirement cost, were recognized for the
time period from the date the asset  retirement  cost and  liability  would have
been  recognized  had the  provisions of SFAS No. 143 been in effect at the date
the liability was incurred,  through January 1, 2003. The difference between the
amounts  recognized as described above and the associated  amounts recognized in
the  Company's  balance  sheet  as of  December  31,  2002 was  recognized  as a
cumulative  effect of change in accounting  principle as of January 1, 2003. The
effect of  adopting  SFAS No. 143 as of January 1, 2003,  as  summarized  in the
table  below,  did not have a  material  effect  on the  Company's  consolidated
financial  position,  results of operations or liquidity,  and is not separately
recognized in the accompanying statement of income.



                                                                          Amount
                                                                       -------------
                                                                       (In millions)

                                                                        
Increase in carrying value of net property,
  plant and equipment:
    Cost ...............................................................   $ .4
    Accumulated depreciation ...........................................    (.1)
Decrease  in  liabilities  previously  accrued
  for  closure  and  post  closure activities ..........................     .3
Asset retirement obligation recognized .................................    (.6)
                                                                           ----

        Net impact .....................................................   $--
                                                                           ====


        At June 30, 2003, the asset retirement  obligation was approximately $.7
million and was included in other noncurrent  liabilities.  Accretion expense on
the asset retirement obligation during the first six months of 2003, included in
cost of sales, was nil. If the Company had adopted SFAS No. 143 as of January 1,
2002, the asset retirement  obligation would have been approximately $.5 million
at  January  1, 2002 and $.6  million  at June 30,  2002,  and the effect on the
Company's  reported  net income for the six months ended June 30, 2002 would not
have been material.

                                      -12-


Note 2 - Business segment information:

        The Company's operations are conducted in one operating business segment
- - activities associated with the production and sale of TiO2.




                                           Three months ended        Six months ended
                                                June 30,                 June 30,
                                         ----------------------    ----------------------
                                            2003         2002        2003         2002
                                         ---------    ---------    ---------    ---------
                                                          (In thousands)

                                                                    
Net sales ............................   $ 182,878    $ 146,145    $ 361,075    $ 285,714
Other income , excluding corporate ...         738        1,008        2,770        3,091
                                         ---------    ---------    ---------    ---------
                                           183,616      147,153      363,845      288,805

Cost of sales ........................     134,200      113,945      264,970      224,668
Selling, general and administrative,
  excluding corporate ................      21,712       16,733       42,207       33,401
                                         ---------    ---------    ---------    ---------

        Operating income .............      27,704       16,475       56,668       30,736

General corporate income (expense):
    Currency transaction loss, net ...        --         18,127         --         15,839
    Interest expense .................      (8,226)        (997)     (16,136)      (1,697)
    Interest expense to affiliates ...          (6)      (8,925)         (70)     (18,699)
    Interest income from affiliates ..          30       10,262           30       19,157
                                         ---------    ---------    ---------    ---------

        Income before income taxes and
          minority interest ..........   $  19,502    $  34,942    $  40,492    $  45,336
                                         =========    =========    =========    =========


Note 3 - Accounts and notes receivable:



                                                       June 30,       December 31,
                                                         2003             2002
                                                      ---------       ------------
                                                            (In thousands)

                                                                
Trade receivables ..............................      $ 114,803       $  83,929
Insurance claims receivable ....................            436             312
Recoverable VAT and other receivables ..........          5,893          10,159
Allowance for doubtful accounts ................         (1,868)         (1,907)
                                                      ---------       ---------

                                                      $ 119,264       $  92,493
                                                      =========       =========



                                      -13-


Note 4 - Inventories:



                                                     June 30,       December 31,
                                                       2003            2002
                                                     --------       ------------
                                                          (In thousands)

                                                                  
Raw materials ............................           $ 28,808           $ 36,960
Work in process ..........................             14,662             14,009
Finished products ........................             73,120             67,469
Supplies .................................             27,076             25,226
                                                     --------           --------

                                                     $143,666           $143,664
                                                     ========           ========


Note 5 - Other noncurrent assets:



                                                           June 30,    December 31,
                                                             2003        2002
                                                           --------    ------------
                                                               (In thousands)

                                                                   
Deferred financing costs ...........................       $ 9,890       $ 9,879
Restricted marketable debt securities ..............         1,968         2,492
Unrecognized net pension obligations ...............           320           292
Other ..............................................         1,531         3,472
                                                           -------       -------

                                                           $13,709       $16,135
                                                           =======       =======


Note 6 - Accounts payable and accrued liabilities:



                                                      June 30,        December 31,
                                                        2003             2002
                                                      --------        ------------
                                                            (In thousands)

                                                                  
Accounts payable ...........................          $ 50,203          $ 49,630
                                                      --------          --------
Accrued liabilities:
    Employee benefits ......................            21,280            20,131
    Interest ...............................               228               217
    Other ..................................            30,696            23,585
                                                      --------          --------

                                                        52,204            43,933
                                                      --------          --------

                                                      $102,407          $ 93,563
                                                      ========          ========


                                      -14-


Note 7 - Long-term debt:



                                                                 June 30,   December 31,
                                                                   2003        2002
                                                                 --------   ------------
                                                                     (In thousands)

                                                                      
8.875% Senior Secured Notes,(euro)285 million principal amount   $325,784   $296,942
Revolving credit facility ....................................     34,293     27,077
Other ........................................................      1,148      1,887
                                                                 --------   --------
                                                                  361,225    325,906
Less current maturities ......................................        781      1,298
                                                                 --------   --------

                                                                 $360,444   $324,608
                                                                 ========   ========


        In March 2003 the Company  borrowed  (euro)15.0  million  ($16.1 million
when  borrowed)  and in April 2003 the  Company  repaid  NOK 80  million  ($11.0
million when repaid) under the revolving credit facility.

Note 8 - Other noncurrent liabilities:



                                                         June 30,       December 31,
                                                           2003             2002
                                                         --------       ------------
                                                               (In thousands)

                                                                   
Insurance claims and expenses ..................         $   540         $   889
Employee benefits ..............................           4,399           4,025
Environmental costs ............................           6,298           5,921
Other ..........................................           2,695           2,098
                                                         -------         -------

                                                         $13,932         $12,933
                                                         =======         =======


Note 9 - Other income (loss), net:



                                         Three months ended      Six months ended
                                               June 30,                June 30,
                                        --------------------    --------------------
                                          2003        2002        2003        2002
                                        --------    --------    --------    --------
                                                      (In thousands)

                                                                
Currency transactions, net ..........   $ (1,105)   $ 16,589    $ (1,011)   $ 14,921
Royalty income ......................      1,628       1,603       3,375       2,890
Trade interest income ...............        188         326         338         539
Disposition of property and equipment         18         644         (44)        597
Other, net ..........................          9         (27)        112         (17)
                                        --------    --------    --------    --------

                                        $    738    $ 19,135    $  2,770    $ 18,930
                                        ========    ========    ========    ========


        Included in currency  transactions,  net in the second quarter and first
half of 2002 are $15.4 million and $13.1 million, respectively, of noncash gains
associated  with the  Company's  dollar-denominated  notes payable to affiliates
which were repaid in June 2002.

        The Company  receives  royalty  income from KC for use of certain of the
Company's intellectual property.

                                      -15-




Note 10 - Income taxes:

        The difference between the provision for income tax expense attributable
to income before income taxes and minority interest and the amount that would be
expected using the U.S.  federal  statutory  income tax rate of 35% is presented
below.



                                                              Six months ended
                                                                  June 30,
                                                           --------------------
                                                             2003        2002
                                                           --------    --------
                                                               (In thousands)

                                                                 
Expected tax expense ...................................   $ 14,172    $ 15,868
Non-U.S. tax rates .....................................       (478)       (677)
Valuation allowance ....................................       (106)     (1,783)
Refund of prior-year German taxes ......................    (24,564)       --
Currency transaction gains for which no income taxes
  were provided ........................................       --        (4,592)
Other, net .............................................        (11)     (1,084)
                                                           --------    --------

        Income tax (benefit) expense ...................   $(10,987)   $  7,732
                                                           ========    ========


        Certain  of the  Company's  tax  returns in various  U.S.  and  non-U.S.
jurisdictions  are being  examined  and tax  authorities  have  proposed  or may
propose tax deficiencies, including penalties and interest.

        The Company has received  preliminary tax assessments for the years 1991
to 1997 from the Belgian tax authorities  proposing tax deficiencies,  including
related interest, of approximately (euro)10.1 million ($11.6 million at June 30,
2003).  The Company has filed protests to the  assessments  with respect to such
years.  The  Company is in  discussions  with the Belgian  tax  authorities  and
believes that a significant  portion of the  assessments  is without  merit.  In
April 2003 the Company received a notification  from the Belgian tax authorities
of their  intent to assess a tax  deficiency  related to 1999.  The  anticipated
assessment,  including interest,  is expected to approximate  (euro)13.1 million
($15.0 million at June 30, 2003). The Company  believes the proposed  assessment
related to 1999 is without  merit and in April 2003 filed a written  response in
opposition to the notification of intent to assess.

        In 2002,  the Company  received a  notification  from the  Norwegian tax
authorities of their intent to assess tax deficiencies of approximately NOK 12.2
million  ($1.7  million at June 30,  2003)  relating to 1998 through  2000.  The
Company has objected to this proposed  assessment  in a written  response to the
Norwegian tax authorities.

        In the first  quarter of 2003,  the Company  was  notified by the German
Federal  Fiscal Court (the  "Court")  that the Court had ruled in the  Company's
favor  concerning a claim for refund suit in which the Company sought refunds of
prior taxes paid during the periods  1990  through  1997.  The Company has filed
certain amended German tax returns and expects to file additional amended German
tax  returns  claiming  such  refunds  for all  years  affected  by the  Court's
decision,  which is  expected  to  result  in an  estimated  refund of taxes and
interest  of  approximately  $40  million.  Receipt of the German tax refunds is
subject to satisfaction of various procedural  requirements,  including a review
and acceptance of the amended German tax returns by the German tax  authorities.
Certain of these procedural requirements were satisfied in the second quarter of
2003 with respect to a portion of the refund claim,  and in July 2003 the German

                                      -16-



tax authorities  refunded the Company a portion of the total anticipated refund.
The portion  received in July was  (euro)21.5  million ($24.6 million using June
30, 2003  exchange  rates).  The Company  has  reflected  this tax refund in its
second  quarter 2003 results of operations.  The Company  expects to receive the
remaining  refunds  over the next six to nine  months,  a  portion  of which may
result in an additional income tax benefit.

        No  assurance  can be  given  that the  Company's  tax  matters  will be
favorably resolved due to the inherent  uncertainties  involved in court and tax
proceedings.  The Company  believes that it has provided  adequate  accruals for
additional taxes and related  interest expense which may ultimately  result from
all such  examinations  and  believes  that  the  ultimate  disposition  of such
examinations  should  not  have a  material  adverse  effect  on  the  Company's
consolidated financial position, results of operations or liquidity.

        At June 30, 2003 the Company had the  equivalent of  approximately  $470
million of income tax loss  carryforwards  in Germany with no  expiration  date.
However,  the Company has provided a deferred tax  valuation  allowance  against
substantially  all of these  income tax loss  carryforwards  because the Company
currently  believes  they do not  meet  the  "more-likely-than-not"  recognition
criteria. In 2002, the German federal government proposed certain changes to its
income tax law, including certain changes that would have imposed limitations on
the annual  utilization  of income tax loss  carryforwards.  Such  proposal,  if
enacted,  would have significantly affected the Company's 2003 and future income
tax expense and cash tax payments.  In April 2003 the German federal  government
passed a new tax law which  does not  contain  the  provision  that  would  have
restricted  the  utilization  of  tax  loss  carryforwards.   Furthermore,   the
provisions  contained in the new law are not expected to  materially  impact the
Company's income tax expense or cash tax payments. On August 1, 2003, the German
federal  government  proposed new tax law amendments  that,  among other things,
reintroduced  the  limitations  on the  annual  utilization  of income  tax loss
carryforwards, to become effective in 2004. There can be no assurance that these
proposed law amendments will be enacted and, if enacted,  when they would become
effective. Such proposal, if enacted as proposed, would significantly affect the
Company's future income tax expense and cash tax payments.

        At June 30, 2003,  the Company had net deferred tax  liabilities  of $60
million. The Company operates in numerous tax jurisdictions, in certain of which
it has temporary  differences that net to deferred tax assets (before  valuation
allowance).  The Company has provided a deferred tax valuation allowance of $166
million at June 30, 2003,  principally related to Germany,  partially offsetting
deferred  tax  assets  which the  Company  believes  do not  currently  meet the
"more-likely-than-not" recognition criteria.

Note 11 - Commitments and contingencies:

  Environmental, product liability and litigation matters

        The Company's  operations are governed by various foreign  environmental
laws and  regulations.  Certain of the  Company's  businesses  are and have been
engaged in the handling,  manufacture or use of substances or compounds that may
be considered toxic or hazardous within the meaning of applicable  environmental
laws. As with other companies  engaged in similar  businesses,  certain past and
current  operations  and  products of the Company  have the  potential  to cause
environmental  or other  damage.  The Company has  implemented  and continues to
implement  various  policies and programs in an effort to minimize  these risks.
The policy of the  Company is to maintain  compliance  with  applicable  foreign
environmental  laws and  regulations  at all of its  facilities and to strive to

                                      -17-



improve its  environmental  performance.  It is possible that future  changes in
environmental  laws  and  enforcement   policies  thereunder  could  affect  the
Company's production, handling, use, storage,  transportation,  sale or disposal
of such  substances  as well as  adversely  affect  the  Company's  consolidated
financial position, results of operations or liquidity.

        The  Company's   production   facilities  operate  in  an  environmental
regulatory  framework in which  governmental  authorities  typically are granted
broad discretionary  powers which allow them to issue operating permits required
for the  plants to  operate.  The  Company  believes  all of its  plants  are in
substantial compliance with applicable environmental laws.

        While the laws regulating  operations of industrial facilities in Europe
vary from  country to  country,  a common  regulatory  base is  provided  by the
European Union (the "EU").  The Company's  German and Belgian  subsidiaries  are
members of the EU and follow its  initiatives.  Norway,  although  not a member,
generally  patterns  its  environmental  regulatory  actions  after the EU.  The
Company  believes  that  it has  all  required  permits  and  is in  substantial
compliance with applicable EU  requirements,  including EU Directive  92/112/EEC
regarding  establishment of procedures for reduction and eventual elimination of
pollution caused by waste from the TiO2 industry.

        At all of the Company's sulfate plant facilities other than Fredrikstad,
Norway,  the Company  recycles  spent acid either  through  contracts with third
parties or using the Company's own facilities. At its Fredrikstad, Norway plant,
the Company ships its spent acid to a third party  location  where it is treated
and  disposed.  The Company has a contract  with a third party to treat  certain
by-products of its German sulfate-process plants. Either party may terminate the
contract  after giving four years advance  notice with regard to its  Nordenham,
Germany plant.  Under certain  circumstances,  Kronos may terminate the contract
after giving six months notice with respect to treatment of by-products from the
Leverkusen, Germany plant.

        The Company  landfills  waste  generated at its  Nordenham,  Germany and
Langerbrugge,  Belgium plants, and mine tailings waste generated at its facility
in Norway. The Company maintains reserves,  as required under GAAP, to cover the
anticipated cost of closure of these  landfills,  which were  approximately  $.5
million as of June 30, 2003.  These  requirements  for landfills are expected to
increase in the future in view of recently adopted EU requirements.

        The Company is responsible  for certain  closure costs at landfills used
and formerly  used by its  Leverkusen,  Germany  TiO2 plants.  The Company has a
reserve of  approximately  $6 million  related to such  landfills as of June 30,
2003.

        The Company's  Belgian  subsidiary and various of its Belgian  employees
are the  subject of an  investigation  by  Belgian  authorities  relating  to an
accident resulting in two fatalities that occurred in its Langerbrugge,  Belgium
facility in October 2000. The investigation stage, which could ultimately result
in civil and criminal  sanctions against the Company,  was completed in 2002. In
May 2003 the Belgian authorities  referred the proceedings against the Company's
Belgian  subsidiary  and certain of its Belgian  employees to the criminal court
for trial. The matter has been set for trial in October 2003.

        The   Company  is  also   involved  in  various   other   environmental,
contractual,  product liability and other claims and disputes  incidental to its
business.  The Company  currently  believes  the  disposition  of all claims and

                                      -18-


disputes,  individually or in the aggregate,  should not have a material adverse
effect on the Company's consolidated financial condition,  results of operations
or liquidity.

        For  descriptions  of certain  other legal  proceedings,  environmental,
income tax and other  commitments  and  contingencies  related  to the  Company,
reference is made to (i) the 2002 Annual  Report,  (ii) the Company's  Quarterly
Report on Form 10-Q for the quarter ended March 31, 2003, and (iii) Note 10.


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


RESULTS OF OPERATIONS



                               Three months ended       %       Six months ended        %
                                   June 30,          Change        June 30,          Change
                               ------------------   ---------   ----------------    --------
                                 2003      2002                  2003     2002
                                ------    ------                ------   ------
                                     (In millions, except percentages and metric tons)

                                                                     
Net sales and operating
  income
    Net sales ...............   $182.9    $146.1      +25%     $361.1    $285.7        +26%
    Operating income ........   $ 27.7    $ 16.5      +68%     $ 56.7    $ 30.7        +85%
    Operating income margin
      percentage ............      15%       11%                  16%       11%

TiO2 operating statistics
    Percent change in
      average selling price
      (in billing currencies)                          +9%                              +9%
    Sales volume (metric tons
      in thousands) .........     78.6      78.5       N/C      158.0     157.7         N/C
    Production volume (metric
      tons in thousands) ....     79.8      74.3       +7%      158.2     146.5         +8%



        The Company's  operating  income in the second quarter of 2003 was $27.7
million  compared  with $16.5  million in the  second  quarter of 2002.  The 68%
increase in operating  income was primarily due to higher average selling prices
and higher production volume. Compared with the first quarter of 2003, operating
income in the second quarter of 2003 decreased $1.3 million, or 4%.

        Operating  income  in the  first  half of 2003  increased  85% to  $56.7
million  compared with $30.7 million in the first half of 2002  primarily due to
9% higher  average  selling  prices in billing  currencies  (which  excludes the
effects of foreign currency translation) and 8% higher production volume.

        The Company's  average  selling price in billing  currencies  during the
second  quarter  of 2003 was 9%  higher  than  the  second  quarter  of 2002 and
comparable  to the first quarter of 2003.  The average  selling price in billing
currencies in June 2003 was  comparable to the average  selling price in billing
currencies for the second  quarter of 2003.  The Company  expects higher average
selling  prices in billing  currencies  for full-year 2003 compared to full-year
2002.  The Company  discloses  percentage  changes in its average  TiO2  selling
prices in billing  currencies  so that such changes can be analyzed  without the

                                      -19-


impact of changes in  foreign  currency  exchange  rates,  thereby  facilitating
period-to-period  comparisons.  Generally,  when the U.S. dollar  strengthens or
weakens  against other  currencies,  the  percentage  change in average  selling
prices in billing  currencies will be higher or lower,  respectively,  than such
percentage  changes would be using actual exchange rates  prevailing  during the
respective  periods.  When  translated from billing  currencies to U.S.  dollars
using currency  exchange rates  prevailing  during the respective  periods,  the
Company's  second-quarter  2003 average  selling  price in U.S.  dollars was 28%
higher than in the second  quarter of 2002 and 3% higher than the first  quarter
of 2003. The average selling price expressed in U.S. dollars in June 2003 was 4%
higher  than the  average  selling  price for the second  quarter  of 2003.  The
average selling price  expressed in U.S.  dollars for the first half of 2003 was
27% higher than the first half of 2002.


        The Company's second quarter 2003 sales volume of 78,600 metric tons was
comparable to the second quarter of 2002 and decreased 1% from the first quarter
of 2003.  Sales  volume in the first  half of 2003 of  158,000  metric  tons was
comparable  to the first half of 2002.  The Company  expects sales volume in the
second half of 2003 to be lower than the first half of 2003. The Company's sales
volume for full-year 2003 should be comparable to full-year 2002.

        The Company's  second  quarter 2003  production  volume of 79,800 metric
tons was 7% higher than the second  quarter of 2002 and 2% higher than the first
quarter of 2003,  respectively.  Operating  rates in the second  quarter of 2003
were at near full capacity  compared with 95% of capacity in the second  quarter
of 2002 and near full capacity in the first quarter of 2003.  Production  volume
in the first half of 2003 was 158,200 metric tons. The Company  anticipates  its
production volume for full-year 2003 will be higher than that of full-year 2002.
Finished  goods  inventory  levels  at the  end of the  second  quarter  of 2003
increased 3% from March 2003 levels and represented under two months of sales.

        The  Company  expects its TiO2  operating  income in 2003 will be higher
than  2002,  primarily  due to higher  average  TiO2  selling  prices in billing
currencies and higher production volume. The Company's TiO2 production volume in
2003 is  expected to be higher than the  Company's  2003 TiO2 sales  volume with
finished goods inventories rising modestly. The Company's expectations as to the
future prospects of the Company and the TiO2 industry are based upon a number of
factors  beyond  the  Company's  control,  including  worldwide  growth of gross
domestic    product,    competition   in   the   marketplace,    unexpected   or
earlier-than-expected  capacity additions and technological  advances. If actual
developments  differ from the Company's  expectations,  the Company's results of
operations could be unfavorably affected.

        Compared to the year-earlier  periods,  cost of sales as a percentage of
net sales  decreased in the second  quarter and first half of 2003 primarily due
to higher  average  selling prices in billing  currencies and higher  production
volume.  Excluding the effects of foreign currency translation,  which increased
the Company's  expenses in the second quarter and first half of 2003 compared to
year-earlier   periods,  the  Company's  selling,   general  and  administrative
expenses,  excluding corporate expenses, in the second quarter and first half of
2003 were comparable to the second quarter and first half of 2002.

        A  significant  amount of the Company's  sales and  operating  costs are
denominated in currencies other than the U.S. dollar.  Fluctuations in the value
of the U.S. dollar relative to other currencies,  primarily a weaker U.S. dollar
compared  to the euro in the second  quarter  and first half of 2003  versus the
year-earlier  periods  increased the dollar value of sales in the second quarter
of 2003 by a net $27.3 million and $53.5 million, respectively, when compared to
the year-earlier  periods. The effect of the weaker U.S. dollar on the Company's

                                      -20-


operating costs that are not  denominated in U.S.  dollars  increased  operating
costs in the second quarter and first half of 2003 compared to the  year-earlier
periods. In addition,  sales to export markets are typically denominated in U.S.
dollars  and a weaker  U.S.  dollar  decreases  margins  on  these  sales at the
Company's  non-U.S.  subsidiaries.  In addition,  the Company  revalued  certain
export trade  receivables and certain  monetary assets held by its  subsidiaries
whose  functional  currency is not the U.S.  dollar and based on the weaker U.S.
dollar reported a revaluation loss in the second quarter and first half of 2003.
The net impact of currency exchange rate fluctuations increased operating income
by $2.5 million in both the second  quarter and first half of 2003 when compared
to the year-earlier periods.

  General corporate

        The following  table sets forth certain  information  regarding  general
corporate income (expense).



                          Three months ended                   Six months ended
                               June 30,         Difference         June 30,         Difference
                          -------------------   -----------   -------------------   ----------
                             2003        2002                    2003       2002
                          -------     -------                 -------     -------
                                                (In millions)

                                                                    
Currency transaction
  gain, net ........      $--         $  18.1     $ (18.1)    $--         $  15.8     $ (15.8)
Interest expense ...         (8.2)       (1.0)       (7.2)      (16.1)       (1.7)      (14.4)
Interest expense to
  affiliates .......       --            (9.0)        9.0        (0.1)      (18.7)       18.6
Interest income from
  affiliates .......       --            10.3       (10.3)     --            19.2       (19.2)
                          -------     -------     -------     -------     -------     -------

                          $  (8.2)    $  18.4     $ (26.6)    $ (16.2)    $  14.6     $ (30.8)
                          =======     =======     =======     =======     =======     =======


        Net corporate currency transaction gains in the second quarter and first
half of 2002  related  primarily  to the  Company's  dollar-denominated,  11.75%
Second-tier Senior Mirror Note payable to Kronos, Inc., which was repaid in June
2002 using a portion of the proceeds from the Notes offering. As a result of the
repayment of this loan from affiliate, the Company does not expect any corporate
currency transaction gains or losses in 2003.

        Interest  expense to third parties in the second  quarter and first half
of 2003 increased $7.2 million and $14.4 million, respectively,  from the second
quarter and first half of 2002  primarily  due to higher  levels of  outstanding
debt and associated currency effects.  Interest expense to affiliates  decreased
$9.0 million and $18.6 million, respectively,  from the second quarter and first
half of 2002 due to the  repayment of loans from  affiliates  in June 2002 using
proceeds from the Company's (euro)285 million Senior Secured Notes offering (the
"Notes").  The Company expects its aggregate interest expense for full-year 2003
to  be  higher  than   full-year  2002  due  to  higher  levels  of  outstanding
indebtedness, offset in part by the effect of lower average rates on outstanding
borrowings.  As a result of the  repayment of the loans from  affiliates in June
2002,  the  Company  does not expect a material  amount of  interest  expense to
affiliates in 2003.

        Interest  income  from  affiliates  decreased  $10.3  million  and $19.2
million, respectively, from the second quarter and first half of 2002 due to the
redemption and  extinguishment  of all notes  receivable from affiliates in July

                                      -21-


2002.  As a result of the  redemption  and  extinguishment  of  affiliate  notes
receivable,  the Company  does not expect a material  amount of interest  income
from affiliates in 2003.

  Provision for income taxes

        The Company  recognized a $24.6 million income tax benefit in the second
quarter of 2003 related to the previously reported favorable German court ruling
concerning  the  Company's  claim for refund suit.  Based on amended  German tax
returns  filed by the  Company  in the second  quarter  of 2003,  the German tax
authorities  refunded to the Company  (euro)21.5  million ($24.6 million at June
30, 2003 exchange rates) in early July 2003. The Company's  provision for income
taxes for the first half of 2002 differs from the  normally  expected  statutory
rate  due  principally  to  the  utilization  of  certain  tax  attributes  that
previously did not meet the  "more-likely-not"  recognition  criteria,  currency
transaction gains, net, on which no income taxes were provided and adjustment to
certain  other  deferred  tax  liabilities.  See  Note  10 to  the  Consolidated
Financial Statements.

  Recently adopted accounting principles

        As described in Note 1 in the  Consolidated  Financial  Statements,  the
Company adopted Statement of Financial Accounting Standards No. 143, "Accounting
for Asset Retirement Obligations," effective January 1, 2003.

LIQUIDITY AND CAPITAL RESOURCES

        The  Company's  consolidated  cash flows from  operating,  investing and
financing  activities  for the six  months  ended  June  30,  2003  and 2002 are
presented below.



                                                                          Six months ended
                                                                              June 30,
                                                                          ----------------
                                                                           2003      2002
                                                                          -------  -------
                                                                            (In millions)

                                                                             
Net cash provided (used) by:
    Operating activities:
        Before changes in assets and liabilities ......................   $  73.9  $  27.1
        Changes in assets and liabilities .............................     (41.1)     8.7
                                                                          -------  -------
                                                                             32.8     35.8
    Investing activities ..............................................     (12.9)   (10.8)
    Financing activities ..............................................     (20.5)   (42.3)
                                                                          -------  -------

      Net cash used by operating, investing, and financing activities     $   (.6) $ (17.3)
                                                                          =======  =======

                                      -22-


  Operating activities

        The TiO2 industry is cyclical and changes in economic  conditions within
the industry  significantly  affect the earnings and operating cash flows of the
Company. Cash flow from operations is considered the primary source of liquidity
for the Company. Changes in TiO2 pricing, production volume and customer demand,
among other  things,  could  significantly  affect the liquidity of the Company.
Cash flow from  operations,  before  changes in assets and  liabilities,  in the
first half of 2003 increased from the comparable period in 2002 primarily due to
$25.9 million of higher  operating  income and $20.4  million of higher  current
income tax benefits, net (see Note 10 to the Consolidated Financial Statements).
Changes  to the  Company's  assets  and  liabilities,  excluding  the  effect of
currency translation,  in the first half of 2003 compared with the first half of
2002, were negatively  affected  primarily by $20.1 million of higher refundable
income taxes and $11.2 million of lower insurance  proceeds  collected.  The net
cash used to fund changes in the Company's  inventories,  receivables,  payables
and accounts with affiliates  (excluding the effect of currency  translation) in
the first half of 2003 was significantly  higher than the first half of 2002 due
to higher  inventory  balances,  increases in accounts and notes  receivable and
decreases in accounts with  affiliates  in the first half of 2003.  Decreases in
accounts with  affiliates in first half of 2003 compared with first half of 2002
was due primarily to payments for raw materials purchases.

  Investing activities

        Capital  expenditures  were $11.9 million and $10.1 million in the first
six months of 2003 and 2002,  respectively.  Capital  expenditures  in the first
half of 2002 included  approximately  $2.2 million related to  reconstruction of
the Company's Leverkusen, Germany sulfate plant damaged in the March 2001 fire.

  Financing activities

        In March 2003 the Company  borrowed  (euro)15.0  million  ($16.1 million
when  borrowed)  and in April 2003 the  Company  repaid  NOK 80  million  ($11.0
million when repaid) under the revolving credit facility.

        In June 2003 the Company  paid a $25.0  million  dividend to Kronos . No
dividends were paid in the first quarter of 2003.

        In March 2002 the  Company  repaid $25  million in  principal  amount of
affiliate  indebtedness to Kronos.  In June 2002 the Company repaid $169 million
principal amount, plus accrued interest of affiliate indebtedness to Kronos with
proceeds from the notes offering  discussed  below.  Further,  in June 2002, the
Company repaid (euro)113.8 million ($111.8 million),  including interest, of the
euro-denominated  note payable to Kronos with proceeds  from the notes  offering
discussed below.

        In June 2002 the Company  issued  (euro)285  million  ($280 million when
issued and $283  million at June 30, 2002)  principal  amount of Notes due 2009.
The Notes are  collateralized by first priority liens on 65% of the common stock
or other equity interests of certain of our first-tier  subsidiaries.  The Notes
were issued  pursuant to an indenture  which  contains a number of covenants and
restrictions  which,  among other  things,  restricts the ability of KII and its
subsidiaries to incur debt, incur liens,  merge or consolidate  with, or sell or
transfer  all or  substantially  all of their  assets to,  another  entity.  The
indenture  further  restricts the ability of KII to pay dividends  under certain
conditions.


                                      -23-



        In June 2002 the Company's  operating  subsidiaries in Germany,  Belgium
and Norway,  entered into a three-year (euro)80 million secured revolving credit
facility  ("Credit  Facility").  The Credit  Facility is  available  in multiple
currencies,  including U.S. dollars,  euros and Norwegian kroner. As of June 30,
2002,  (euro)13  million ($13  million)  and NOK 200 million  ($26  million) was
borrowed  at  closing,  and along  with  available  cash,  was used to repay and
terminate KII's short-term notes payable ($53.2 million when repaid).

        Deferred  financing  costs of $9.3  million for the Notes and the Credit
Facility are being amortized over the life of the respective  agreements and are
included in other noncurrent assets.

        Cash flows related to capital  contributions and other transactions with
affiliates aggregated a net cash inflow of $2.9 million for the first six months
of 2002.  Such amounts relate  principally to cash flows related to dividends or
loans  KII  received  from,  or  capital  contributions  or  loans  KII  made to
affiliates  (such  notes  receivable  from  affiliates  having  previously  been
reported as a reduction of the  Company's  stockholder's  equity,  and therefore
considered  financing  cash flows).  As discussed in Note 1 of the  Consolidated
Financial Statements, KII transferred its Canadian operations to Kronos in April
2002, and accordingly KII no longer reports such capital  transaction cash flows
related to such Canadian operations subsequent to April 2002.

  Cash, cash equivalents,  restricted cash and noncurrent  restricted marketable
debt securities and borrowing availability

        At June 30, 2003, the Company had cash and cash equivalents  aggregating
$15.8 million and an additional  $2.9 million of restricted  cash and noncurrent
restricted  marketable debt securities,  of which $2.0 million was classified as
noncurrent.  Based  upon  expectations  for the TiO2  industry  and  anticipated
demands on cash  resources  as  discussed  herein,  the Company  expects to have
sufficient liquidity to meet near-term obligations including operations, capital
expenditures  and debt service.  To the extent that actual  developments  differ
from expectations, liquidity could be adversely affected.

        Certain of the  Company's  subsidiaries  had  approximately  $55 million
available for borrowing at June 30, 2003 under the Credit Facility.  At June 30,
2003,  the  Company had  approximately  $50 million  available  for  payments of
dividends and other restricted  payments as defined in the Notes  indenture.  At
June 30, 2003, the Company had complied with all financial  covenants  governing
its debt agreements.

  Income tax contingencies

        See Note 10 to the Consolidated Financial Statements.

  Redeemable  preferred  stock,  profit  participation  certificates  and  notes
receivable from affiliates

        In July 2002 KII and Kronos agreed to a recapitalization  of the Company
as contemplated in the Notes offering.  In connection with the  recapitalization
agreement,  KII  converted  the Series A (738  shares) and Series B (647 shares)
redeemable preferred stock (including liquidation and redemption preferences and
accrued and unpaid  dividends) held by Kronos into 1,385 shares of KII, $100 par
value,  common  stock.  As a  result  of  the  conversion,  the  Series  A and B
redeemable preferred stock certificates were canceled. Further, KII redeemed its


                                      -24-


profit  participation  certificates held by Kronos in exchange for various notes
receivable  from NL. As a result of the  redemption,  the  profit  participation
certificates  were  canceled.  Finally,  KII redeemed 1,613 shares of KII common
stock held by Kronos in exchange for its remaining notes  receivable from NL and
Kronos.

  Foreign operations

        The Company's operations are located outside the United States for which
the functional currency is not the U.S. dollar. As a result, the reported amount
of the Company's assets and liabilities (and income and expenses) related to its
non-U.S.  operations,  and therefore the Company's consolidated net assets, will
fluctuate  based upon changes in currency  exchange rates. At June 30, 2003, the
Company had substantial net assets denominated in the euro, Norwegian kroner and
United Kingdom pound sterling.

  Environmental, product liability and litigation matters

        See Note 11 to the Consolidated Financial Statements.

  Other

        The  Company   periodically   evaluates  its   liquidity   requirements,
alternative uses of capital, capital needs and availability of resources in view
of, among other things,  its debt service and capital  expenditure  requirements
and estimated  future  operating  cash flows.  As a result of this process,  the
Company  in the  past  has  sought,  and in the  future  may  seek,  to  reduce,
refinance,  repurchase or restructure  indebtedness;  raise additional  capital;
repurchase shares of its common stock;  modify its dividend policy;  restructure
ownership  interests;  sell interests in subsidiaries or other assets; or take a
combination  of such steps or other  steps to manage its  liquidity  and capital
resources.  In the  normal  course  of its  business,  the  Company  may  review
opportunities for the acquisition,  divestiture, joint venture or other business
combinations in the chemicals or other industries, as well as the acquisition of
interests in, and loans to, related  companies.  In the event of any acquisition
or joint venture  transaction,  the Company may consider using  available  cash,
issuing equity securities or increasing its indebtedness to the extent permitted
by the agreements governing the Company's existing debt.

  Disclosure regarding forward-looking statements

        The  statements  contained in these  Consolidated  Financial  Statements
relating to matters that are not historical  facts,  including,  but not limited
to,  statements found under the captions  "Results of Operations" and "Liquidity
and Capital  Resources"  above,  are  forward-looking  statements that represent
management's  beliefs and assumptions based on currently available  information.
Forward-looking  statements  can be  identified  by the  use of  words  such  as
"believes,"   "intends,"  "may,"  "will,"  "should,"   "could,"   "anticipates,"
"expects," or comparable  terminology  or by  discussions of strategy or trends.
Although  the  Company  believes  that  the   expectations   reflected  in  such
forward-looking  statements are  reasonable,  it cannot give any assurances that
these  expectations  will prove to be correct.  Such  statements by their nature
involve risks and uncertainties,  including, but not limited to, the cyclicality
of the titanium  dioxide  industry,  global  economic and political  conditions,
changes in global  productive  capacity,  changes in customer  inventory levels,
changes in product  pricing,  changes  in  product  costing,  changes in foreign
currency   exchange   rates,   competitive   technology   positions,   operating
interruptions  (including,  but not limited to, labor  disputes,  leaks,  fires,
explosions,   unscheduled  downtime,   transportation  interruptions,   war  and
terrorist  activities),  the  ultimate  resolution  of NL's  pending or possible


                                      -25-


future lead pigment litigation and legislative  developments related to the lead
pigment litigation,  the outcome of other litigation and tax controversies,  and
other risks and uncertainties  included in this Quarterly Report and in the 2002
Annual  Report,  and  the  uncertainties  set  forth  from  time  to time in the
Company's and NL's filings with the Securities and Exchange  Commission.  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.  The
Company and NL disclaim any intention or obligation to update publicly or revise
such  statements  whether  as a result  of new  information,  future  events  or
otherwise.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        For a discussion  of the Company's  market  risks,  refer to the caption
"Quantitative and Qualitative  Disclosures About Market Risk" in the 2002 Annual
Report.  There have been no material  changes to the  information  provided that
would require additional  information with respect to the quarter ended June 30,
2003.

ITEM 4.    CONTROLS AND PROCEDURES

        The Company  maintains a system of disclosure  controls and  procedures.
The term "disclosure  controls and procedures," as defined by regulations of the
Securities and Exchange Commission ("SEC"),  means controls and other procedures
that are  designed to ensure that  information  required to be  disclosed in the
reports  that the  Company  files or  submits  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  required to be disclosed by the
Company  in the  reports  that it files or  submits  to the SEC under the Act is
accumulated  and  communicated  to  the  Company's  management,   including  its
principal  executive  officer and its principal  financial  officer,  or persons
performing  similar  functions,  as appropriate to allow timely  decisions to be
made regarding  required  disclosure.  Each of Harold C. Simmons,  the Company's
Chief  Executive  Officer,  and Robert D. Hardy,  the Company's  Chief Financial
Officer,  have evaluated the Company's  disclosure controls and procedures as of
June 30,  2003.  Based upon their  evaluation,  these  executive  officers  have
concluded that the Company's disclosure controls and procedures are effective as
of the date of such evaluation.

        The Company also maintains a system of internal  controls over financial
reporting.  The term "internal control over financial  reporting," as defined by
regulations  of the SEC, means a process  designed by, or under the  supervision
of, the  Company's  principal  executive and principal  financial  officers,  or
persons  performing  similar  functions,  and effected by the Company's 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  accounting
principles  generally  accepted in the United  States of America  ("GAAP)",  and
includes those policies and procedures that:

o       Pertain  to  the  maintenance  of  records  that  in  reasonable  detail
        accurately and fairly reflect the  transactions  and dispositions of the
        assets of the Company,
o       Provide reasonable assurance that transactions are recorded as necessary
        to permit  preparation of financial  statements in accordance with GAAP,
        and that receipts and expenditures of the Company are being made only in
        accordance  with  authorizations  of  management  and  directors  of the
        Company, and

                                      -26-




o       Provide reasonable assurance regarding prevention or timely detection of
        unauthorized  acquisition,  use or disposition  of the Company's  assets
        that  could  have  a  material  effect  on  the  Company's  consolidated
        financial statements.

There has been no change to the  Company's  system  of  internal  controls  over
financial  reporting  during the quarter ended June 30, 2003 that has materially
affected,  or is reasonably likely to materially affect, the Company's system of
internal controls over financial reporting.


                           PART II. OTHER INFORMATION

ITEM 1.       LEGAL PROCEEDINGS

           Reference  is  made  to  Note  11  to  the   Consolidated   Financial
Statements,  and for  descriptions  of previously  reported  legal  proceedings,
reference is made to the 2002 Annual Report and the Company's  Quarterly  Report
on Form 10-Q for the quarter ended March 31, 2003.

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

                (a)   Exhibits

                      The Company has retained a signed  original of any exhibit
                      listed  below that  contains  signatures,  and the Company
                      will provide any such exhibit to the SEC or its staff upon
                      request.

                      31.1    Certification.
                      31.2    Certification.
                      32.1    Certification.

               (b)    Reports on Form 8-K

                      Reports on Form 8-K filed  during the  quarter  ended June
                      30, 2003 and through the date of this report:

                      May 6, 2003 - Reported Items 7 and 9.

                                      -27-



                                   SIGNATURES
                                   ----------


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





                                              KRONOS INTERNATIONAL, INC.
                                             ----------------------------
                                                     (Registrant)



Date:  August 6, 2003                  By /s/ Robert D. Hardy
- ---------------------                     --------------------------------------
                                          Robert D. Hardy
                                            Principal Financial and Accounting
                                            Officer

                                      -28-