NEW-CO CHEMICAL, INC.
(Exact Name of Registrant as Specified in its Charter)

123 Robert S. Kerr Avenue, Oklahoma City, Oklahoma 73102
(405) 270-1313
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)

Gregory F. Pilcher, Esq.
Senior Vice President, General Counsel and Secretary
Kerr-McGee Corporation
123 Robert S. Kerr Avenue
Oklahoma City, Oklahoma 73102
(405) 270-1313
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If the securities being registered on this form are being offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If delivery of the prospectus is expected to be made pursuant to Rule 434 under the Securities Act, please check the following box. o

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting offers to buy these securities in any state where the offer or sale is not permitted.

We are offering shares of our Class A common stock in this initial public offering. No public market currently exists for our Class A common stock.

We intend to apply to list our Class A common stock on the New York Stock Exchange under the symbol " ." We anticipate that the initial public offering price will be between $ and $ per share.

Investing in our Class A common stock involves risks.
See "Risk Factors" beginning on page 12.

We have granted the underwriters a 30-day option to purchase up to an additional shares of Class A common stock from us on the same terms and conditions as set forth above if the underwriters sell more than shares of our Class A common stock in this offering.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.


Prospectus Summary
Risk Factors
Special Note Regarding Forward-Looking Statements
Use of Proceeds
Dividend Policy
Capitalization
Dilution
Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results of Operations
Industry Background
Business
Management
Principal Stockholder
Arrangements between Kerr-McGee and Our Company
Description of Capital Stock
Shares Eligible for Future Sale
Certain United States Federal Income and Estate Tax Consequences to Non-U.S. Holders
Underwriting
Legal Matters
Experts
Where You Can Find Additional Information
Index to Combined Financial Statements

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information that is different from that contained in this prospectus. This prospectus is not an offer to sell or a solicitation of an offer to buy shares of our Class A common stock in any jurisdiction where an offer or sale of shares of our Class A common stock would be unlawful. The information in this prospectus is complete and accurate only as of the date on the front cover, regardless of the time of delivery of this prospectus or of any sale of shares of our Class A common stock.

Until , 2005 (25 days after commencement of this offering), all dealers that effect transactions in our Class A common stock, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

This summary highlights the material information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should read the entire prospectus carefully, including the combined financial statements and related notes and the factors described in "Risk Factors," before making an investment decision.

New-Co Chemical, Inc. is currently an indirect wholly-owned subsidiary of Kerr-McGee Corporation and was formed on May 17, 2005 to hold Kerr-McGee Corporation's chemical business. Kerr-McGee Corporation's chemical business is currently operated by certain of its subsidiaries, each of which will be transferred to New-Co prior to the closing of this offering. Some of the subsidiaries that will be transferred to us currently have, or have in the past had, businesses and properties that are unrelated to the chemical business we will operate after the closing. As a result, we will have liabilities that are not typical of other titanium dioxide producers.

This prospectus describes New-Co Chemical, Inc. as if it held the subsidiaries that will be transferred to it prior to closing for all historical periods presented. For more information, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" and note 1 to our audited combined financial statements included elsewhere in this prospectus. Unless the context otherwise requires, any references in this prospectus to "we," "our," "us" and "New-Co" refer to New-Co Chemical, Inc. and its consolidated subsidiaries as in effect on the closing date of this offering. Any references in this prospectus to "Kerr-McGee" refer to Kerr-McGee Corporation and its consolidated subsidiaries, other than us.

New-Co is one of the leading global producers and marketers of titanium dioxide. Titanium dioxide is a white pigment used in a wide range of products for its exceptional ability to impart whiteness, brightness and opacity. We market titanium dioxide pigment, which represented more than 90% of our net sales in 2004, under the brand name TRONOX®. We are the world's third largest producer of titanium dioxide with an estimated 13% share of the $9 billion global market in 2004. Our world-class, high-performance pigment products are critical components of everyday consumer applications, such as coatings, plastics and paper, as well as specialty products, such as inks, foods and cosmetics. In addition to titanium dioxide, we produce electrolytic manganese dioxide, sodium chlorate and boron-based and other specialty chemicals. In 2004, we had total net sales of $1.3 billion.

located manufacturing facilities and direct sales and technical service organizations in the United States, Europe and the Asia-Pacific region, we are able to serve our diverse base of more than 1,100 customers in over 100 countries.

Globally, including the production capacity of the facility operated by our Tiwest Joint Venture (see "Business—Manufacturing, Operation and Properties—The Tiwest Joint Venture"), we have 624,000 tonnes of aggregate annual titanium dioxide production capacity. We hold over 200 product and process patents worldwide, and we have a highly skilled and technologically sophisticated workforce.

We are the world's third largest producer and marketer of titanium dioxide products and the world's second largest producer and supplier of titanium dioxide manufactured via proprietary chloride technology, which is preferred for many of the largest end-use applications. We have an estimated 15% share of the $5.1 billion global market for the use of titanium dioxide in coatings, which is the largest end-use market. We believe our leading market positions provide us with a competitive advantage in retaining existing customers and obtaining new business.

We are one of the few titanium dioxide manufacturers with global operations. We have production facilities and a sales and marketing presence in the Americas, Europe and the Asia-Pacific region. In 2004, sales into the Americas accounted for approximately 47% of our total titanium dioxide net sales, followed by approximately 32% into Europe and approximately 21% into the Asia-Pacific region. Our global presence enables us to provide customers in over 100 countries with a reliable source of multiple grades of titanium dioxide. The diversity of the geographic markets we serve also mitigates our exposure to regional economic downturns.

We sell our products to a diverse portfolio of customers with whom we have well-established relationships. Our customer base consists of more than 1,100 customers in over 100 countries and includes market leaders in each of the major end-use markets for titanium dioxide. We have supplied each of our top ten customers with titanium dioxide pigment for over ten years. We work closely with our customers to optimize their formulations, thereby enhancing the use of titanium dioxide in their production processes. This has enabled us to develop and maintain strong relationships with our customers, resulting in a high customer retention rate.

We offer innovative, high-performance products for nearly every major titanium dioxide end-use application, with 35 grades of titanium dioxide pigment currently available. We are dedicated to continually developing our titanium dioxide products to better serve our customers and responding to the increasingly stringent demands of their end-use markets. Our recently-introduced products, CR-826 and CR-880, offer a combination of optical properties, opacity, ease of dispersion and durability that is valued by customers for a variety of applications. Sales volume of these high-performance, market-leading products increased at a compounded annual growth rate of 36% from 2000 to 2004.

We are one of the few producers in the titanium dioxide industry to hold the rights to a proprietary chloride process for the production of titanium dioxide. Approximately 83% of our gross production capacity uses our proprietary chloride process technology, which is protected by numerous patents worldwide and utilized by our highly skilled and technologically sophisticated workforce. Titanium dioxide produced using chloride process technology is preferred for many of the largest end-use applications. The chloride process generates less waste, uses less energy and is less labor intensive than the sulfate production process. The complexity and proprietary nature of chloride process technology discourages others from entering the titanium dioxide industry.

Our management team has an average of 23 years of business experience. The diversity of their business experience provides a broad array of skills that contributes to the successful execution of our business strategy. Our operations team and plant managers, who have an average of 27 years of manufacturing experience, participate in the development and execution of strategies that have resulted in production volume growth, production efficiency improvements and cost reductions. The experience, stability and leadership of our sales organization have been instrumental in growing sales, developing and maintaining customer relationships and increasing our market share.

We employ a disciplined, balanced scorecard approach throughout our organization to ensure alignment with, and accountability for, the execution of our strategy, which includes the following components:

We target our key markets with innovative, high-performance products that provide enhanced value to our customers at competitive prices. A key component of our business strategy is to enhance our product portfolio continually with high-quality, market-driven product development. We design our titanium dioxide products to satisfy our customers' specific requirements for their end-use applications and align our business to respond quickly and efficiently to changes in market demands. In this regard, and in order to continue meeting our customers' needs, we expect to offer three new titanium dioxide pigment products in 2005 that we believe will further enhance our market positions.

We employ customer and end-use market feedback, technological expertise and fundamental research to create next-generation products and processes. Our technology development efforts include building value-added properties into our titanium dioxide to enhance its performance in our customers' end-use applications. Our research and development teams support our future business strategies, and we manage those teams using disciplined project management tools and a team approach to technological development.

We achieve operational excellence by improving equipment uptime and product quality while reducing maintenance and operating costs. We use Six Sigma, a business improvement methodology, to improve our operational performance. As a result, in 2004, we reduced annual energy costs by $0.8 million at one of our plants, and decreased costs of goods sold by $1.5 million through improved yields at another. Targeting uptime with the Six Sigma methodology also recently enabled one of our

plants to increase its annual production by 2,000 tonnes through a simple reconfiguration of its processing equipment.

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

We improve our supply chain efficiency by focusing on reducing both operating costs and working capital needs. Our supply chain efforts to lower operating costs consist of reducing procurement spending, lowering transportation and warehouse costs and optimizing production scheduling. We actively manage our working capital by increasing inventory turnover and reducing finished goods and raw materials inventory without affecting our ability to deliver titanium dioxide to our customers. As a result of our efforts, we reduced our finished goods inventory in 2004 by 27% while increasing sales volumes by approximately 9%.

Aligning the efforts of our employees with our business strategies is critical to our success. To achieve that alignment, we evaluate the performance of our employees using a balanced scorecard approach. We also invest in training initiatives that are directly linked to our business strategies. For instance, approximately 120 of our employees have completed the well-regarded supply chain management training program at Michigan State University's Broad Executive School of Management. We also train our employees in Six Sigma methodology to support our operational excellence and asset efficiency strategic objectives.

After completion of this offering, investors in this offering will own all of our outstanding Class A common stock. Kerr-McGee will not own any of our Class A common stock but will indirectly own all of our outstanding Class B common stock, which will represent % of the combined voting power of all outstanding classes of our common stock (assuming no exercise by the underwriters of their option to purchase additional shares). See "Principal Stockholder." As a result, Kerr-McGee will be able to control the vote on all matters submitted to our stockholders, including the election of directors. See "Risk Factors—Risks Related to Our Relationship with Kerr-McGee—As long as Kerr-McGee owns shares of our common stock representing a majority of the voting power of our common stock, it will control us and the influence of our other stockholders over significant corporate actions will be limited."

Kerr-McGee has advised us that, subject to the terms of its agreement with the underwriters (as discussed in "Underwriting—Lock-Up Agreements"), following completion of this offering it intends to distribute all of the shares of our Class B common stock that it owns to its stockholders (the Distribution). Kerr-McGee expects to accomplish this Distribution through a spin-off, split-off or a combination of both transactions. A spin-off would take the form of a pro rata distribution by Kerr-McGee of its shares of our Class B common stock to holders of Kerr-McGee's common stock. A split-off would be an exchange offer pursuant to which holders of shares of common stock of Kerr-McGee would be invited to exchange those shares for our Class B common stock that Kerr-McGee then holds. However, Kerr-McGee is not required to complete the Distribution. Kerr-McGee has the sole discretion to decide if and when the Distribution will occur and to determine the form, the structure and all other terms of any transactions to effect the Distribution. For a more detailed discussion of the Distribution, please see "Arrangements between Kerr-McGee and Our Company" and "Risk Factors—Risks Related to Our Relationship with Kerr-McGee—The Distribution may not occur, and we may not achieve the expected benefits of the Distribution."

Prior to the completion of this offering, we will enter into agreements with Kerr-McGee that, regardless of whether the Distribution occurs, will govern the separation of our businesses and various interim and ongoing relationships, including agreements with respect to the provision of interim services by Kerr-McGee to us. Under the terms of these agreements, we are entitled to the ongoing assistance of Kerr-McGee only for a limited period of time. See "Arrangements between Kerr-McGee and Our Company." All of the agreements relating to our separation from Kerr-McGee have been made in the context of a parent-subsidiary relationship and have been entered into in the overall context of our separation from Kerr-McGee. The terms of these agreements may be more or less favorable to us than if they had been negotiated with unaffiliated third parties. See "Risk Factors—Risks Related to Our Relationship with Kerr-McGee—Our separation agreements with Kerr-McGee may be less favorable to us than if they had been negotiated with unaffiliated third parties" and "Arrangements between Kerr-McGee and Our Company."

We believe that our separation from Kerr-McGee will enable us to realize the following benefits:

We expect to obtain additional financing either concurrently with or shortly following the completion of this offering. Such financing may take the form of loans under a credit facility, the issuance of bonds or other types of debt securities, or some combination of the foregoing. We expect to distribute a majority of the net proceeds of any such additional financing to Kerr-McGee.

The chart below shows New-Co's ownership structure at the closing of this offering:

Unless we specifically state otherwise, all information in this prospectus regarding our Class A common stock:

Investing in our Class A common stock involves risk. You should carefully consider all of the information set forth in this prospectus and, in particular, should evaluate the specific factors set forth under "Risk Factors" beginning on page 12 in deciding whether to invest in our Class A common stock.

New-Co Chemical, Inc. is a Delaware corporation that was incorporated on May 17, 2005. We intend to change our name and establish our own website address prior to completion of this offering. Our principal executive offices are located at 123 Robert S. Kerr Avenue, Oklahoma City, Oklahoma 73102. Our telephone number is (405) 270-1313.

The following tables set forth our summary combined financial data as of the dates and for the periods indicated in such tables. The summary financial data presented below for the years ended December 31, 2004, 2003 and 2002 have been derived from our audited combined financial statements included elsewhere in this prospectus. The summary financial data presented below as of March 31, 2005 and for the three-month periods ended March 31, 2005 and 2004 have been derived from our interim unaudited condensed combined financial statements included elsewhere in this prospectus. In the opinion of our management, our unaudited condensed combined financial statements have been prepared on a basis consistent with the audited combined financial statements and include all adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation of the results of operations for the periods presented. Results of operations for the three-month period ended March 31, 2005 are not necessarily indicative of the operating results to be expected for the full fiscal year 2005 or for any future periods.

The summary as adjusted financial data for the year ended December 31, 2004 and as of and for the three-month period ended March 31, 2005 set forth below have been prepared to give effect to this offering and the use of proceeds therefrom as if the offering had occurred on the date or at the beginning of the period indicated. The summary as adjusted financial data is for informational purposes only and should not be considered indicative of actual results that would have been achieved had the transactions actually been consummated on the dates or at the beginning of the periods indicated.

The summary combined and as adjusted financial data presented below should be read together with "Use of Proceeds," "Capitalization," "Selected Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our combined financial statements and the notes to those statements, in each case, included elsewhere in this prospectus.

		Three Months Ended March 31,							Year ended December 31,
		2005			2004			As Adjusted 2005	2004			2003			2002			As Adjusted 2004
		(millions of dollars, except per share amounts)
Net income (loss)		$	4.0		$	(4.2	)		$	(127.6	)	$	(92.7	)	$	(97.3	)
	Cumulative effect of change in accounting principle, net of income tax benefit		—			—				—			9.2			—
	Loss from discontinued operations, net of income tax benefit		8.4			1.6				45.8			35.8			81.0
	Income tax (benefit) provision		5.4			(1.4	)			(38.3	)		(15.1	)		8.3
	Net interest expense (including loss on sale of receivables)^(a)		5.9			3.3				17.8			13.7			15.9
	Depreciation and amortization expense, including write-downs of property, plant and equipment^(b)		26.8			26.1				196.6			128.5			117.5
	Impairment of intangible assets		—			—				7.4			—			—

EBITDA			50.5			25.4				101.7			79.4			125.4
	Provision for environmental remediation and restoration, net of reimbursements		10.9			0.9				4.6			14.9			14.3

Adjusted EBITDA		$	61.4		$	26.3			$	106.3		$	94.3		$	139.7

Net income (loss):		$	4.0		$	(4.2	)		$	(127.6	)	$	(92.7	)	$	(97.3	)
	Depreciation and amortization expense, including asset write-downs and impairments^(c)		26.8			26.1				227.0			135.2			125.9
	Deferred income taxes		(9.6	)		(2.4	)			(38.2	)		25.9			(5.9	)
	Cumulative effect of change in accounting principle		—			—				—			9.2			—
	Provision for environmental remediation and restoration, net of reimbursements		21.7			(0.9	)			67.2			56.0			75.4
	Allocations from Kerr-McGee^(d)		11.9			9.1				55.1			65.8			51.6
	Other noncash items affecting net income (loss)		4.8			2.2				30.8			29.0			66.7
	Changes in assets and liabilities		28.6			(43.4	)			(23.5	)		(108.0	)		(134.0	)

Net cash provided by (used in) operating activities		$	88.2		$	(13.5	)		$	190.8		$	120.4		$	82.4

An investment in our Class A common stock involves risk. You should consider carefully the following factors and the other information in this prospectus before deciding to purchase any shares of our Class A common stock. If any of the following risks were actually to occur, our business, financial condition or results of operations could be materially and adversely affected. In that case, the trading price of our Class A common stock could decline, and you might lose all or part of your investment.

We will have liabilities that are not typical of other titanium dioxide producers.

Prior to the completion of this offering, certain of Kerr-McGee Corporation's subsidiaries will be transferred to us. Some of the subsidiaries that will be transferred to us currently have, or have in the past had, businesses or properties that are unrelated to the chemical business we will operate after the closing. Those other businesses and properties include, among others, businesses involving, and properties used in, the treatment of forest products, the production of ammonium perchlorate, the refining and marketing of petroleum products and the mining, milling and processing of nuclear materials. As a result, we will have liabilities that are not typical of other titanium dioxide producers. Such liability could have an adverse effect on our financial condition and results of operations.

Costs of environmental liabilities and regulation compliance could exceed estimates.

We are party to a number of legal and administrative proceedings involving environmental and other matters pending in various courts and before various agencies. These include proceedings associated with facilities currently or previously owned, operated or used by us or our predecessors, and include claims for personal injuries, property damages, injury to the environment, including natural resource damages, and non-compliance with permits. Such proceedings may be costly and may require a substantial amount of management attention, which may have an adverse affect on our financial condition and results of operations. See "Business—Government Regulations and Environmental Matters."

Our current and former operations also involve the generation and management of regulated materials that are subject to various environmental laws and regulations. These laws and regulations obligate us to remediate various sites at which chemicals such as creosote and perchlorate, low-level radioactive substances, asbestos and other materials have been disposed of or released. Some of these sites have been designated Superfund sites by the Environmental Protection Agency under the Comprehensive Environmental Response, Compensation and Liability Act. See note 21 to our audited combined financial statements included elsewhere in this prospectus. The discovery of contamination arising from historical industrial operations at some of our properties has exposed us, and in the future may continue to expose us, to remediation obligations and other damages.

We reserve for costs related to environmental matters when a loss is probable and the amount is reasonably estimable. As of March 31, 2005, we had reserves in the amount of $248.5 million for environmental matters. It is not possible for us to estimate reliably the amount and timing of all future expenditures related to environmental matters for the reasons described more fully in "Business—Government Regulations and Environmental Matters" and "Business—Legal Proceedings." While we believe that we have established appropriate reserves for environmental remediation, costs may be higher than anticipated, and we could be required to record additional reserves in the future.

We are subject to extensive environmental, health and safety laws and regulations that may result in unanticipated loss or liability, which could reduce our profitability.

Our operations and production facilities are subject to extensive environmental and health and safety laws and regulations at national, international and local levels in numerous jurisdictions relating to pollution, protection of the environment, transporting and storing raw materials and finished products and storing and disposing of hazardous wastes. We may incur substantial costs, including fines, damages, criminal or civil sanctions and remediation costs, or experience interruptions in our operations, for violations arising under these laws and regulations. In the event of a catastrophic incident involving any of the raw materials we use or chemicals we produce, we could incur material costs as a result of addressing the consequences of such event.

In addition, changes in the laws and regulations to which we are subject, or their interpretation, or the enactment of new laws and regulations, could result in materially increased and unanticipated capital expenditures and compliance costs. For example, the proposed REACH (Registration, Evaluation and Authorization of Chemicals) regulatory scheme in the European Union, if implemented as currently proposed, could adversely affect our European operations by imposing on us a testing, evaluation and registration program for certain of the chemicals that we use or produce. We are not able to predict the ultimate cost of compliance with these requirements or their effect on our business.

There is also a risk that one or more of our key raw materials or one or more of our products may be found to have, or be recharacterized as having, a toxicological or health-related impact on the environment or on our customers or employees. If such a discovery or recharacterization occurs, the relevant materials or products, including products of our customers incorporating our materials or products, may be recalled or banned or we may incur increased costs in order to comply with new regulatory requirements. Changes in laws and regulations, or their interpretation, may also affect the marketability of certain of our products.

Hazards associated with chemical manufacturing could adversely affect our results of operations.

Due to the nature of our business, we are exposed to the hazards associated with chemical manufacturing and the related storage and transportation of raw materials, products and wastes. These hazards could lead to an interruption or suspension of operations and have an adverse effect on the productivity and profitability of a particular manufacturing facility or on us as a whole. Potential hazards include the following:

These hazards may cause personal injury and loss of life, damage to property and contamination of the environment, which could lead to government fines or work stoppage injunctions and lawsuits by injured persons. If such actions are determined adversely to us, we may have inadequate insurance to cover such claims or we may have insufficient cash flow to pay for such claims. Such outcomes could adversely affect our financial condition and results of operations.

Market conditions and cyclical factors that adversely affect the demand for the end-use products that contain our titanium dioxide could adversely affect our results.

Historically, regional and world events that negatively affect discretionary spending or economic conditions generally, such as terrorist attacks, the incidence or spread of contagious diseases (such as SARS), or other economic, political, or public health or safety conditions, have adversely affected

demand for the finished products that contain titanium dioxide and from which we derive substantially all of our revenue. Events such as these are likely to contribute to a general reluctance by the public to purchase "quality of life" products, which could cause a decrease in demand for our chemicals and, as a result, may have an adverse effect on our results of operations and financial condition.

Additionally, the demand for titanium dioxide during a given year is subject to seasonal fluctuations. Titanium dioxide sales are generally higher in the second and third quarters of the year than in the other quarters due in part to the increase in paint production in the spring to meet demand resulting from the spring and summer painting season in North America and Europe. We may be adversely affected by existing or future cyclical changes, and such conditions may be sustained or further aggravated by anticipated or unanticipated changes in regional weather conditions. For example, poor weather conditions in a region can lead to an abbreviated painting season, which can depress consumer sales of paint products that use titanium dioxide pigment.

Our business, financial condition and results of operations could be adversely affected by the political and economic conditions of the countries in which we conduct business and other factors related to our international operations.

We produce, market and sell our products throughout the world. We also purchase many of the raw materials used in the production of our products in foreign jurisdictions. In 2004, approximately 45% of our total revenues were generated from sales outside of the United States. Multiple factors relating to our international operations and to particular countries in which we operate could have an adverse effect on our financial condition and results of operations. These factors include the following:

Our results of operations may be adversely affected by fluctuations in currency exchange rates.

The financial condition and results of operations of certain of our operating entities are reported in various foreign currencies and then translated into U.S. dollars at the applicable exchange rate for inclusion in our financial statements. As a result, any appreciation of the U.S. dollar against these foreign currencies will have a negative impact on our reported sales and operating margin (and conversely, the depreciation of the dollar against these foreign currencies will have a positive impact). In addition, our operating entities often need to convert currencies they receive for our products into currencies in which they purchase raw materials or pay for services, which could result in a gain or loss depending on fluctuations in exchange rates. Because we have significant operations in Europe and Australia, we are exposed primarily to fluctuations in the euro and the Australian dollar.

In the past, we have sought to minimize certain of our foreign currency translation risk by engaging in hedging transactions. We may be unable to effectively manage our foreign currency

translation risk, and any volatility in foreign currency exchange rates may have an adverse effect on our financial condition or results of operations. For a further discussion of how we manage our foreign currency risk, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative Disclosure about Market Risk—Foreign Currency Exchange Rate Risk."

Our industry and the end-use markets in which we compete are highly competitive. This competition may adversely affect our results of operations.

Each of the markets in which we compete is highly competitive. Competition is based on a number of factors such as price, product quality and service. We face significant competition from major international producers, such as E.I. du Pont de Nemours and Company, Millennium Chemicals Inc., Huntsman Corporation and Kronos Worldwide, Inc., as well as smaller regional competitors. Our most significant competitors include major chemicals and materials manufacturers and diversified companies, a number of which have substantially larger financial resources, staffs and facilities than we do. The additional resources and larger staffs and facilities of such competitors may give them a competitive advantage when responding to market conditions and capitalizing on operating efficiencies. Increased competition could result in reduced sales, which could adversely affect our profitability. See "Business—Competitive Conditions."

In addition, within the end-use markets in which we compete, competition between products is intense. We face substantial risk that certain events, such as new product development by our competitors, changing customer needs, production advances for competing products or price changes in raw materials, could cause our customers to switch to our competitor's products. If we are unable to develop and produce or market our products to compete effectively against our competitors, our results of operations may suffer.

Fluctuations in costs of our raw materials or our access to supplies of our raw materials could have an adverse effect on our results of operations.

In 2004, raw materials used in the production of titanium dioxide constituted approximately 31% of our operating expenses and 33% of our cost of products sold. Titanium-bearing ores, in particular, represented more than 22% of our cost of products sold in 2004.

Costs of many of the raw materials we use may fluctuate widely for a variety of reasons, including changes in availability, major capacity additions or reductions or significant facility operating problems. These fluctuations could negatively affect our operating margins and our profitability. As these costs rise, our operating expenses likely will increase and could adversely affect our business, especially if we are unable to pass price increases in raw materials through to our customers.

Should our vendors not be able to meet their contractual obligations or should we be otherwise unable to obtain necessary raw materials, we may incur higher costs for raw materials or may be required to reduce production levels, which may have an adverse effect on our financial position, results of operations or liquidity. For a further discussion, see "Business—Raw Materials."

The labor and employment laws in certain jurisdictions in which we operate are more restrictive than in the United States. Our relationship with our employees could deteriorate, which could adversely affect our operations.

In the United States, approximately 200 employees at our Savannah, Georgia facility are members of a union and are subject to a collective bargaining arrangement that is scheduled to expire in April 2006. Approximately 40% of our employees are employed outside the United States. In certain of those countries, labor and employment laws are more restrictive than in the United States and, in many cases, grant significant job protection to employees, including rights on termination of employment. For

example, in certain jurisdictions, by law some of our employees are represented by a works' council, which subjects us to employment arrangements very similar to collective bargaining agreements.

We are required to consult with and seek the consent or advice of the unions or works' councils that represent our employees for certain of our activities. This requirement could have a significant impact on our flexibility in managing costs and responding to market changes. Furthermore, there can be no assurance that we will be able to negotiate labor agreements with our unionized employees in the future on satisfactory terms. If those employees were to engage in a strike, work stoppage or other slowdown, or if any of our other employees were to become unionized, we could experience a significant disruption of our operations or higher ongoing labor costs, which could adversely affect our financial condition and results of operations.

Third parties may claim that our products or processes infringe their intellectual property rights, which may cause us to pay unexpected litigation costs or damages or prevent us from making, using, or selling our products.

Although we do not intend to, nor do we believe that we do, infringe the intellectual property rights of others, we may be subject to legal proceedings and claims in which third parties allege that their patents or other intellectual property rights are infringed by us or our licensees. If our processes or products are found to infringe or otherwise violate the intellectual property rights of others, we may need to obtain licenses from those parties or substantially re-engineer our products or processes in order to avoid infringement. We might not be able to obtain the necessary licenses on acceptable terms or be able to re-engineer our products successfully. Moreover, if we are found by a court of law to infringe or otherwise violate the intellectual property rights of others, we could be required to pay substantial damages or be enjoined from making, using, or selling the infringing products or technology. We also could be enjoined from making, using, or selling the allegedly infringing products or technology pending the final outcome of the suit.

If we are not able to continue our technological innovation and successful commercial introduction of new products, our profitability could be adversely affected.

Our industries and the end-use markets into which we sell our products experience periodic technological change and product improvement. Our future growth will depend on our ability to gauge the direction of commercial and technological progress in key end-use markets and on our ability to fund and successfully develop, manufacture and market products in such changing end-use markets. We must continue to identify, develop and market innovative products or enhance existing products on a timely basis in order to maintain our profit margins and our competitive position. We may not be able to develop new products or technology, either alone or with third parties, or license intellectual property rights from third parties on a commercially competitive basis. If we fail to keep pace with the evolving technological innovations in our end-use markets on a competitive basis, our financial condition and results of operations could be adversely affected.

If our intellectual property were compromised or copied by competitors, or if competitors were to develop similar intellectual property independently, our results of operations could be negatively affected.

Our success depends to a significant degree upon our ability to protect and preserve our intellectual property rights. Although we own and have applied for numerous patents and trademarks throughout the world, we may have to rely on judicial enforcement of our patents and other proprietary rights. Our patents may be challenged, invalidated, circumvented or rendered unenforceable. Furthermore, if any patent application filed by us does not result in an issued patent, or if patents have been or are issued to us but such patents do not provide meaningful protection of our products or processes, then our ability to compete may be adversely affected. A failure to protect,

defend or enforce our intellectual properties could have an adverse effect on our financial condition and results of operations.

We also rely upon unpatented proprietary technology, know-how and other trade secrets to maintain our competitive position. While it is our policy to enter into confidentiality agreements with our employees and third parties to protect our proprietary expertise and other trade secrets, these agreements may not be enforceable or, even if legally enforceable, we may not have adequate remedies for breaches of such agreements. The failure of our patents or confidentiality agreements to protect our proprietary technology, know-how or trade secrets could result in significantly lower revenues, reduced profit margins or loss of market share.

We may be unable to determine when third parties are using our intellectual property rights without our authorization. The undetected or unremedied use of our intellectual property rights or the legitimate development or acquisition of intellectual property similar to ours by third parties could reduce or eliminate any competitive advantage we have as a result of our intellectual property, adversely affecting our financial condition and results of operations. If we must take legal action to protect, defend or enforce our intellectual property rights, any suits or proceedings could result in significant costs and diversion of our resources and our management's attention, and we may not prevail in any such suits or proceedings. A failure to protect, defend or enforce our intellectual property rights could have an adverse effect on our financial condition and results of operations.

We expect to need capital in the future and may not be able to obtain it on favorable terms.

As a stand-alone company, we will not be able to rely on Kerr-McGee to fund our capital requirements. Either concurrently with or shortly following the completion of this offering, we expect to obtain additional financing in the form of loans under a credit facility, the issuance of bonds or other types of securities, or some combination of the foregoing. We may require additional capital in the future to finance our future growth and development, implement further marketing and sales activities, fund our ongoing research and development activities and meet our general working capital needs. Our capital requirements will depend on many factors, including acceptance of and demand for our products, the extent to which we invest in new technology and research and development projects, and the status and timing of competitive developments.

If additional funds are raised through the issuance of equity securities, the percentage of your equity ownership will be reduced. In addition, holders of such new equity securities may have rights, preferences or privileges senior to yours. If additional funds are raised through the incurrence of indebtedness, we may incur significant interest charges, and become subject to various restrictions and covenants that could limit our ability to respond to market conditions, provide for unanticipated capital investments or take advantage of business opportunities. Additional financing may not be available when needed on terms favorable to us or at all. If adequate funds are not available on acceptable terms, we may be unable to develop or enhance our products, take advantage of future opportunities or respond to competitive pressures, which could harm our business.

We are a holding company and depend on the performance of our subsidiaries and their ability to make distributions to us.

We are a holding company and do not conduct any business operations of our own. Our principal assets are the equity interests we own in our operating subsidiaries, either directly or indirectly through other subsidiaries. As a result, we are dependent upon cash dividends, distributions or other transfers we receive from our subsidiaries in order to make dividend payments to our stockholders, to repay any debt we may incur, and to meet our other obligations. The ability of our subsidiaries to pay dividends and make payments to us will depend on their operating results and may be restricted by, among other things, applicable corporate, tax and other laws and regulations and agreements of those subsidiaries.

For example, state corporate law applicable to several of our principal subsidiaries generally prohibits the payment of dividends by any subsidiary unless the subsidiary has a capital surplus or net profits in the current or immediately preceding fiscal year. Payments or distributions from our subsidiaries also could be subject to restrictions on dividends or repatriation of earnings under applicable local law, monetary transfer restrictions and foreign currency exchange regulations in the jurisdictions in which our subsidiaries operate. Our subsidiaries are separate and distinct legal entities. Any right that we have to receive any assets of or distributions from any subsidiary upon its bankruptcy, dissolution, liquidation or reorganization, or to realize proceeds from the sale of the assets of any subsidiary, will be junior to the claims of that subsidiary's creditors, including trade creditors.

The payment of dividends is subject to the discretion of our board of directors, and various factors may cause the board to determine not to pay dividends. Such factors include our financial position, results of operations, capital requirements and liquidity, any loan or other agreement restrictions, governmental requirements and such other factors as our board of directors may consider relevant. See "Dividend Policy." In addition, our assets consist primarily of investments in our operating subsidiaries. Our cash flow and ability to pay dividends depend upon cash dividends and distributions or other transfers from our subsidiaries. See "—We are a holding company and depend on the performance of our subsidiaries and their ability to make distributions to us."

Our historical financial information may not be representative of our results as a stand-alone company and, therefore, may not be reliable as an indicator of our future financial results.

The historical financial information we have included in this prospectus has been derived from Kerr-McGee's accounting records. Kerr-McGee did not account for our business, and we were not operated, as a separate, stand-alone company for the historical periods presented. Therefore, our historical combined financial statements may not reflect what our results of operations, financial position and cash flows would have been had we been a stand-alone company during the periods presented or what our results of operations, financial position and cash flows will be in the future.

In particular, our historical combined financial statements reflect allocations for certain corporate functions historically provided by Kerr-McGee, including general corporate expenses and employee benefits. These allocations were based on what Kerr-McGee considered to be reasonable reflections of the historical utilization levels of these services required in support of our business and may be less than the expenses we will incur in the future as a stand-alone company. In addition, we have not made adjustments to our historical financial information to reflect changes that may occur in our cost structure, financing and operations as a result of our separation from Kerr-McGee, including changes resulting from no longer being a member of a consolidated group for tax purposes. These changes potentially include increased costs associated with reduced economies of scale.

For additional information about our past financial performance and the basis of the presentation of our historical combined financial statements, please see "Selected Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our combined financial statements and notes to our combined financial statements included elsewhere in this prospectus.

As long as Kerr-McGee owns shares of our common stock representing a majority of the voting power of our common stock, it will control us and the influence of our other stockholders over significant corporate actions will be limited.

Upon the closing of this offering, Kerr-McGee will own all of our Class B common stock, which will represent a majority of the combined voting power of all outstanding classes of our common stock.

As a result, Kerr-McGee will be entitled to nominate a majority of our board of directors and will have the ability to control the vote in any election of directors. Kerr-McGee will also have control over our decisions to enter into significant corporate transactions and will have the ability to prevent any transaction that requires the approval of our board of directors or our stockholders regardless of whether or not other members of our board of directors or other stockholders believe that any such transactions are in our best interests. As a result, Kerr-McGee will be able to control, directly or indirectly and subject to applicable law, all matters affecting us, including the following:

The interim services provided to us by Kerr-McGee may not be sufficient to meet our needs, and we may not be able to replace these services after our agreements with Kerr-McGee expire.

Historically, Kerr-McGee performed various corporate functions on our behalf, including the following:

Following the completion of this offering, Kerr-McGee will have no obligation to provide any services on our behalf other than as provided in our interim services agreement with Kerr-McGee. See "Arrangements between Kerr-McGee and Our Company—Interim Services Agreement." We are in the process of creating our own, or engaging third parties to provide, systems and business functions to replace many of the systems and business functions Kerr-McGee provides us. However, we may not be successful in implementing these systems and business functions or in transitioning data from Kerr-McGee's systems to ours. If we do not have in place our own systems and business functions or if we do not have agreements with other providers of these services when our interim services agreement with Kerr-McGee expires, we may not be able to effectively operate our business and our profitability may be affected adversely.

We will qualify for, and intend to rely on, exemptions from certain corporate governance requirements.

Upon the closing of this offering, Kerr-McGee will continue to control a majority of the voting power of our outstanding common stock. As a result, we are a "controlled company" within the meaning of the New York Stock Exchange corporate governance standards. Under the New York Stock Exchange rules, a "controlled company" may elect not to comply with the following corporate governance requirements:

Following this offering and until such time that we cease to be a "controlled company," we intend to utilize these exemptions. As a result, we will not have a majority of independent directors and our nominating and corporate governance and compensation committees will not consist entirely of independent directors. Additionally, we are relying on a transition provision for the New York Stock Exchange standards relating to the independence of audit committees. That transition provision allows issuers, such as us, that have a registration statement under the Securities Act covering an intial public offering of securities to (1) exempt all but one of our audit committee members from the independence rquirements for 90 days from the effective date of our registration statement, and (2) exempt a minority of the members of our audit committee from the independence requirement for one year from the effective date of our registration statement.

Accordingly, you will not have the same protection afforded to stockholders of companies that are subject to all of the New York Stock Exchange corporate governance requirements.

The Distribution may not occur, and we may not achieve the expected benefits of the Distribution.

Kerr-McGee has advised us that, subject to the terms of its agreement with the underwriters (as discussed in "Underwriting—Lock-Up Agreements"), following completion of this offering it intends to distribute all of our Class B common stock that it owns to its stockholders. However, Kerr-McGee is not required to complete the Distribution and may decide in its sole discretion not to effect the Distribution. If the Distribution does not occur, or even if it does occur, we may not obtain the benefits we expect as a result of our separation from Kerr-McGee. In addition, until the Distribution occurs, the risks relating to Kerr-McGee's control of us and the potential conflicts of interest between Kerr-McGee and us will continue to be relevant to our stockholders. See "—As long as Kerr-McGee owns shares of our common stock representing a majority of the voting power of our common stock, it will control us and the influence of our other stockholders over significant corporate actions will be limited." and "—Many of our executive officers and some of our directors may have conflicts of interest because of their ownership of common stock of, and other ties to, Kerr-McGee."

Our executive officers and directors may have conflicts of interest because of their ownership of common stock of, and other ties to, Kerr-McGee.

Two of our three directors are officers of Kerr-McGee. These directors will have fiduciary duties to both companies and may have conflicts of interest on matters affecting both us and Kerr-McGee and in some circumstances may have interests adverse to our interests. In addition, all of our executive officers and directors own common stock of Kerr-McGee or options to purchase common stock of Kerr-McGee. Ownership of such common stock or options could create, or appear to create, potential

conflicts of interest when directors and officers are faced with decisions that could have different implications for Kerr-McGee and us.

Our separation agreements with Kerr-McGee may be less favorable to us than if they had been negotiated with unaffiliated third parties.

We will enter into our separation agreements with Kerr-McGee while we are a wholly-owned subsidiary of Kerr-McGee. If these agreements were negotiated with unaffiliated third parties, they might be more favorable to us. Pursuant to certain of our agreements with Kerr-McGee, we will agree to indemnify Kerr-McGee for, among other matters, certain liabilities related to the current and past businesses operated by our subsidiaries and their predecessors. See "Arrangements Between Kerr-McGee and Our Company" for a description of these obligations. The allocation of assets and liabilities between Kerr-McGee and us may not reflect the allocation that would have been reached by two unaffiliated parties. While we are controlled by Kerr-McGee, it is possible for Kerr-McGee to cause us to amend these agreements on terms that may be less favorable to us than the original terms of the agreement.

Provisions in our agreements with Kerr-McGee may discourage, delay or prevent us from issuing additional shares of our common stock or entering into any transaction that would result in a change of control.

Under our financial reporting and corporate governance agreement, while Kerr-McGee owns at least 50% of our outstanding common stock, we are restricted from issuing any shares of our common stock, or any rights, warrants or options to acquire our common stock, if this would cause Kerr-McGee to own less than 50% of our outstanding stock (on a fully diluted basis) or 80% of the total voting power of our outstanding capital stock entitled to vote in the election of our directors (on a fully diluted basis). See "Arrangements between Kerr-McGee and Our Company—Financial Reporting and Corporate Governance Agreement."

In addition, under our tax sharing agreement with Kerr-McGee, if we enter into certain transactions during the period ending two years following the Distribution which result in the issuance or acquisition of our shares, and the Internal Revenue Service subsequently determines that Section 355(e) of the Internal Revenue Code is applicable to the Distribution, we will be required to indemnify Kerr-McGee for any tax liability incurred by it. We would also be required to indemnify Kerr-McGee for any tax that would result from any transaction we enter into that prevents Kerr-McGee from distributing "control" of us, as defined under Section 368(c) of the Internal Revenue Code, in the Distribution. See "Arrangements between Kerr-McGee and Our Company—Tax Sharing Agreement."

These obligations may discourage, delay or prevent us from issuing additional shares of our common stock, even if we need additional capital, or from entering into a transaction that would result in a change of control. See "Arrangements between Kerr-McGee and Our Company—Tax Sharing Agreement—Tax Limitations on Additional Issuances of Our Stock and Other Transactions."

There is no existing market for our Class A common stock, and an active trading market may not develop or the price of our Class A common stock may decline.

Prior to this offering, there has been no public market for our Class A common stock and there can be no assurance that an active trading market will develop and continue upon completion of this offering. You may be unable to resell your shares at or above the initial public offering price, which will be determined by negotiations between the underwriters and us and may not be indicative of the

market price for our Class A common stock after the initial public offering. Factors that could affect our market price include the following:

These factors may decrease the market price of our Class A common stock regardless of our actual operating performance. In addition, the stock markets in general have experienced extreme volatility that has at times been unrelated to the operating performance of particular companies. These broad market fluctuations may also result in a lower trading price of our Class A common stock. The market price of our Class A common stock could also be affected by additional sales or other distributions of our common stock. See "—Our share price may decline as a result of additional sales or other distributions of our common stock."

All of the net proceeds we receive from this offering and a majority of any net proceeds we receive from additional financing we obtain will be distributed to Kerr-McGee and none will be used to further invest in our business.

We estimate that the net proceeds from this offering of our Class A common stock, after deducting estimated underwriting discounts and commissions and estimated offering expenses, will be approximately $ million ($ million if the underwriters exercise in full their option to purchase additional shares of Class A common stock). We intend to distribute all of those net proceeds we receive to Kerr-McGee. In addition, we expect to obtain additional financing either concurrently with or shortly following the completion of this offering. We expect to distribute a majority of the net proceeds of any such additional financing to Kerr-McGee. As a result, none of such proceeds will be used to further invest in our business. See "Use of Proceeds."

Because of differences in voting power and liquidity between our Class A common stock and our Class B common stock, the market price of our Class A common stock may be less than the market price of our Class B common stock following Kerr-McGee's distribution of our Class B common stock.

Following the completion of this offering, Kerr-McGee has advised us that, subject to the terms of its agreement with the underwriters (as discussed in "Underwriting—Lock-Up Agreements"), it intends to distribute its shares of our Class B common stock to its stockholders. After the Distribution, the Class B common stock will be publicly traded. As a result of the Distribution as currently contemplated by Kerr-McGee, there will be more shares of Class B common stock than Class A common stock outstanding, which will cause the Class B common stock to be more liquid than the Class A common stock. In addition, the Class B common stock will have greater voting power per share for the election and removal of directors than the Class A common stock. As a result, investors may prefer the Class B common stock as a means of investing in our company, and the Class B common stock may trade at a higher market price than the Class A common stock. For a further discussion, see "Description of Capital Stock—Authorized Capitalization—Common Stock."

Our share price may decline as a result of additional sales or other distributions of our common stock.

Sales or other distributions of substantial amounts of our common stock after this offering, or the possibility of those sales or other distributions, could adversely affect the market price of our Class A common stock and impede our ability to raise capital through the issuance of equity securities.

After this offering, Kerr-McGee will own all of the outstanding shares of our Class B common stock, representing % of the outstanding shares of all classes of our common stock and % of the total voting power of all classes of our common stock. Kerr-McGee has advised us that, following completion of this offering, it intends to distribute all of our Class B common stock that it owns to its stockholders in the Distribution. Kerr-McGee has no contractual obligation to retain its shares of our Class B common stock, except for a limited period described under "Underwriting—Lock-Up Agreements," during which it may not sell or distribute any of its shares of our Class B common stock without the underwriters' consent until 180 days, or, in the case of the Distribution and certain related transfers 120 days, after the date of this prospectus. Subject to applicable U.S. federal and state securities laws, after the expiration of the applicable waiting period (or before, with consent of the underwriters to this offering), Kerr-McGee may sell any and all of the shares of our Class B common stock that it beneficially owns or distribute any or all of its shares of our Class B common stock, including in the Distribution, to its stockholders. In addition, as described under "Underwriting—Lock-Up Agreements," after a waiting period of 180 days after the date of this prospectus (or before, with consent of the underwriters), we could issue and sell additional shares of our Class A common stock, subject to our indemnification obligations under our tax sharing agreement with Kerr-McGee and, if the Distribution is not yet complete, Kerr-McGee's consent. See "Arrangements between Kerr-McGee and Our Company—Financial Reporting and Corporate Governance Agreement" and "Arrangements between Kerr-McGee and Our Company—Tax Sharing Agreement—Tax Limitations on Additional Issuances of Our Stock and Other Transactions."

Any sale or distribution by Kerr-McGee of our Class B common stock or any sale by us of our Class A common stock in the public market could adversely affect prevailing market prices for the shares of our Class A common stock. See "Shares Eligible for Future Sale" for a discussion of possible future sales or other distributions of our common stock.

You will suffer an immediate and substantial dilution in the book value of your investment.

The initial public offering price per share of our Class A common stock is substantially higher than the net tangible book value per share of our Class A common stock. Accordingly, if you purchase shares of our Class A common stock in this offering, you will be subject to immediate and substantial dilution of $ in pro forma net tangible book value per share. You will experience additional dilution to the extent that the underwriters exercise their option to purchase additional shares of our Class A Common Stock. See "Dilution."

Certain provisions of Delaware law, our corporate instruments and our stockholder rights plan may delay or prevent an acquisition of us that stockholders may consider favorable or may prevent efforts by our stockholders to change our directors or our management, which could decrease the value of your shares.

Section 203 of the Delaware General Corporation Law and provisions in our amended and restated certificate of incorporation and amended and restated bylaws could make it more difficult for a third party to acquire us without the consent of our board of directors. These provisions include the following:

In addition, our stockholder rights plan imposes a significant penalty on any person or group that acquires, or begins a tender or exchange offer that would result in such person acquiring, 15% or more

of our outstanding Class A common stock, 15% of our outstanding Class B common stock, or any combination of our Class A common stock and Class B common stock representing 15% or more of the votes of all shares entitled to vote in the election of directors. In such a case, our board of directors has the unrestricted right to authorize the special issuance of shares of our preferred stock. These restrictions under Delaware law and our stockholder rights plan do not apply to Kerr-McGee while it retains at least 15% or more of our Class B common stock.

Although we believe these provisions protect our stockholders from coercive or otherwise unfair takeover tactics and thereby provide for an opportunity to receive a higher bid by requiring potential acquirers to negotiate with our board of directors, these provisions apply even if the offer may be considered beneficial by some stockholders. Further, these provisions may discourage potential acquisition proposals and may delay, deter or prevent a change of control of our company, including through unsolicited transactions that some or all of our stockholders might consider to be desirable. As a result, efforts by our stockholders to change our direction or our management may be unsuccessful.

We have made certain forward-looking statements in this prospectus, which are subject to risks and uncertainties. See "Risk Factors." These statements are based on the beliefs and assumptions of our management and on the information currently available to our management at the time of such statements. Forward-looking statements include information concerning our possible or assumed future results or otherwise speak to future events and may be preceded by, followed by, or otherwise include the words "believes," "expects," "anticipates," "intends," "plans," "estimates" or similar expressions.

Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Future results or performance may differ materially from those expressed or implied in these forward-looking statements. Many of the factors that will determine these results and values are beyond our ability to control or predict. Potential investors are cautioned not to put undue reliance on any forward-looking statements. Except as required by the Federal securities laws, we do not have any intention or obligation to update forward-looking statements after we distribute this document, even if new information, future events or other circumstances have made them incorrect or misleading.

You should understand that various factors, in addition to those discussed in "Risk Factors" and elsewhere in this document, could affect our future results and could cause results to differ materially from those expressed in such forward-looking statements, including the following:

We estimate that our net proceeds from the sale of shares of Class A common stock being offered by this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses, will be approximately $ million ($ million if the underwriters exercise in full their option to purchase additional shares), assuming the shares are offered at $ per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus. We intend to distribute all of the net proceeds to Kerr-McGee.

Following completion of this offering, we currently intend to pay a regular quarterly dividend to our Class A and Class B stockholders of $ per share. The declaration and payment of future dividends is discretionary, and the amount, if any, will be dependent upon our results of operations, financial condition, contractual restrictions and other factors deemed relevant by our board of directors. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition—Liquidity and Capital Resources."

The following table sets forth our cash and cash equivalents and combined capitalization as of March 31, 2005:

This table should be read together with "Use of Proceeds," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our combined financial statements and the notes to those statements, in each case, included elsewhere in this prospectus.

Dilution is the amount by which the offering price paid by the purchasers of our Class A common stock to be sold in this offering will exceed the net tangible book value per share of our Class A common stock after this offering. The net tangible book value per share is equal to the amount of our total tangible assets (total assets less intangible assets) less total liabilities, divided by the number of shares of our Class A common stock outstanding. After giving effect to our sale of shares of Class A common stock in this offering at an assumed initial public offering price of $ per share, the midpoint of the estimated offering price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and offering expenses, our net tangible book value as of March 31, 2005 would have been $ , or $ per share of Class A common stock. This represents an immediate dilution in net tangible book value of $ per share to investors purchasing shares of our Class A common stock in this offering.

The following table summarizes, as of , , the total number of shares of Class A and Class B common stock on an aggregate basis purchased from us, the total consideration paid to us and the average price per share of Class B common stock paid by Kerr-McGee and the average price per share of Class A common stock paid by new investors purchasing shares of Class A common stock in this offering:

The tables and calculations above assume no exercise of the underwriters' option to purchase additional shares of our Class A common stock.

The following table sets forth our selected combined financial data as of the dates and for the periods indicated in such table. The selected statement of operations data for the years ended December 31, 2004, 2003 and 2002, and the balance sheet data as of December 31, 2004 and 2003, have been derived from our audited combined financial statements included elsewhere in this prospectus. The selected statement of operations data for the years ended December 31, 2001 and 2000, and the balance sheet data as of March 31, 2004 and December 31, 2002, 2001 and 2000 have been derived from our accounting records and are unaudited. The selected statement of operations data for the three-month periods ended March 31, 2005 and 2004, and the balance sheet data as of March 31, 2005, have been derived from our interim unaudited condensed combined financial statements included elsewhere in this prospectus. In the opinion of our management, our unaudited condensed combined financial statements have been prepared on a basis consistent with the audited combined financial statements and include all adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation of the results of operations for the periods presented. Results of operations for the three- month periods ended March 31, 2005 and 2004 are not necessarily indicative of the operating results to be expected for the full fiscal year 2005 or for any future periods.

The selected financial data presented below should be read together with our combined financial statements and the notes to those statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

We are currently an indirect wholly-owned subsidiary of Kerr-McGee Corporation and were formed on May 17, 2005 to hold Kerr-McGee Corporation's chemical business. Kerr-McGee Corporation's chemical business is currently operated by certain of its subsidiaries. Prior to the closing of this offering, each of those subsidiaries will be contributed to us by Kerr-McGee, along with certain assets and liabilities related to the chemical business. Until that contribution occurs, we will have no material assets or operations. This prospectus, including the combined financial statements and the following discussion, describes us and our financial condition and operations as if we held the subsidiaries that will be transferred to us prior to closing for all historical periods presented. The following discussion should be read in conjunction with the selected combined financial data and the combined financial statements and the related notes included elsewhere in this prospectus. Except for the historical combined financial information contained herein, the matters discussed below may contain forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed below and elsewhere in this prospectus, particularly in "Risk Factors" and "Special Note Regarding Forward-Looking Statements."

We are the world's third largest producer and marketer of titanium dioxide products, with an estimated 13% share of the $9 billion global market in 2004. We also produce and market electrolytic manganese dioxide and sodium chlorate, as well as boron-based and other specialty chemicals. We operate seven production facilities and have direct sales and technical service organizations in the United States, Europe and the Asia-Pacific region. We have approximately 2,150 employees worldwide and more than 1,100 customers located in over 100 countries. In 2004, we had total net sales of $1.3 billion and adjusted EBITDA of $106.3 million. For a reconciliation of adjusted EBITDA to net income (loss) and cash flows from operating activities, see "Prospectus Summary—Summary Financial Data."

Our business has two reportable segments: pigment and electrolytic and other chemical products. Our pigment segment, which accounted for approximately 93% of our net sales in 2004, primarily produces and markets titanium dioxide pigment. Performance of our pigment segment is cyclical and tied closely to general economic conditions, including global gross domestic product. Events that negatively affect discretionary spending also may negatively affect demand for finished products that contain titanium dioxide. Our pigment segment also is affected by seasonal fluctuations in the demand for coatings, the largest end-use market for titanium dioxide. From 2000 through 2003, the titanium dioxide industry experienced a period of unusually weak business conditions as a result of a variety of factors, including the global economic recession, exceptionally rainy weather conditions in Europe and the Americas and the outbreak of SARS in Asia. However, global economic conditions generally improved in late 2004, driving increased demand, and, in the last half of 2004 and early 2005, increased prices. No major titanium dioxide plant construction projects have commenced, and we expect the industry's current high capacity utilization rates to continue in the near term and believe that industry dynamics show a sustainable improving trend.

Due to the nature of our current and former operations, we have significant environmental remediation obligations. Former operations include, among others, operations involving the production of ammonium perchlorate, treatment of forest products, the refining and marketing of petroleum products and the mining, milling and processing of nuclear materials. As a result, some of the obligations to which we are subject are not typical of other titanium dioxide producers. As of March 31, 2005, we had reserves in the amount of $248.5 million for environmental matters and receivables for reimbursement for such matters of $48.0 million. During 2004, we provided $67.2 million (net of reimbursements) for environmental remediation and restoration costs, of which

$61.5 million related to discontinued operations. We had $34.7 million of expenditures associated with our environmental remediation projects, net of $50.5 million in third-party reimbursements in 2004.

Our combined financial statements included elsewhere in this prospectus have been derived from the accounting records of Kerr-McGee, principally representing Kerr-McGee's Chemical—Pigment and Chemical—Other reportable segments. We have used the historical results of operations, and historical basis of assets and liabilities of the subsidiaries we will own and the chemical business we will operate after completion of this offering, to prepare the combined financial statements.

Our combined statement of operations included elsewhere in this prospectus includes allocations of costs for certain corporate functions historically provided to us by Kerr-McGee, including:

General Corporate Expenses. This represents costs related to corporate functions such as accounting, tax, treasury, human resources, legal and information management and technology. These costs have historically been allocated primarily based on estimated use of services as compared to Kerr-McGee's other businesses. These costs are included in selling, general and administrative expenses in the combined statement of operations.

Employee Benefits and Incentives. This represents fringe benefit costs and other incentives, including group health and welfare benefits, U.S. pension plans, U.S. postretirement benefit plans and employee stock-based compensation plans. These costs have historically been allocated on an active headcount basis for health and welfare benefits, including U.S. postretirement plans, on the basis of salary for U.S. pension plans and on a specific identification basis for employee stock-based employee compensation plans. These costs are included in costs of goods sold, selling, general and administrative expenses and restructuring charges in the combined statement of operations.

Interest Expense. Kerr-McGee has provided financing to us through cash flows from its other operations and debt incurred. Although the incurred debt has not been allocated to us, a portion of the interest expense has been allocated based on specifically-identified borrowings at Kerr-McGee's average borrowing rates. These costs are included in other income (expense) in the combined statement of operations, net of interest income that has been allocated to Kerr-McGee on certain monies we have loaned to Kerr-McGee.

Expense allocations from Kerr-McGee reflected in the income (loss) from continuing operations in our combined financial statements were as follows:

These allocations were based on what Kerr-McGee considered to be reasonable reflections of the historical utilization levels of these services required in support of our business. We currently estimate that general annual corporate expenses will increase $20.0 to $25.0 million when we become a stand-alone company. In addition, we estimate that we may incur up to $12.0 million of one-time costs related to the creation of the infrastructure we need to operate as a stand-alone company. This consists primarily of costs to separate our information technology systems and infrastructure from those of Kerr-McGee.

Kerr-McGee uses a worldwide centralized approach to cash management and the financing of its operations, with all related activity between Kerr-McGee and us reflected as net transfers from Kerr-McGee in our combined statement of comprehensive income (loss) and business equity. In connection with our separation from Kerr-McGee, the net amount due from us to Kerr-McGee at the closing date of this offering will be contributed by Kerr-McGee to us as equity, forming a part of our continuing equity. Subsequent to the closing of this offering, amounts due from or to Kerr-McGee arising from transactions subsequent to that date will be settled in cash.

We believe the assumptions underlying our combined financial statements are reasonable. However, the combined financial statements may not necessarily reflect our future results of operations, financial position and cash flows or what our results of operations, financial position and cash flows would have been had we been a stand-alone company during the periods presented.

The following table summarizes segment operating profit (loss), with a reconciliation to combined net income (loss) for each of the last three years and for the three-month periods ended March 31, 2005 and 2004:

Three Months Ended March 31, 2005 Compared to Three Months Ended March 31, 2004

Net Sales. Net sales increased by $59.3 million, or 21.6%, to $334.2 million during the first quarter of 2005 from $274.9 million in the first quarter of 2004. The increase was primarily due to an

increase in both average selling prices and sales volumes in the pigment segment due to stronger market conditions.

Gross Margin. Gross margin for the first quarter of 2005 increased $30.9 million compared to the same period in 2004. As a percent of sales, gross margin increased to 18.5% in the first quarter of 2005 from 11.3% in 2004. The improved margin was primarily due to the improved pricing in the pigment segment realized during the first quarter of 2005.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $1.0 million during the first quarter of 2005 compared to the same period in 2004. This increase was primarily due to an increase in employee incentive compensation related to cash bonuses resulting from the improved performance during the quarter.

Provision for Environmental Remediation and Restoration, net of Reimbursements. Provision for environmental remediation and restoration, net of reimbursements was $10.9 million in the first quarter of 2005 compared to $0.9 million in the same period of 2004. The charge in the first quarter of 2005 was primarily related to remediation of ammonium perchlorate contamination associated with the Henderson, Nevada facility. During the first quarter of 2005, it was determined that the groundwater remediation system at the Henderson facility would need to be operated and maintained over an extended time period and a provision was added for the closure of an ammonium perchlorate pond. This charge was net of additional insurance reimbursement receivable (see "—Environmental Matters").

Other Income (Expense). Other expense decreased $1.9 million during the first quarter of 2005 compared to the same period in 2004 primarily due to a decrease in losses in 2005 compared to the prior year attributable to changes in the exchange rates for both the euro and the Australian dollar.

Benefit (Provision) for Income Taxes. Our effective tax rate related to continuing operations for the first quarter of 2005 was 30.3%, compared to 35.0% for the first quarter of 2004. This effective rate is based on Kerr-McGee's current tax allocation policy. On a stand-alone basis, our pro forma provision for income taxes related to continuing operations for the first quarter of 2005 would have been $2.6 million less than that determined under the current allocation policy. This increase in income taxes was due primarily to income in the United States that would have been eliminated by our stand-alone net operating loss carryforward.

Loss from Discontinued Operations. The loss from discontinued operations, net of taxes, in the first quarter of 2005 was $8.4 million compared to $1.6 million for the same period in 2004. The loss in 2005 was primarily related to additional environmental costs for the former West Chicago site to cover increased soil volumes encountered during the final stages of characterization of Kress Creek (see "—Environmental Matters—Environmental Costs" below and note 21 to the audited combined financial statements included elsewhere in the prospectus).

Net Sales. Net sales increased $58.4 million, or 23.1%, during the first quarter of 2005 compared to the same period in the prior year. Approximately $30 million of this increase was due to an increase in average selling prices of approximately 11%, and the remainder was due to increased sales volumes of approximately 14,000 tonnes. Stronger market conditions contributed to the improvement in both the pricing and volumes in 2005. Pricing was also positively impacted by the effect of foreign currency exchange rates in these two periods.

Operating Profit. Operating profit for the first quarter of 2005 was $31.7 million, an increase of $25.0 million over the operating profit of $6.7 million for the same 2004 period. The increase was driven by the increase in net sales, partially offset by increased manufacturing costs and freight due to the increased volumes sold and increased costs resulting from the effects of foreign currency exchange rate changes.

Net Sales. Net sales for the first quarter of 2005 were $23.4 million, an increase of $0.9 million, compared to the same period in the prior year, primarily due to increased sales of sodium chlorate.

Operating Loss. Operating loss in the first quarter of 2005 was $8.7 million, compared with an operating loss of $2.6 million in the same 2004 period. In the first quarter of 2005, we incurred a net $11.4 million environmental provision related primarily to ammonium perchlorate remediation associated with our Henderson, Nevada operations (net of expected insurance reimbursement of $19.0 million). This charge was partially offset by improved operations at our Henderson, Nevada electrolytic manganese dioxide manufacturing facility during the first quarter of 2005 compared to the prior year.

Net Sales. Net sales increased by $144.1 million, or 12.4%, to $1,301.8 million in 2004 from $1,157.7 million in 2003. The increase was primarily due to increased sales volumes in both segments and an increase in average sales prices for titanium dioxide in 2004 due to improved market conditions and the positive impact of foreign currency exchange rates.

Gross Margin. Gross margin in 2004 was $132.9 million compared to $133.0 million in 2003. As a percent of sales, gross margin declined to 10.2% in 2004 from 11.5% in 2003. The decline in the gross margin percentage was primarily due to an inventory revaluation charge of $15.6 million recognized in 2004 in connection with the shutdown of our titanium dioxide pigment sulfate production at our Savannah, Georgia facility (see further discussion under "—Restructuring Charges" below).

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $11.2 million in 2004 compared to 2003. This increase was due to an increase in employee incentive compensation related to cash bonuses and restricted stock awards, additional costs associated with cash settlements of certain qualified benefits associated with retirements during the year and increased legal fees.

Restructuring Charges. In 2004, we shutdown our titanium dioxide pigment sulfate production at our Savannah, Georgia facility. Demand and prices for sulfate anatase pigments, particularly in the paper market, had declined in North America consistently during the previous several years. The decreasing volumes, along with unanticipated environmental and infrastructure issues discovered after we acquired the facility in 2000, created unacceptable financial returns for the facility and contributed to the decision to shut it down. We expect this shutdown, once fully implemented, will result in an improvement in segment operating profit of approximately $15 million annually based on 2004 costs.

Included in the restructuring charges in 2004 was $86.6 million of asset write-downs taken in the form of accelerated depreciation for plant assets, $7.4 million for impairment of intangible assets, $6.7 million for severance and benefit plan curtailment costs and $6.7 million for other closure costs. We also recognized an additional $5.6 million of costs in 2004 in connection with the closure of the synthetic rutile plant in Mobile, Alabama. The 2003 restructuring charges included $38.6 million for shutdown costs related to the Mobile, Alabama facility and $22.8 million in connection with a work force reduction program consisting of both voluntary retirements and involuntary terminations that reduced our work force by 138 employees.

Provision for Environmental Remediation and Restoration, net of Reimbursements. Provision for environmental remediation and restoration, net of reimbursements, was $4.6 million in 2004 compared to $14.9 million in 2003. The decrease in 2004 was primarily due to a provision in 2003 related to ammonium perchlorate at our Henderson, Nevada facility. Our environmental obligations are discussed in detail under "—Environmental Matters—Environmental Costs" below and note 21 to the audited combined financial statements included elsewhere in this prospectus.

Other Income (Expense). Other expense increased $4.7 million in 2004 compared to 2003 primarily due to an increased loss on the pigment receivables sold under the asset securitization program due to increased activity in 2004 and an increase in the foreign currency losses in 2004 due to unfavorable changes in the Australian dollar exchange rates.

Benefit for Income Taxes. Our effective tax rate related to continuing operations was 31.9%, compared with 24.0% in 2003. This rate is based on Kerr-McGee's current tax allocation policy. On a stand-alone basis, our pro forma provision for income taxes related to continuing operations in 2004 would have been $44.2 million more than that determined under our allocation policy with Kerr-McGee. This increase in income taxes was due primarily to net operating losses in the United States which we would not have been able to utilize on a stand-alone basis.

Loss from Discontinued Operations. We recognized a loss from discontinued operations as a result of our decision to dispose of the forest products business and additional environmental provisions related to other previously discontinued operations of $45.8 million in 2004 and $35.8 million in 2003, net of tax benefit. The increased loss in 2004 was primarily due to additional environmental provisions, net of reimbursements, in 2004 related to our former thorium manufacturing and refining operations.

Cumulative Effect of Change in Accounting Principle. We recognized a charge of $9.2 million (net of income tax benefit of $4.9 million) in 2003 upon adoption, as of January 1, 2003, of Financial Accounting Standards Board Statement No. 143 (FAS No. 143), "Accounting for Asset Retirement Obligations" related to our Mobile plant which we expected to close at the date of adoption of this standard.

Net Sales. Net sales increased $129.6 million, or 12%, in 2004 to $1,208.4 million from $1,078.8 million in 2003. Of the total increase, approximately $114 million was due to increased sales volumes and approximately $16 million resulted from an increase in average sales prices. Sales volumes for 2004 were approximately 9% higher than in the prior year due primarily to stronger market conditions. Approximately half of the increase in average sales prices in 2004 was due to the effect of foreign currency exchange rates with the remainder due to price increases resulting from improved market conditions.

Operating Loss. The pigment segment recorded an operating loss of $86.5 million in 2004, compared with an operating loss of $15.0 million in 2003. The 2004 operating loss was primarily the result of shutdown provisions discussed above for the sulfate-process titanium dioxide pigment production at the Savannah, Georgia, facility totaling $123.0 million. Operating results for 2004 also were negatively impacted by $6.8 million of costs incurred in connection with the continued efforts to close the synthetic rutile plant in Mobile, Alabama, compared to a $46.7 million plant closure provision recognized in 2003 for this facility. Additionally, operating results in 2003 were negatively impacted by a $22.9 million charge for work force reduction and other compensation costs. These charges had the effect of reducing operating profit by $129.8 million in 2004 and $69.6 million in 2003. The increase in revenues in 2004 resulting from higher volume and sales prices was offset by an increase of approximately $132 million in production costs due to higher volume (approximately $80 million) and costs (approximately $52 million including the effects of foreign currency exchange rate changes) and an increase in selling, general and administrative expenses of approximately $6 million over 2003. Additional information related to the shutdowns of the Savannah and Mobile facilities is included in note 15 to our audited combined financial statements included elsewhere in this prospectus.

We began production through a new high-productivity oxidation line at our Savannah, Georgia chloride process pigment plant in January 2004. This new technology results in low-cost incremental capacity increases through modification of existing chloride oxidation lines and allows for improved operating efficiencies through simplification of hardware configurations and reduced maintenance requirements. This project, if successful, will substantially increase chloride production capability at a

reduced asset intensity level. We continue to evaluate the performance of this new oxidation line and expect to determine how the Savannah site might be reconfigured to exploit its capabilities in 2005. The possible reconfiguration of the Savannah site, if any, could include redeployment or idling of certain assets and reduction of their future useful lives, resulting in write-downs or the recognition of other charges.

Net Sales. Net sales increased $14.5 million, or 18.4%, in 2004 to $93.4 million from $78.9 million in 2003. The increase in net sales resulted primarily from an increase in electrolytic sales due primarily to the full year of operations at our electrolytic manganese dioxide (EMD) manufacturing operation in Henderson, Nevada (see further discussion under "—Operating Loss" below).

Operating Loss. The electrolytic and other chemical products segment recorded an operating loss for 2004 of $0.6 million compared with an operating loss of $22.0 million in 2003. The improved operating performance was primarily due to the full year of operations at the EMD facility, lower environmental costs in 2004 of $9.4 million compared to 2003 and work force reduction and other compensation charges recognized in 2003 that did not recur in 2004. The 2003 environmental costs incurred related primarily to remediation of ammonium perchlorate contamination associated with the Henderson, Nevada facility. While we are no longer producing ammonium perchlorate, we continue to use the property in our other chemical products business.

During the third quarter of 2003, our EMD manufacturing operation in Henderson, Nevada, was placed on standby to reduce inventory levels due to the harmful effect of low-priced imports on our EMD business. In response to the pricing activities of importing companies, Kerr-McGee Chemical LLC, one of our subsidiaries, filed a petition for the imposition of anti-dumping duties with the U.S. Department of Commerce International Trade Administration and the U.S. International Trade Commission on July 31, 2003. In its petition, Kerr-McGee Chemical LLC alleged that manufacturers in certain countries export EMD to the United States in violation of U.S. anti-dumping laws and requested that the U.S. Department of Commerce apply anti-dumping duties to the EMD imported from such countries. The Department of Commerce found probable cause to believe that manufacturers in the specified countries engaged in dumping and initiated an anti-dumping investigation with respect to such manufacturers. Subsequently, demand in the United States for U.S.-produced EMD product increased, and the plant resumed operations in December 2003. Kerr-McGee Chemical LLC withdrew its anti-dumping petition in February 2004 but continues to monitor the pricing activities of EMD importers.

Net Sales. Net sales increased by $93.4 million, or 8.8%, to $1,157.7 million in 2003 from $1,064.3 million in 2002. The increase was primarily due to an increase in average sales price in the pigment segment, largely as a result of favorable changes in foreign currency exchange rates.

Gross Margin. Gross margin increased $17.7 million, or 15.4% in 2003 from $115.3 million in 2002 to $133.0 million in 2003. As a percent of sales, gross margin increased to 11.5% in 2003 from 10.8% in 2002. The increase was primarily due to the improved sales prices in the pigment segment.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $14.9 million in 2003 compared to 2002. This increase was primarily due to increased general corporate allocations from Kerr-McGee, additional consulting and legal fees and increased employee incentive compensation in the form of cash bonuses.

Restructuring Charges. In 2003, we closed our synthetic rutile plant in Mobile, Alabama. We recorded a write-down of fixed assets in the form of accelerated depreciation of $15.2 million for plant assets, $16.6 million for severance and benefit plan curtailment costs and $6.8 million for other shutdown costs. We also recognized a $22.8 million charge in 2003 in connection with a work force

reduction program consisting of both voluntary retirements and involuntary terminations that reduced our work force by 138 employees. In 2002, we recorded an $11.8 million write-down of fixed assets in the form of accelerated depreciation for abandoned engineering projects.

Provision for Environmental Remediation and Restoration, net of Reimbursements. Provision for environmental remediation and restoration, net of reimbursements, was $14.9 million in 2003 compared to $14.3 million in 2002, primarily related to remediation of ammonium perchlorate contamination at our Henderson, Nevada facility in both years. Our environmental obligations are discussed in detail under "—Environmental Matters" below and note 21 to the audited combined financial statements included elsewhere in this prospectus.

Other Income (Expense). Other expense increased $7.4 million in 2003 compared to 2002 primarily due to an increase in the foreign currency losses in 2003 as a result of unfavorable changes in both the euro and Australian dollar exchange rates compared to the U.S. dollar.

Benefit (Provision) for Income Taxes. Our effective tax rate related to continuing operations for 2003 was a benefit of 24.0%, compared with expense of 103.8% in 2002. This rate is based on Kerr-McGee's current tax allocation policy. The difference in the effective rate is due to the proportion of income from continuing operations attributable to foreign operations.

Loss from Discontinued Operations. We recognized a loss from discontinued operations as a result of our decision to dispose of the forest products business and additional environmental and litigation provisions related to other previously discontinued operations of $35.8 million in 2003 and $81.0 million in 2002, net of tax benefit. The decrease in the loss in 2003 was due primarily to higher litigation expenses in 2002 related to our former forest products operations.

Net Sales. Net sales increased $84.5 million, or 8.5%, in 2003 to $1,078.8 million from $994.3 million in 2002. Of the total increase, approximately $94 million resulted from an increase in average sales prices, partially offset by an approximately $10 million decrease due to lower sales volumes. The increase in average sales prices in 2003 was largely due to the effect of foreign currency exchange rates. Excluding the effect of foreign currency exchange rates, average selling prices in local currencies for 2003 were 3% higher than in 2002. Sales volumes for 2003 were approximately 1% lower than in the prior year.

Operating Profit (Loss). The pigment segment recorded an operating loss of $15.0 million in 2003, compared with an operating profit of $23.5 million in 2002. The increase in revenues due to higher sales prices was partially offset by an increase in average product costs of approximately $58 million and selling, general and administrative costs of approximately $11 million over 2002. Additionally, operating results in 2003 were negatively affected by $46.7 million in plant closure provisions related to the shutdown of the synthetic rutile plant in Mobile, Alabama, together with a $22.9 million charge for work force reduction and other compensation costs. The 2002 operating profit included $11.8 million in charges for abandoned chemical engineering projects, approximately $3 million for severance and other costs and a $6.1 million reversal of environmental reserves associated with the Savannah operations.

Net Sales. Net sales increased $8.9 million, or 12.7%, in 2003 to $78.9 million from $70.0 million in 2002. The increase in net sales was primarily due to higher electrolytic operations sales volumes. The increased volumes were predominantly achieved in sodium chlorate and boron products (17% and 37%, respectively).

Operating Loss. Operating loss for 2003 was $22.0 million compared with operating loss of $13.4 million in 2002. The $8.6 million increase in operating loss for 2003 was primarily due to the 2003 work force reduction costs and other compensation charges of approximately $4.1 million and higher electrolytic product costs of approximately $8 million, partially offset by lower environmental

costs of approximately $4.2 million. Environmental provisions in both 2003 and 2002 related primarily to remediation of ammonium perchlorate contamination associated with our Henderson, Nevada, operations (see "—Environmental Matters—Environmental Costs" and note 21 to our audited combined financial statements included elsewhere in this prospectus).

Historically, we have participated in Kerr-McGee's centralized cash management system and have relied on Kerr-McGee to provide necessary cash financing. Such activities include cash deposits from our operations which are transferred daily to Kerr-McGee's centralized banking system and cash borrowings used to fund our operations and capital expenditures. The related cash activity between us and Kerr-McGee is reflected as net transfers with affiliates in our combined statement of cash flows. Additionally, as discussed below, certain expenditures related to our operations were paid by Kerr-McGee on our behalf and, therefore, did not affect cash flows from operating and financing activities reported in our combined statement of cash flows. As such, the amounts of cash and cash equivalents, as well as cash flows from operating and financing activities presented in the company's combined financial statements are not representative of the amounts that would have been required or generated by us as a stand-alone company.

In connection with our separation from Kerr-McGee, the net amount due from us to Kerr-McGee at the closing date of this offering will be contributed by Kerr-McGee, forming a part of our continuing equity. Such net amounts due to Kerr-McGee that were outstanding at the balance sheet dates have been reflected in our combined financial statements as a component of owner's net investment in equity. Amounts due to or from Kerr-McGee arising from transactions subsequent to completion of this offering will be settled in cash. Following completion of this offering, Kerr-McGee will no longer provide funds to finance our operations. We expect to obtain financing from other parties either concurrently with or shortly following completion of this offering. This financing may take the form of loans under a credit facility, the issuance of bonds or other types of debt securities, or a combination of the foregoing. In connection with our separation from Kerr-McGee, we expect to distribute a majority of the proceeds of any additional financing to Kerr-McGee, but will retain a portion to support our working capital needs.

The following table provides certain information useful in the analysis of our financial condition and liquidity.

Of cash and cash equivalents at March 31, 2005, $2.4 million was held in the United States and $67.3 million was held in other countries. In April 2005, $100 million of unremitted foreign earnings in Australia were repatriated as extraordinary dividends, as defined in the American Jobs Creation Act of 2004, and subsequently transferred to Kerr-McGee as part of its centralized cash management system. (see "—New/Revised Accounting Standards" below for additional discussion).

Until recently, we had an accounts receivable monetization program, which served as a source of liquidity up to a maximum of $165.0 million. This program was terminated in April 2005, as discussed in "—Off-Balance Sheet Arrangements" below.

Our primary cash needs will be for working capital, capital expenditures, environmental cash expenditures and debt service. We believe that our cash flows from operations, together with the proceeds from any debt financing that we retain, will be sufficient to meet these cash needs for the foreseeable future. However, our ability to generate cash is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. If our cash flows from operations are less than we expect, we may need to raise additional capital. We may also require additional capital to finance our future growth and development, implement additional marketing and sales activities, and to fund our ongoing research and development activities.

Debt or additional equity financing may not be available when needed on terms favorable to us or even available to us at all. Any debt financing we obtain may impose various restrictions and covenants on us which could limit our ability to respond to market conditions, provide for unanticipated capital investments or take advantage of business opportunities. We may also be subject to significant interest expense under the terms of any debt we incur.

Our ability to issue additional equity is further constrained by our agreements with Kerr-McGee. Under our financial reporting and corporate governance agreement with Kerr-McGee, while Kerr-McGee owns at least 50% of our outstanding common stock, we are restricted from issuing any shares of our common stock, or any rights, warrants or options to acquire our common stock, if this would cause Kerr-McGee to own less than 50% of our outstanding stock (on a fully diluted basis) or 80% of the total voting power of our outstanding capital stock entitled to vote in the election of our directors (on a fully diluted basis). In addition, under our tax sharing agreement with Kerr-McGee, if we enter into certain transactions during the two-year period following the Distribution which result in the issuance or acquisition of our shares, and the Internal Revenue Service subsequently determines that Section 355(e) of the Internal Revenue Code is applicable to the Distribution, we will be required to indemnify Kerr-McGee for any tax liability incurred by it.

Cash Flows from Operating Activities. Cash flows from operating activities in our combined statement of cash flows for all periods presented exclude certain expenditures incurred by Kerr-McGee on our behalf. Therefore, reported amounts are not representative of cash flows from operating activities we will generate or use as a stand-alone company. For example, cash flows from operating activities for 2004 exclude $37.0 million paid by Kerr-McGee for income taxes on our behalf. Additionally, 2004, 2003 and 2002 cash flows from operating activities exclude $55.1 million, $65.8 million and $51.6 million, respectively, of general corporate expenses, employee benefits and incentives, and net interest costs associated with our present and discontinued operations. While such costs are reflected in our combined statement of operations because they were allocated to us by Kerr-McGee, they did not result in cash outlays by us. As a stand-alone company, we expect costs and expenses of this nature will require the use of our cash and other sources of liquidity. Additionally, we expect that our general corporate expenses may be $20 to $25 million greater on an annual basis than we have incurred historically, which will further reduce our cash flows from operating activities as compared to historical experience. Further, as discussed under "—Contractual Obligations and Commitments" below, we expect cash requirements associated with employee pension and postretirement plans to increase following the completion of this offering.

Cash flows from operating activities for 2004 were $190.8 million, an increase of $70.4 million compared with cash flows from operating activities for 2003 of $120.4 million. The increase in cash flows from operating activities in 2004 is attributable primarily to a reduction in inventories, $35.7 million higher environmental cost reimbursements, $12.7 million lower expenditures for environmental remediation and restoration and $35.0 million less cash paid for legal settlements largely related to our former forest products business. These positive effects on cash flows from operating activities were partially offset by an unfavorable effect of timing differences between product sales and collections of trade accounts receivable. While improved economic conditions resulted in increased sales volumes in late 2004, collection of the related accounts receivable did not occur until 2005.

Cash flows from operating activities for 2003 were $120.4 million, an increase of $38.0 million compared with cash flows from operating activities for 2002 of $82.4 million. The increase in cash flows from operating activities in 2003 is attributable primarily to $23.2 million lower expenditures for environmental remediation and restoration and $14.8 million higher environmental cost reimbursements.

Cash flows from operating activities for the first quarter of 2005 were $88.2 million, compared with cash used in operating activities of $13.5 million for the same prior year period. The $101.7 million increase in cash flows from operating activities in the first quarter of 2005 was primarily due to higher sales volumes and prices as a result of stronger market conditions, increased environmental cost reimbursements and the timing of payment of accounts payable and accrued liabilities. Reimbursements of environmental expenditures exceeded cash paid for such expenditures by $56.5 million and $26.8 million in the first quarter of 2005 and 2004, respectively.

Cash Used in Investing Activities. Net cash used in investing activities was $91.4 million in 2004 compared to $95.7 million in 2003 and $86.6 million in 2002, principally representing capital expenditures. Significant capital expenditure projects in 2004 included waste management projects and an automated slurry project at our Hamilton, Mississippi facility that was begun in 2003. In 2003, significant projects included the Savannah plant high productivity oxidation line, waste management projects and the initial phase of the Hamilton plant automated slurry project that was completed in 2004.

Cash used in investing activities for the first quarter of 2005 was $11.1 million, a decline from $22.2 million for the first quarter of 2004. Higher capital expenditures in the first quarter of 2004 reflect spending on the Savannah plant high productivity oxidation line.

Capital expenditures for 2005 are budgeted at $100 million. Process and technology improvements that increase productivity and enhance product quality will account for approximately 43% of the 2005 capital budget. This includes changes to the Uergingen, Germany pigment facility to convert waste to a saleable product and reduce raw material costs and upgrading the oxidation line at the Botlek, the Netherlands, pigment facility to improve throughput.

Cash Provided by (Used in) Financing Activities. Net cash provided by (used in) financing activities was $(131.1) million in 2004, $(10.3) million in 2003, and $4.1 million in 2002. Net transfers from (to) Kerr-McGee were $(131.1) million, $(10.0) million and $14.3 million in 2004, 2003 and 2002, respectively. Cash used in financing activities for the first quarter of 2005 was $31.9 million, a decline of $59.4 million from the first quarter of 2004. All of the cash from financing activities resulted from transfers from or to Kerr-McGee. As discussed above, cash flows from operating activities presented in our historical financial statements exclude certain operating expenditures paid by Kerr-McGee on our behalf. Therefore, we anticipate that our cash flows from operating activities as a stand-alone company will be lower, which will require higher levels of cash provided by financing activities to support our operating and capital cash requirements.

Accounts Receivable Monetization Program. Through April 2005, we sold selected accounts receivable through a three-year, credit-insurance-backed asset securitization program with a maximum availability of $165.0 million. Under the terms of the program, selected qualifying customer accounts receivables were sold monthly to a special-purpose entity (SPE), which in turn sold an undivided ownership interest in the receivables to a third-party multi-seller commercial paper conduit sponsored by an independent financial institution. We sold, and retained an interest in, excess receivables to the SPE as over-collateralization for the program. Our retained interest in the SPE's receivables was classified in trade accounts receivable in our accompanying combined balance sheet. The retained interest was subordinate to, and provided credit enhancement for, the conduit's ownership interest in the SPE's receivables, and was available to the conduit to pay certain fees or expenses due to the conduit, and to absorb credit losses incurred on any of the SPE's receivables in the event of

termination. However, credit loss has historically been insignificant. We retained servicing responsibilities and received a servicing fee of 1.07% of the receivables sold for the period of time outstanding, generally 60 to 120 days. No recourse obligations were recorded since we had no obligations for any recourse actions on the sold receivables. We also hold preference stock in the SPE, which essentially represents a retained deposit to provide further credit enhancements, if needed, but was otherwise recoverable by us. The carrying value of our investment in the preference stock was $4.0 million at December 31, 2004, and is expected to be recovered upon dissolution of the SPE later in 2005.

The accounts receivable monetization program included ratings downgrade triggers based on Kerr-McGee's senior unsecured debt rating. These triggers provide for certain program modifications, including a program termination event upon which the program would effectively liquidate over time and the third-party multi-seller commercial paper conduit would be repaid with the collections on accounts receivable sold by the SPE. In April 2005, Kerr-McGee's senior unsecured debt was downgraded, triggering program termination. As opposed to liquidating the program over time or modifying its terms, Kerr-McGee elected to terminate the program by advancing the then outstanding balance of receivables sold of $165.0 million to the SPE, which in turn used the funds to repay the financial institution. The balance of outstanding receivables is expected to be collected as they become due and will be used by the SPE to repay Kerr-McGee for its advance. Our trade receivables will increase as a result of the program termination.

Other Arrangements. We have entered into certain agreements that require us to indemnify third parties for losses related to environmental matters, litigation and other claims. We have recorded no material obligations in connection with such indemnification obligations. In addition, pursuant to our master separation and distribution agreement with Kerr-McGee, we will be required to indemnify Kerr-McGee for all costs and expenses incurred by it arising out of or due to our environmental and other liabilities. At December 31, 2004, Kerr-McGee had outstanding letters of credit on our behalf in the amount of approximately $7.5 million. These letters of credit have been granted to Kerr-McGee by financial institutions to support our environmental clean-up costs and severance requirements in international locations. We intend to replace these letters of credit with our own as part of the debt financing that we plan to enter into concurrently with or shortly following completion of this offering.

In the normal course of business, we enter into operating leases, purchase obligations and other commitments. Operating leases primarily consist of rental of railcars and production equipment. The aggregate future payments for operating leases and purchase commitments and obligations as of December 31, 2004, are summarized in the following table:

			Payments Due By Period
Type of Obligation			Total		2005		2006 -2007		2008 -2009		After 2009
			(millions of dollars)
Operating leases			$	30.5	$	6.1	$	6.5	$	5.3	$	12.6
Purchase obligations:
	Ore contracts			387.1		155.6		191.2		40.3		—
	Other purchase obligations			296.8		91.7		140.6		31.3		33.2

		Total	$	714.4	$	253.4	$	338.3	$	76.9	$	45.8

We will be obligated under an employee benefits agreement with Kerr-McGee to maintain the Material Features (as defined in the employee benefits agreement) of the U.S. postretirement plan without change for a period of three years following the effective date of the Distribution (see "Arrangements between Kerr-McGee and Our Company—Employee Benefits Agreement"). Based on the

actuarially projected obligations under that plan, we expect contributions to be in the range of $12.0 to $16.0 million for each of the next three years.

Kerr-McGee Chemical Worldwide LLC is a subsidiary guarantor for Kerr-McGee's $1.5 billion of long-term notes issued in 2001 in a public offering. It is anticipated that this guarantee will be removed prior to this offering.

We have obligations associated with the retirement of tangible long-lived assets. In addition to asset retirement obligations of $30.9 million reflected in our audited combined balance sheet at December 31, 2004 included elsewhere in this prospectus, obligations exist for certain facilities that we are not able to estimate until the timing of liability settlement is known.

We are subject to a broad array of international, federal, state and local laws and regulations relating to environmental protection. Under these laws, we are or may be required to obtain or maintain permits or licenses in connection with our operations. In addition, under these laws, we are or may be required to remove or mitigate the effects on the environment of the disposal or release of certain chemical, petroleum, low-level radioactive and other substances at various sites. Environmental laws and regulations are becoming increasingly stringent, and compliance costs are significant and will continue to be significant in the foreseeable future. There can be no assurance that such laws and regulations or any environmental law or regulation enacted in the future will not have a material effect on our operations or financial condition.

Sites at which we have environmental responsibilities include sites that have been designated as Superfund sites by the U.S. Environmental Protection Agency (EPA) pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) and that are included on the National Priority List (NPL). As of March 31, 2005, we had received notices that we had been named potentially responsible parties (PRP) with respect to 12 existing EPA Superfund sites on the NPL that require remediation. We do not consider the number of sites for which we have been named a PRP to be the determining factor when considering our overall environmental liability. Decommissioning and remediation obligations, and the attendant costs, vary substantially from site to site and depend on unique site characteristics, available technology and the regulatory requirements applicable to each site. Additionally, we may share liability at some sites with numerous other PRPs, and U.S. law currently imposes joint and several liability on all PRPs under CERCLA. We are also obligated to perform or have performed remediation or remedial investigations and feasibility studies at sites that have not been designated as Superfund sites by EPA. Such work frequently is undertaken pursuant to consent orders or other agreements.

Historically, we have held interests in various businesses in which we are no longer engaged. Such businesses include the treatment of forest products, the production of ammonium perchlorate, the refining and marketing of oil and gas and associated petroleum products, the mining and processing of uranium and thorium and other activities. Although we are no longer engaged in such businesses, residual obligations may still exist, including obligations related to compliance with environmental laws and regulations, including the Clean Water Act, the Clean Air Act, CERCLA and the Resource Conservation and Recovery Act. These laws and regulations require us to undertake remedial measures at sites of current or former operations or at sites where waste was disposed. For example, we are required to conduct decommissioning and environmental remediation at certain refineries, production and distribution facilities and service stations previously owned or operated before exiting the refining and marketing business in 1995. We also are required to conduct decommissioning and remediation activities at sites where we were involved in the exploration, production, processing or sale of uranium

or thorium and at sites where we were involved in the production and sale of ammonium perchlorate. Additionally, we are decommissioning and remediating our former wood-treatment facilities as part of our exit from the forest products business. For a description of the decommissioning and remediation activities in which we currently are engaged, see "—Environmental Costs" below and note 21 to our audited combined financial statements included elsewhere in this prospectus.

Expenditures for environmental protection and cleanup for each of the last three years and for the three-year period ended December 31, 2004, are as follows:

In addition to past expenditures, reserves have been established for the remediation and restoration of active and inactive sites where it is probable that future costs will be incurred and the liability is reasonably estimable. For environmental sites, we consider a variety of matters when setting reserves, including the stage of investigation; whether EPA or another relevant agency has ordered action or quantified cost; whether we have received an order to conduct work; whether we participate as a PRP in the Remedial Investigation/Feasibility Study (RI/FS) process and, if so, how far the RI/FS has progressed; the status of the record of decision by the relevant agency; the status of site characterization; the stage of the remedial design; evaluation of existing remediation technologies; the number and financial condition of other potential PRPs; and whether we can reasonably evaluate costs based upon a remedial design or engineering plan.

After the remediation work has begun, additional accruals or adjustments to costs may be made based on any number of developments, including revisions to the remedial design; unanticipated construction problems; identification of additional areas or volumes of contamination; inability to implement a planned engineering design or to use planned technologies and excavation methods; changes in costs of labor, equipment or technology; any additional or updated engineering and other studies; and weather conditions.

As of December 31, 2004, our financial reserves for all active and inactive sites totaled $215.8 million. This includes $81.4 million added to the reserves in 2004 for active and inactive sites. In the audited combined balance sheet at December 31, 2004 included elsewhere in this prospectus, $130.8 million of the total reserve is classified as noncurrent liabilities-environmental remediation or restoration, and the remaining $85.0 million is included in accrued liabilities. We believe we have reserved adequately for the reasonably estimable costs of known environmental contingencies. However, additional reserves may be required in the future due to the previously noted uncertainties.

The following table reflects our portion of the known estimated costs of investigation or remediation that are probable and estimable. The table summarizes EPA Superfund NPL sites where we or our affiliates have been notified we are a PRP under CERCLA and other sites for which we had financial reserves recorded at year-end 2004. In the table, aggregated information is presented for certain sites that are individually not significant (each has a remaining reserve balance of less than $3 million). Sites specifically identified in the table below are discussed in note 21 to our audited combined financial statements which are included elsewhere in this prospectus.

There may be other sites where we have potential liability for environmental-related matters but for which we do not have sufficient information to determine that the liability is probable or reasonably estimable. We have not established reserves for such sites. One such site involves a former wood treatment plant in New Jersey.

In 1999, one of our subsidiaries, Kerr-McGee Chemical LLC, was named as a PRP under CERCLA at a New Jersey wood-treatment site. On April 15, 2005, Kerr-McGee Chemical LLC and its ultimate parent received a letter from EPA asserting that they are liable under CERCLA as a former owner or operator of the site and demanding reimbursement of costs expended by the EPA at the site. The demand is for payment of past costs in the amount of approximately $179 million, plus interest. Kerr-McGee Chemical LLC did not operate the site, which had been sold to a third party before Kerr-McGee Chemical LLC succeeded to the interests of a predecessor owner in the 1960's. The predecessor also did not operate the site, which had been closed down before it was acquired by the predecessor. Based on historical records, there are substantial uncertainties about whether or under what terms the predecessor assumed liabilities for the site. In addition, it appears there may be other PRPs, though it is not known whether the other PRPs have received similar letters from the EPA. We intend to defend vigorously against the EPA's claim. We have not recorded a reserve for the site as it is not possible to reliably estimate the liability, if any, we may have for the site because of the defenses discussed above and uncertainties and the potential existence of other PRPs.

Preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates, judgments and assumptions regarding matters that are inherently uncertain and that ultimately affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Even so, the accounting principles we use generally do not impact our reported cash flows or liquidity. Generally, accounting rules do not involve a selection among alternatives, but involve a selection of the appropriate policies for applying the basic principles. Interpretation of the existing rules must be done and judgments made on how the specifics of a given rule apply to us.

The more significant reporting areas impacted by management's judgments, estimates and assumptions are recoverability of long-lived assets, restructuring and exit activities, environmental remediation, tax accruals and benefit plans. Management's judgments, estimates and assumptions in these areas are based on information available from both internal and external sources, including engineers, legal counsel, actuaries, environmental studies and historical experience in similar matters. Actual results could differ materially from those judgments, estimates and assumptions as additional information becomes known.

The following description of our critical accounting policies is not intended to be an all-inclusive discussion of the uncertainties considered and estimates made by management in applying accounting principles and policies. Results may vary significantly if different policies were used or required and if new or different information becomes known to management.

Key estimates related to long-lived assets include useful lives, recoverability of carrying values and existence of any retirement obligations. As a result of future decisions, such estimates could be significantly modified. The estimated useful lives of our property, plant and equipment range from three to 40 years and depreciation is recognized on the straight-line basis. Useful lives are estimated based upon our historical experience, engineering estimates and industry information. Our estimates

include an assumption regarding periodic maintenance and an appropriate level of annual capital expenditures to maintain the assets.

A long-lived asset is evaluated for potential impairment whenever events or changes in circumstances indicate that its carrying value may be greater than its future net cash flows. Such evaluations involve a significant amount of judgment since the results are based on estimated future events, such as sales prices; costs to produce the products; the economic and regulatory climates; and other factors. We cannot predict when or if future impairment charges will be required for held-for-use assets.

We have recorded charges in recent periods in connection with closing certain facilities and work force reduction programs. These charges are recorded when management commits to a plan and incurs a liability related to the plan. Estimates for plant closing include write-down of inventory value, write-down of property, plant and equipment, any necessary environmental or regulatory costs, contract termination, asset retirement obligations and severance costs. Estimates for work force reductions are recorded based on estimates of the number of positions to be terminated, termination benefits to be provided, estimates of any enhanced benefits provided under pension and postretirement plans and the period over which future service will continue, if any. We evaluate the estimates on a quarterly basis and adjust the reserves when information indicates that the estimates are above or below the initial estimates. For additional information regarding work force reduction programs and exit activities, see note 15 to our audited combined financial statements included elsewhere in this prospectus. Changes in estimates of provisions for restructuring and exit activities were not significant over the last three years.

Our management makes judgments and estimates in accordance with applicable accounting rules when it establishes reserves for environmental remediation, litigation and other contingent matters. Provisions for such matters are charged to expense when it is probable that a liability has been incurred and reasonable estimates of the liability can be made. Estimates of environmental liabilities, which include the cost of investigation and remediation, are based on a variety of matters, including, but not limited to, the stage of investigation, the stage of the remedial design, evaluation of existing remediation technologies, and presently enacted laws and regulations. In future periods, a number of factors could significantly change our estimate of environmental remediation costs, such as changes in laws and regulations, revisions to the remedial design, unanticipated construction problems, identification of additional areas or volumes of contamination, and changes in costs of labor, equipment and technology. Consequently, it is not possible for us to reliably estimate the amount and timing of all future expenditures related to environmental or other contingent matters and actual costs may vary significantly from our estimates. Before considering reimbursements of our environmental costs discussed below, we provided $81.4 million, $88.2 million and $188.1 million pre-tax for environmental remediation and restoration costs in 2004, 2003 and 2002, respectively, including provisions of $75.7 million, $52.3 million and $173.8 million in 2004, 2003 and 2002, respectively, related to former businesses reflected as a component of loss from discontinued operations.

To the extent costs of investigation and remediation are recoverable from the U.S. government under Title X and have been incurred or are recoverable under certain insurance policies and such recoveries are deemed probable, we record a receivable. In considering the probability of receipt, we evaluate our historical experience with receipts, as well as our claim submission experience. At December 31, 2004, estimated recoveries of environmental costs recorded in the combined balance sheet totaled $93.8 million, of which $65.7 million was received in early 2005. Provisions for environmental remediation and restoration in the combined statement of operations were reduced by

$14.2 million, $32.2 million and $112.7 million in 2004, 2003 and 2002, respectively, for estimated recoveries, including recoveries of $14.2 million, $11.2 million and $112.7 million in 2004, 2003 and 2002, respectively, related to former businesses reflected as a component of loss from discontinued operations.

For additional information about contingencies, refer to "—Environmental Matters" above and note 21 to our audited combined financial statements included elsewhere in this prospectus.

Historically, we have been included in the consolidated tax return of Kerr-McGee. We have not historically been a party to a tax-sharing agreement with Kerr-McGee but have consistently followed an allocation policy whereby Kerr-McGee has allocated to the members of its consolidated return provisions or benefits based upon each member's taxable income or loss. This allocation methodology results in the recognition of deferred assets and liabilities for the differences between the financial statement carrying amounts and their respective tax basis, except to the extent for deferred taxes on income considered to be permanently reinvested in foreign jurisdictions. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Kerr-McGee has allocated current tax benefits to the members of its consolidated return, including us, that have generated losses that are utilized or expected to be utilized on the consolidated return. This allocation methodology is not consistent with that calculated on a stand-alone tax return basis. In addition, Kerr-McGee manages its tax position for the benefit of its entire portfolio of businesses, and its tax strategies are not necessarily reflective of those tax strategies that we would have followed as a stand-alone company.

We intend to enter into a tax sharing agreement with Kerr-McGee that will govern Kerr-McGee's and our respective rights, responsibilities and obligations after this offering with respect to taxes for tax periods ending in 2005 and prior. Generally, taxes incurred or accrued prior to this offering that are attributable to the business of one party will be borne solely by that party. In addition, the tax sharing agreement addresses the allocation of liability for taxes incurred as a result of restructuring activities undertaken to implement the separation and distribution. We are required to indemnify Kerr-McGee for any tax liability incurred by reason of the Distribution by Kerr-McGee of our Class B common stock to its stockholders being considered a taxable transaction to Kerr-McGee as a result of a breach of any of our representations, warranties or covenants contained in the tax sharing agreement.

Under U.S. federal income tax laws, we and Kerr-McGee are jointly and severally liable for Kerr-McGee's federal income taxes attributable to the periods prior to and including Kerr-McGee's taxable calendar year, which ends on December 31, 2005. If Kerr-McGee fails to pay the taxes attributable to it under the tax sharing agreement for periods prior to and including its current taxable year, we could be liable for any part of, including the whole amount of, these tax liabilities.

U.S. Plans. Our U.S. employees participate in the contributory and noncontributory defined benefit retirement plans and the contributory postretirement plans for health care and life insurance sponsored by Kerr-McGee. Our combined financial statements reflect costs associated with Kerr-McGee's U.S. plans which are allocated by Kerr-McGee based on salary for defined benefit retirement plans and based on active headcount for postretirement plans.

Effective upon completion of the Distribution, we plan to establish a defined benefit retirement plan and related trust for our employees and former employees who participated in Kerr-McGee's defined benefit retirement plans at the Distribution date. Based on formulas set forth in the employee benefits agreement, Kerr-McGee will transfer to us obligations and assets for the defined benefit

retirement plans. Kerr-McGee will transfer to us the obligations for the postretirement plans, which are unfunded, the projected benefit obligation for which is expected to be approximately $147 million. We also plan to establish a postretirement health and welfare benefit plan with comparable features to the plan currently maintained by Kerr-McGee.

To measure plan obligations and attribute cost to periods when employee services are provided, we will form various assumptions related to the newly established plans, including discount rate, rate of compensation increases, long-term rate of return, mortality and retirement rates, inflation and health care cost trend rate, among others. Some of these assumptions are specific to us and our employee groups covered, and, therefore, are expected to be different from assumptions formed by Kerr-McGee for its plans. Therefore, application of such assumptions by us may result in materially different amounts of net periodic cost (benefit) recognized in our financial statements in future periods compared to the net periodic cost (benefit) historically allocated to us by Kerr-McGee (amounts historically allocated are presented in note 18 to our audited combined financial statements included elsewhere in this prospectus). Further, we currently do not reflect any assets or liabilities associated with Kerr-McGee's U.S. defined benefit retirement and postretirement plans.

Foreign Benefit Plans. We provide defined benefit retirement plans for employees in Germany and the Netherlands and account for these plans in accordance with FAS No. 87, "Employers' Accounting for Pensions." The various assumptions used and the attribution of the costs to periods of employee service are fundamental to the measurement of net periodic cost and pension obligations associated with the retirement plans.

The following are considered significant assumptions related to our foreign retirement plans:

Other factors considered in developing actuarial valuations include inflation rates, retirement rates, mortality rates and other factors. Assumed inflation rates are based on an evaluation of external market indicators. Retirement rates are based primarily on actual plan experience. Long-term rate of return assumption for the Netherlands plan is based on the advice of third-party consultants, considering portfolio mix and the rates of return on local government and corporate bonds. Discount rate assumption is based on local corporate bond index rates. We determine rate of compensation increases assumption based on our long-term plans for compensation increases specific to employee groups covered. The assumed rate of salary increases includes the effects of merit increases, promotions and general inflation. Additional information regarding the significant assumptions relevant to the determination of the net periodic pension cost and the actuarially determined present value of the benefit obligations is included in note 18 to our audited combined financial statements included elsewhere in this prospectus.

In November 2004, the FASB issued FAS No. 151, "Inventory Costs—an Amendment of ARB No. 43, Chapter 4," which requires that abnormal amounts of idle facilities cost, freight, handling costs and spoilage be expensed as incurred and not capitalized as inventory. FAS No. 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. We will adopt the standard effective January 1, 2006. The effect of adoption is not expected to have a material effect on our financial position or results of operations.

In December 2004, the FASB issued FASB Staff Position No. FAS 109-2 (FSP No. 109-2), "Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provisions within the American Jobs Creation Act of 2004" (the Jobs Act). FSP No. 109-2 provides guidance with respect to reporting the potential impact of the repatriation provisions of the Jobs Act on an enterprise's income tax expense and deferred tax liability. The Jobs Act was enacted on October 22, 2004, and provides for a temporary 85% dividends received deduction on certain foreign earnings repatriated during a one-year period. The deduction would result in an approximate 5.25% federal tax rate on the repatriated earnings. Additionally, withholding taxes may be due in certain tax jurisdictions. To qualify for the deduction, the earnings must be reinvested in the United States pursuant to a domestic reinvestment plan established by a company's chief executive officer and approved by a company's board of directors. Certain other criteria in the Jobs Act must be satisfied as well. FSP No. 109-2 states that an enterprise is allowed time beyond the financial reporting period to evaluate the effect of the Jobs Act on its plan for reinvestment or repatriation of foreign earnings. As of December 31, 2004, management had not decided on whether, and to what extent, foreign earnings might be repatriated by us under the Jobs Act, and accordingly, the combined financial statements do not reflect any provision for taxes on unremitted earnings. On April 11, 2005, management completed its analysis of the impact of the Jobs Act on our plan for repatriation. Based on this analysis, we repatriated $100 million in extraordinary dividends, as defined in the Jobs Act, in April 2005. Accordingly, a tax liability of approximately $5 million will be recognized in the quarter ended June 30, 2005.

In December 2004, the FASB issued Statement No. 123 (revised 2004), "Share-Based Payment" (FAS No. 123R), which replaces FAS No. 123 and supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees." FAS No. 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values beginning with the first interim period after June 15, 2005, with early adoption encouraged. In April 2005, the SEC amended its rule to allow public companies more time to implement the standard. Following the SEC's rule, we intend to implement FAS No. 123R effective January 1, 2006. The pro forma disclosures previously permitted under FAS No. 123 no longer will be an alternative to financial statement recognition. Under FAS No. 123R, we must determine the appropriate fair value model to be used for valuing share-based payments, the amortization method for compensation cost and the transition method to be used at the date of adoption. We plan to adopt the standard using the modified prospective method, as permitted by the standard. The modified prospective method requires the compensation expense be recorded for all unvested share-based compensation awards at the beginning of the first quarter of adoption. We expect that the adoption will not have a material effect on our financial condition and cash flows, and that the effect on our results of operations will be comparable to the current pro forma disclosures under FAS No. 123 included in note 2 to our audited combined financial statements included elsewhere in this prospectus.

In March 2005, the FASB issued FASB Interpretation No. 47, "Accounting for Conditional Asset Retirement Obligations" (FIN No. 47) to clarify that an entity must recognize a liability for the fair value of a conditional asset retirement obligation when incurred, if the liability's fair value can be reasonably estimated. Conditional asset retirement obligations under this pronouncement are legal obligations to perform asset retirement activities when the timing and (or) method of settlement are conditional on a future event or may not be within the control of the entity. FIN No. 47 also provides additional guidance for evaluating whether sufficient information to reasonably estimate the fair value of an asset retirement obligation is available. FIN No. 47 is effective for us as of December 31, 2005. We do not expect implementation of this pronouncement to have a material effect on its financial statements, unless additional information enabling us to estimate the fair value of its conditional asset retirement obligations becomes available in future periods.

In May 2005, the FASB issued FAS No. 154, "Accounting Changes and Error Corrections" (FAS No. 154), which will require that, unless it is impracticable to do so, a change in an accounting principle be applied retrospectively to prior periods' financial statements for all voluntary changes in accounting

principles and upon adoption of a new accounting standard if the standard does not include specific transition provisions. FAS No. 154 supersedes Accounting Principles Board Opinion No. 20, "Accounting Changes" (APB No. 20), which previously required that most voluntary changes in accounting principles be recognized by including in the current period's net income (loss) the cumulative effect of changing to the new accounting principle. FAS No. 154 also provides that if an entity changes its method of depreciation, amortization, or depletion for long-lived, nonfinancial assets, the change must be accounted for as a change in accounting estimate. Under APB No. 20, such a change would have been reported as a change in an accounting principle. FAS No. 154 will be applicable to accounting changes and error corrections made by the company starting in 2006. The effect on us of applying this new standard will depend upon whether material voluntary changes in accounting principles, changes in estimates or error corrections occur and transition and other provisions included in new accounting standards.

We are exposed to market risks, including credit risk, from fluctuations in foreign currency exchange rates and natural gas prices. To reduce the impact of these risks on earnings and to increase the predictability of cash flows, from time to time, we enter into certain derivative contracts, primarily forward contracts to buy and sell foreign currencies. In addition to information included in this section, see notes 2 and 12 to our audited combined financial statements included elsewhere in this prospectus.

The U.S. dollar is the functional currency for our international operations, except for our European operations, for which the euro is the functional currency. Periodically, we enter into forward contracts to buy and sell foreign currencies. Certain of our contracts for the purchase of Australian dollars and the sale of euros have been designated and have qualified as cash flow hedges of our anticipated future cash flows related to pigment sales, raw material purchases and operating costs. These contracts generally have durations of less than three years. Changes in the fair value of these contracts are recorded in accumulated other comprehensive income (loss) and are recognized in earnings in the periods during which the hedged forecasted transactions affect earnings.

We have entered into other forward contracts to sell foreign currencies, which will be collected as a result of pigment sales denominated in foreign currencies, primarily in European currencies. These contracts have not been designated as hedges even though they do protect us from changes in foreign currency rates. Accordingly, gains or losses on such contracts are recognized in earnings as incurred.

The following table presents the notional amounts at the contract exchange rates and the weighted-average contractual exchange rates for contracts to purchase (sell) foreign currencies outstanding at year-end 2004 and 2003. All amounts are U.S. dollar equivalents. The estimated fair value of our foreign currency forward contracts is based on the year-end forward exchange rates quoted by financial institutions. At December 31, 2004 and 2003, the net fair value of our foreign currency

forward contracts was a liability of $3.6 million and a net asset of $6.6 million, respectively. No material changes in our foreign currency derivative positions occurred in the first quarter of 2005.

			Notional Amount			Weighted- Average Contract Rate
			(millions of dollars, except average contract rates)
Open contracts at December 31, 2004,
	Maturing in 2005:
		Euro	$	(72	)	1.2998
		Japanese yen		(1	)	.0095
		New Zealand dollar		(1	)	.6873
		British pound sterling		(1	)	1.8043
Open contracts at December 31, 2003,
	Maturing in 2004:
		Euro	$	(57	)	1.1115
		Japanese yen		(2	)	.0092
		New Zealand dollar		(1	)	.6121
		Australian dollar		38		.5366
		British pound sterling		(1	)	1.6876

From time to time, we enter into financial derivative instruments that generally fix the commodity prices to be paid for a portion of our forecasted natural gas purchases. These contracts have been designated and qualified as cash flow hedges. As such, the resulting changes in fair value of these contracts, to the extent effective in achieving their risk management objective, are recorded in accumulated other comprehensive income. At December 31, 2004 and 2003, the fair value of natural gas derivative assets included in our combined balance sheet was $2.0 million and $0.8 million, respectively. These amounts will be recognized in earnings in the periods during which the hedged forecasted transactions affect earnings (i.e., when the natural gas is purchased). No material changes in our natural gas derivative positions occured in the first quarter of 2005.

We are one of the leading global producers and marketers of titanium dioxide pigments. We also produce a variety of electrolytic and other specialty chemical products.

Titanium dioxide, or TiO₂, is a white pigment used in a wide range of products for its exceptional ability to impart whiteness, brightness and opacity. TiO₂ is a critical component of everyday applications, such as coatings, plastics and paper, as well as many specialty products such as inks, foods and cosmetics. Titanium dioxide is widely considered to be superior to alternative white pigments in large part due to its hiding power, which is the ability to cover or mask other materials effectively and efficiently. For example, titanium dioxide's hiding power helps prevent show-through on printed paper materials (making the materials easier to read) and a high concentration of titanium dioxide within paints reduces the number of coats needed to cover a surface effectively. Titanium dioxide is designed, marketed and sold based on specific end-use applications.

The global titanium dioxide market is characterized by a small number of large global producers. In addition to our company, there are four other major producers: E.I. du Pont de Nemours and Company, Millennium Chemicals Inc., Huntsman Corporation and Kronos Worldwide, Inc. These five major producers accounted for approximately 70% of the global market in 2004.

We estimate that global sales of titanium dioxide in 2004 exceeded 4.6 million tonnes, generating approximately $9 billion in industry-wide revenues. Because titanium dioxide is a "quality of life" product, its consumption growth is closely tied to a given region's economic health and correlates over time to the growth in its average gross domestic product. According to industry estimates, titanium dioxide consumption has been growing at a compounded annual growth rate of approximately 2.8% over the past decade. The charts below summarize the global demand for titanium dioxide in 2004, based on reported total sales, by geography and end-use market:

Although there are other white pigments on the market, we believe that titanium dioxide has no effective substitute because no other white pigment has the physical properties for achieving comparable opacity and brightness or can be incorporated in as cost-effective a manner. In an effort to optimize titanium dioxide's cost-to-performance ratio in certain applications, some customers also use pigment "extenders," such as synthetic pigments, kaolin clays and calcium carbonate. We estimate that the impact on our total sales from the use of such extenders is minimal.

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

A general improvement in global economic conditions in late 2004 drove increased demand for titanium dioxide. Increased demand coupled with reduced supply led to price increases in the last half of 2004 and early 2005. We believe that current industry dynamics show a sustainable improving trend. With no major plant construction projects commenced, and considering that it typically takes two to four years to bring on significant new capacity, we expect the current high capacity utilization rates to continue in the near term. We believe limited expected capacity additions over the next several years, when combined with improving demand, will result in increasing margins.

Production Process. Titanium dioxide pigment is produced using a combination of processes involving the manufacture of base pigment particles followed by surface treatment, drying and milling (collectively known as finishing). There are two commercial production processes in use: the chloride process and the sulfate process. The chloride process is a newer technology and has several advantages over the sulfate process: it generates less waste, uses less energy, is less labor intensive and permits the direct recycle of a major process chemical, chlorine, back into the production process. In addition, as described below under "—Types of Titanium Dioxide," titanium dioxide produced using the chloride process is preferred for many of the largest end-use applications. As a result, the chloride process currently accounts for substantially all of the titanium dioxide production capacity in North America and approximately 60% of worldwide capacity. Since the late 1980s, the vast majority of titanium dioxide production capacity that has been built uses the chloride process.

In the chloride process, feedstock ores (titanium slag, synthetic rutile, natural rutile or ilmenite ores) are reacted with chlorine (the chlorination step) and carbon to form titanium tetrachloride (TiCl₄) in a continuous fluid bed reactor. Purification of TiCl₄ to remove other chlorinated products is accomplished using a distillation process. The purified TiCl₄ is then oxidized in a vapor phase form to produce base pigment particles and chlorine gas. The latter is recycled back to the chlorination step for reuse. Base pigment is then typically slurried with water and dispersants prior to entering the finishing step.

In the sulfate process, batch digestion of ilmenite ore or titanium slag is carried out with concentrated sulfuric acid to form soluble titanyl sulfate. After treatment to remove soluble and insoluble impurities and concentration of the titanyl sulfate, hydrolysis of the liquor forms an insoluble hydrous titanium oxide. This precipitate is filtered, bleached, washed and calcined to produce a base pigment that is then forwarded to the finishing step.

The schematic diagram below illustrates the basic steps of the chloride and sulfate processes and a representation of a finishing process common to both.

Types of Titanium Dioxide. Commercial production of titanium dioxide results in one of two different crystal forms, either rutile or anatase. Rutile titanium dioxide is preferred over anatase titanium dioxide for many of the largest end-use applications, such as coatings and plastics, because its higher refractive index imparts better hiding power at lower quantities than the anatase crystal form. Although rutile titanium dioxide can be produced using either the chloride process or the sulfate process, customers often prefer rutile produced using the chloride process because it typically has a bluer undertone and greater durability.

Anatase titanium dioxide can only be produced using the sulfate process and has applications in paper, rubber, fibers, ceramics, foods and cosmetics. It is not recommended for outdoor applications because it is less durable than rutile titanium dioxide.

The battery industry uses electrolytic manganese dioxide (EMD) as the active cathode material for primary (non-rechargeable) batteries and lithium manganese oxide and lithium vanadium oxide in rechargeable lithium batteries. Battery applications account for nearly all of the consumption of these chemicals.

The primary battery market is composed of alkaline and zinc carbon battery technologies to address the various power delivery requirements of a multitude of consumer battery-powered devices. Approximately 85% of market demand in the United States is for alkaline batteries, which are higher performing and more costly than batteries using the older zinc carbon technology. EMD quality requirements for alkaline technology are much more demanding than for zinc carbon technology and, as a result, alkaline-grade EMD commands a higher price than zinc carbon-grade EMD. The older zinc carbon technology remains dominant in developing countries such as China and India. As the economies of China and India continue to mature, and the need for more efficient energy sources develops, we anticipate that the demand for alkaline-grade EMD will increase.

The market application for rechargeable lithium batteries is consumer electronics, in particular cell phones, computers, camcorders and, most recently, power tools. A combination of improved power delivery performance and lighter weight has allowed rechargeable lithium technology to displace older lead acid and nickel cadmium technologies.

The pulp and paper industry accounts for over 95% of the market demand for sodium chlorate, which uses it to bleach pulp. Although there are other methods for bleaching pulp, the chlorine dioxide process is preferred for environmental reasons. Approximately 60% of North American production capacity is located in Canada due to the availability of lower cost hydroelectric power, which reduces manufacturing costs and ultimately, product prices. However, transportation costs also affect product pricing. We believe that the proximity of domestic producers to certain of the major pulp and paper producers helps offset the lower-cost power advantage enjoyed by Canadian producers.

There are two types of boron specialty chemicals: boron trichloride and elemental boron. Boron trichloride is a specialty chemical that is used in many products, including pharmaceuticals, semiconductors, high-performance fibers, specialty ceramics and epoxies. Elemental boron is a specialty chemical that is used in igniter formulations for the defense, pyrotechnic and automotive air bag industries.

New-Co is one of the leading global producers and marketers of titanium dioxide pigment. We market titanium dioxide pigment, which represented more than 90% of our net sales in 2004, under the brand name TRONOX®. We are the world's third largest producer of titanium dioxide with an estimated 13% share of the $9 billion global market in 2004. Our world-class, high-performance pigment products are critical components of everyday consumer applications, such as coatings, plastics and paper, as well as specialty products, such as inks, foods and cosmetics. In addition to titanium dioxide, we produce electrolytic manganese dioxide, sodium chlorate, boron-based and other specialty chemicals. In 2004, we had total net sales of $1.3 billion. Net sales from our United States operations were $716.8 million in 2004, $646.7 million in 2003 and $602.8 million in 2002, and net sales from our international operations were $585.0 million in 2004, $511.0 million in 2003 and $461.5 million in 2002.

We have maintained strong relationships with our customers since our current chemical operations began in 1964. We focus on providing our customers with world-class products, end-use market expertise and strong technical service and support. With over 2,150 employees worldwide, strategically located manufacturing facilities and direct sales and technical service organizations in the United States, Europe and the Asia-Pacific region, we are able to serve our diverse base of more than 1,100 customers in over 100 countries.

Globally, including all of the production capacity of the facility operated by our Tiwest Joint Venture (see "—Manufacturing, Operation and Properties—The Tiwest Joint Venture"), we have 517,000 and 107,000 tonnes of aggregate annual chloride and sulfate titanium dioxide production capacity, respectively. We hold over 200 product and process patents worldwide, and we have a highly skilled and technologically sophisticated workforce.

The major end-use markets for titanium dioxide products, which we sell in the Americas, Europe and the Asia-Pacific region, are coatings, plastics and paper and specialty products. The charts below summarize our approximate 2004 net sales by geography and our approximate 2004 sales volume by end-use market:

Coatings End-Use Market. The coatings end-use market represents the largest end-use market for titanium dioxide products and accounts for approximately 58% of overall industry demand, based on reported industry sales volumes, and 65% of our 2004 sales volume. Customers in the coatings end-use market demand exceptionally high quality standards for titanium dioxide, especially with regard to opacity, durability, tinting strength and brightness. We recognize four sub-markets within the coatings end-use market based on application, each of which requires different titanium dioxide formulations. The table below summarizes the sub-markets within coatings, as well as their applications and primary growth factors:

Sub-Market	Applications	Growth Factors
Architectural	Residential and commercial paints	Housing market and interest rates
Industrial	Appliances, coil coatings, furniture and maintenance	Durable goods spending and environmental regulations
Automotive	Original equipment manufacture, refinish and electro-coating	Interest rates and environmental regulations
Specialty	Marine and can coatings, packaging and traffic paint	Fixed capital spending and government regulations

Plastics End-Use Market. The plastics end-use market accounts for approximately 25% of overall industry demand for titanium dioxide, based on reported industry sales volumes, and 21% of our 2004 sales volume. Plastics producers focus on titanium dioxide's opacity, durability, color stability and thermal stability. We recognize four sub-markets within the plastics market based on application, each of which requires different titanium dioxide formulations. The table below summarizes the sub-markets within plastics, as well as their applications and primary growth factors:

Sub-Market	Applications	Growth Factors
Polyolefins	Food packaging, plastic films and agricultural films	Consumer non-durable goods spending
PVC	Vinyl windows, siding, fencing, vinyl leather, roofing and shoes	Construction and renovation markets and consumer non-durable goods spending
Engineering plastics	Computer housing, cell phone cases, washing machines and refrigerators	Consumer durable goods spending and electronics market
Other plastics	Roofing and flooring	Construction market and durable goods spending

Paper and Specialty End-Use Market. The paper and specialty end-use market accounts for approximately 17% of overall industry demand for titanium dioxide, based on reported industry sales volumes, and 14% of our 2004 sales volume. We recognize four sub-markets within paper and specialty based on application, each of which requires different titanium dioxide formulations. The table below summarizes the sub-markets within paper and specialty, as well as their applications and primary growth factors:

Sub-Market	Applications	Growth Factors
Paper and paper laminate	Filled paper, coated paper for print media, coated board for beverage container packaging, wallboard, flooring, cabinets and furniture	Consumer non-durable goods spending and construction and renovation markets
Inks and rubber	Packaging, beverage cans, container printing and rubber flooring	Consumer non-durable goods spending
Food and pharmaceuticals	Creams, sauces, capsules, sun screen, face and body care products	Consumer non-durable goods spending
Catalysts and electroceramics	Anti-pollution equipment (catalysts) for automobiles and power-generators and production of capacitors and resistors	Environmental regulations and electronics

Our other product lines include chemicals for battery materials, sodium chlorate for pulp bleaching and boron-based specialty chemicals. The sub-markets for those products, together with their applications and growth factors, are as follows:

Product	Sub-Market	Applications	Growth Factors
Battery materials	Non-rechargeable battery materials	Alkaline and zinc carbon battery markets	Consumer non-durable goods spending
Battery materials	Rechargeable battery materials	Rechargeable lithium batteries	Consumer non-durable goods spending
Sodium Chlorate	Pulp and paper industry	Pulp bleaching	Consumer non-durable goods spending
Boron	Specialty chemical	Pharmaceuticals, semiconductors, high-performance fibers, specialty ceramics and epoxies	Consumer non-durable goods spending
Boron	Defense, pyrotechnic and air bag industries	Igniter formulations	Consumer non-durable goods spending

We supply titanium dioxide to a diverse customer base that includes market leaders in each of the major end-use markets for titanium dioxide. In 2004, our ten largest customers represented approximately 32% of our total sales volume and no single customer accounted for more than 10%. In 2004, approximately 45% of our global production volume was covered by multi-year supply contracts.

In addition to price and product quality, we compete on the basis of technical support and customer service. Our direct sales and technical service organizations carry out our sales strategy and work together to provide quality customer service. Our direct sales staff is trained in all of our products and applications. Because of the technical requirements of titanium dioxide applications, our technical service organization and direct sales offices are supported by a regional customer service staff located in each of our major geographic markets.

Our sales and marketing strategy focuses on effective customer management through the development of strong relationships throughout our company with our customers. We develop customer relationships and manage customer contact through our sales team, technical service organization, research and development team, customer service team, plant operations personnel, supply chain specialists and senior management. We believe that multiple points of customer contact facilitate efficient problem-solving, supply chain support, formula optimization and product co-development. By developing close relationships with our customers and providing well-designed products and services, we are a value-added business partner.

The global market in which our titanium dioxide business operates is highly competitive. Worldwide, we are one of only five companies (including E.I. du Pont de Nemours and Company, Millennium Chemicals Inc., Huntsman Corporation and Kronos Worldwide, Inc.) that own proprietary chloride process technology for production of titanium dioxide pigment. We estimate that, based on

gross sales volume, these companies accounted for approximately 70% of the global market share in 2004. We believe that cost efficiency and product quality as well as technical and customer service are key competitive factors for titanium dioxide producers.

Titanium dioxide produced using chloride process technology is preferred for many of the largest titanium dioxide end-use applications; however, titanium dioxide produced using sulfate process technology is preferred for certain specialty applications. The following charts summarize the estimated market share breakdown and production process mix for the five leading titanium dioxide pigment producers for fiscal year 2004:

As of December 31, 2004, including the total production capacity of our Tiwest Joint Venture (see "—Manufacturing, Operations and Properties—The Tiwest Joint Venture"), we had global production capacity of 624,000 tonnes per year and an approximate 13% global market share. In addition to the major competitors discussed above, we compete with numerous smaller, regional producers, as well as producers in China that have expanded their sulfate production capacity during the previous five years.

Electrolytic Manganese Dioxide. With an 8% estimated global capacity share, we are a key producer of EMD. Other significant producers and their estimated global capacity shares include Erachem (7%) in the United States, as well as international producers Delta (17%), Tosoh (15%), Xiangtan (11%) and Mitsui (7%). The remainder of global capacity is produced by various Chinese producers. The U.S. market accounts for approximately one third of global demand for EMD.

Sodium Chlorate. We have an estimated 6% share of North American sodium chlorate capacity. Our significant competitors and their estimated share of North American capacity are ERCO (27%), Eka Chemicals (25%), Nexen (22%) and Finnish Chemicals (10%).

Other Specialties. For boron products, we believe that we have the majority of the installed capacity for boron trichoride. Other boron production capacity is located in Ireland, Japan and Russia.

We produce titanium dioxide using either the chloride process or the sulfate process at five production facilities located in four countries. We believe our facilities are well-situated to serve our global customer base.

Two of our facilities are located in the United States and we have one facility in each of Australia, Germany and the Netherlands. Our facilities in Germany and the Netherlands are held under long-term leases. We own our domestic facilities and hold a 50% undivided interest in our Australian facility, which is owned by the Tiwest Joint Venture. We market and sell all of the titanium dioxide produced by our Australian facility and share in the profits equally with our joint venture partner. See "—The Tiwest Joint Venture."

The following table summarizes our production capacity as of December 31, 2004, by location and process:

Titanium Dioxide Production Capacity
As of December 31, 2004
(Gross tonnes per year)

Including the titanium dioxide produced by our Australian facility owned by the Tiwest Joint Venture and production volumes from our Savannah sulfate facility that was closed in September 2004, we produced 602,024 tonnes of titanium dioxide in 2004, compared to 578,913 tonnes in 2003 and 556,213 tonnes in 2002. Our average production rates, as a percentage of capacity, were 91%, 87% and 92%, in 2004, 2003 and 2002, respectively. Over the past five years, production at our facilities increased by approximately 21%, primarily due to debottlenecking and low cost incremental investments. Our global manufacturing presence, coupled with our ability to increase capacity incrementally, makes us a stable supplier to many of the largest titanium dioxide producers.

Our subsidiary, KMCC Western Australia Pty. Ltd., owns a 50% interest in the Tiwest Joint Venture, which is located in Australia. The remaining 50% interest is held by our joint venture partner, Ticor Limited. The Tiwest Joint Venture owns and operates a chloride process titanium dioxide plant located in Kwinana, Western Australia, as well as a mining venture in Cooljarloo, Western Australia, and a synthetic rutile processing facility in Chandala, Western Australia. Under our joint venture agreements, we have the right to market all of the titanium dioxide produced by the Kwinana facility, and we and Ticor share the profits received from the joint venture equally. For more information regarding our facility in Kwinana, see "—Titanium Dioxide" above. For more information regarding the mining venture, see "—Heavy Minerals" below.

Management. The Tiwest Joint Venture is governed by two committees: a management committee and an operating committee. The operating committee meets at least monthly and supervises the joint venture's routine operations, and the management committee meets at least quarterly and has the authority to make fundamental corporate decisions and to overrule the operating committee's decisions. The committees' decisions are made by simple majority approval. If there is an equal number of votes cast for and against a matter at an operating committee meeting, the matter is referred to a subsequent

meeting. If at the subsequent meeting, the matter still receives an equal number of votes cast on each side, the matter is referred to the management committee. KMCC Western Australia and Ticor each have the right to appoint half of each committee's members.

Heavy Minerals. The Tiwest Joint Venture mines heavy minerals from 21,027 acres that it leases under a long-term mineral lease from the State of Western Australia. Our 50% interest in the properties' remaining in-place proven and probable reserves is 5.6 million tonnes of heavy minerals contained in 214 million tonnes of sand averaging 2.6% heavy minerals. The valuable heavy minerals are composed on average of 61.0% ilmenite, 10.0% zircon, 4.5% natural rutile and 3.4% leucoxene, with the remaining 21.1% of heavy minerals having no significant value.

Heavy-mineral concentrate from the mine is processed at a 750,000-tonne per year dry separation plant. Some of the recovered ilmenite is upgraded at our nearby synthetic rutile facility in Chandala, which has a capacity of 225,000 tonnes per year. Synthetic rutile is a high-grade titanium dioxide feedstock. All of the synthetic rutile feedstock for the 110,000-tonne per year titanium dioxide plant located at Kwinana is provided by the Chandala processing facility. Production of feedstock in excess of the Tiwest Joint Venture's requirements is sold to third parties, as well as to us as part of the feedstock requirement for titanium dioxide at our other facilities.

Information regarding our 50% interest in heavy-mineral reserves, production and average prices for the three years ended December 31, 2004, is presented in the following table. Mineral reserves in this table represent the estimated quantities of proven and probable ore that, under anticipated conditions, may be profitably recovered and processed for the extraction of their mineral content. Future production of these resources depends on many factors, including market conditions and government regulations. See "Risk Factors—Risks Related to Our Business and Industry—Fluctuations in costs of our raw materials or our access to supplies of our raw materials could have an adverse effect on our results of operations."

Heavy-Mineral Reserves, Production and Prices
(Reserves and production in tonnes)

	2004			2002
Proven and probable reserves (as of year end)		5,570,000		5,970,000		5,700,000
Production		302,000		294,000		289,000
Average market price (per tonne)	$	161	$	152	$	150

We produce electrolytic and other chemical products at three domestic facilities, each of which we own. The following table summarizes our production capacity as of December 31, 2004, by location and product.

Electrolytic and Other Chemical Capacity
As of December 31, 2004
(Gross tonnes per year)

Facility	Capacity	Product
Hamilton, Mississippi	130,000	Sodium chlorate
Henderson, Nevada	27,000	EMD
Henderson, Nevada	525	Boron products
Soda Springs, Idaho	300	Lithium manganese oxide and lithium vanadium oxide

The primary raw materials that we use to produce titanium dioxide are various types of titanium-bearing ores, including ilmenite, natural rutile, synthetic rutile, titanium-bearing slag and leucoxene. We generally purchase ores under multi-year agreements from a variety of suppliers in Australia, Canada, India, Norway, South Africa, Ukraine and the United States. We purchase approximately 47% of the titanium-bearing ores we require from two suppliers under long-term supply contracts that expire in 2007 through 2009. Approximately 85% of the synthetic and natural rutile used by our facilities are obtained from the Tiwest Joint Venture under a long-term contract. See "—Manufacturing, Operations and Properties—The Tiwest Joint Venture." We do not anticipate difficulties obtaining long-term extensions to our existing supply contracts prior to their expiration. Other significant raw materials include chlorine and petroleum coke for the chloride process, which we obtain from many suppliers worldwide, and sulfuric acid for the sulfate process, which we produce ourselves.

The primary raw material that we use to produce sodium chlorate is sodium chloride, and for battery materials, manganese ore. We purchase these materials under multi-year agreements and spot contracts.

Research and development is an integral component of our business strategy. Enhancing our product portfolio with high quality, market-focused product development is key in driving our business from the customer perspective.

We have approximately 70 scientists, chemists, engineers and skilled technicians to provide the technology (products and processes) necessary to support our business. Our product development personnel have a high level of expertise in the plastics industry and polymer additives, the coatings industry and formulations, surface chemistry, material science, analytical chemistry and particle physics. Among the process technology development group's highly developed skills are computational fluid dynamics, process modeling, particle growth physics, extractive metallurgy, corrosion engineering and thermodynamics. The majority of scientists supporting our research and development efforts are located in Oklahoma City, Oklahoma. Our expenditures for research and development were approximately $6.3 million in 2004, $8.0 million in 2003 and $7.5 million in 2002.

New process developments are focused on increased through-put, control of particle physical properties and general processing equipment-related issues. On-going development of process technology contributes to cost reduction, enhanced production flexibility, increased capacity and improved consistency of product quality.

In 2004, products developed in the last five years provided over 26% of our total titanium dioxide sales volume. We anticipate that three new products will be commercialized in 2005.

Patents held for our products and production processes are important to our long-term success. We seek patent protection for our technology where competitive advantage may be obtained by patenting, and file for broad geographic protection given the global nature of our business. Our proprietary titanium dioxide technology is covered by numerous patents worldwide, the substantial majority of which relate to our chloride products and production technology. In addition, our proprietary EMD technology is covered by ten patents worldwide.

We also rely upon and have taken steps to secure our unpatented proprietary technology, know-how and other trade secrets. Our proprietary chloride production technology is an important part of our overall technology position. We are committed to pursuing technological innovations in order to maintain our competitive position.

Following completion of this offering, we will have approximately 2,150 employees, with approximately 1,260 in the United States, 860 in Europe, and 30 in Australia. Approximately 16% of our employees in the United States are represented by collective bargaining agreements, and approximately 95% of our employees in Europe are represented by works' councils. We consider relations with our employees to be good.

We are subject to extensive regulation by federal, state, local and foreign governments. Governmental authorities regulate the generation and treatment of waste and air emissions at our operations and facilities. At certain operations, we also comply with certain worldwide, voluntary standards such as ISO 9002 for quality management and ISO 14001 for environmental management. ISOs are standards developed by the International Organization for Standardization, a nongovernmental organization that promotes the development of standards and serves as an external oversight for quality and environmental issues.

A variety of laws and regulations relating to environmental protection affect almost all of our operations. Under these laws, we are or may be required to obtain or maintain permits and/or licenses in connection with our operations. In addition, these laws require us to remove or mitigate the effects on the environment of the disposal or release of certain chemical, petroleum, low-level radioactive and other substances at various sites. Operation of pollution-control equipment usually entails additional expense. Some expenditures to reduce the occurrence of releases into the environment may result in increased efficiency; however, most of these expenditures produce no significant increase in production capacity, efficiency or revenue.

During 2004, direct capital and operating expenditures related to environmental protection and cleanup of operating sites totaled $32.1 million. Additional expenditures totaling $85.2 million were charged against reserves for environmental remediation and restoration. While it is difficult to estimate the total direct and indirect costs of government environmental regulations on our operations, we estimate that in 2005 and 2006 we will incur $11.3 million and $6.0 million, respectively, in direct capital expenditures, $10.7 million and $10.8 million, respectively, in operating expenditures and $85.0 million and $55.4 million, respectively, in expenditures charged to reserves.

We are party to a number of legal and administrative proceedings involving environmental matters or other matters pending in various courts or agencies. These include proceedings associated with businesses and facilities currently or previously owned, operated or used by our affiliates or their predecessors, and include claims for personal injuries, property damages, breach of contract, injury to the environment, including natural resource damages, and non-compliance with permits. Our current and former operations also involve management of regulated materials and are subject to various environmental laws and regulations. These laws and regulations obligate us to clean up various sites at which petroleum and other hydrocarbons, chemicals, low-level radioactive substances or other materials have been contained, disposed of or released. Some of these sites have been designated Superfund sites

by the U.S. Environmental Protection Agency pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 and are listed on the National Priority List.

We provide for costs related to environmental contingencies when a loss is probable and the amount is reasonably estimable. It is not possible for us to reliably estimate the amount and timing of all future expenditures related to environmental matters because, among other reasons:

We believe that we have reserved adequately for the reasonably estimable costs of contingencies. However, additions to the reserves may be required as additional information is obtained that enables us to better estimate our liabilities, including any liabilities at sites now under review. We cannot reliably estimate the amount of future additions to the reserves at this time. Additionally, there may be other sites where we have potential liability for environmental-related matters but for which we do not have sufficient information to determine that the liability is probable and/or reasonably estimable. We have not established reserves for such sites.

For additional discussion of environmental matters, see "Management's Discussion and Analysis of Financial Condition and Results of Operations," and note 21 to our audited combined financial statements included elsewhere in this prospectus.

A number of lawsuits and claims are pending against us, some of which are summarized below. For a discussion of other legal proceedings and contingencies, please see note 21 to our audited combined financial statements included elsewhere in this prospectus.

a. In 2002, Tiwest Pty. Ltd., the entity which conducts the Tiwest Joint Venture, received a complaint and notice of violation from the Department of Environmental Waters and Catchment Protection in Western Australia alleging violations of the Australian Environmental Protection Act (1986). This matter concerned an alleged chlorine release at the facility. Tiwest Pty. Ltd. defended the proceeding in the Court of Petty Sessions, Perth, Western Australia, and on March 26, 2004, the Court

found in favor of Tiwest Pty. Ltd. The Department has appealed the Court's decision. Tiwest Pty. Ltd. is vigorously defending against the appeal, and we believe that, should the Court's ruling be overturned, any fines or penalties related to the matter will not have a material adverse effect on our financial condition or results of operations.

b. On September 8, 2003, the Environmental Protection Division of the Georgia Department of Natural Resources issued a unilateral Administrative Order to our subsidiary, Kerr-McGee Pigments (Savannah) Inc., claiming that the Savannah plant exceeded emission allowances provided for in the facility's Title V air permit. The Environmental Protection Division is seeking monetary penalties of approximately $173,000. We are vigorously defending against the claims made in the order and, in that connection, the order was appealed, and its effectiveness stayed, on October 8, 2003. We believe that any penalties related to the Order will not have a material adverse effect on our financial condition or results of operations.

c. On September 15, 2004, the Missouri Attorney General issued to our subsidiary, Kerr-McGee Chemical LLC, a notice of violation of the Missouri Clean Water Act. The notice alleges the discharge of untreated contaminants from Kerr-McGee Chemical LLC's plant in Springfield, Missouri to the City of Springfield sanitation system and the Little Sac River. The Attorney General is requesting a civil penalty of $375,000, the performance of an environmental assessment and natural resource damages, which the Missouri Department of Natural Resources currently estimates to be $500,000. The contractor performing the decommissioning work at the plant at the time of the alleged discharge has acknowledged its contractual obligation to indemnify Kerr-McGee Chemical LLC for costs, damages or fines resulting from its actions. We believe that the claims made in the notice are without substantial merit and that any penalties and damages related to the notice will not have a material adverse effect on our financial condition or results of operations.

Set forth below is certain information regarding our current executive officers and our current and prospective directors as of June 6, 2005.

Name	Age	Position
Thomas W. Adams	44	President, Chief Executive Officer and Director
Mary Mikkelson	43	Vice President and Chief Financial Officer
Robert M. Wohleber	54	Director
J. Michael Rauh	55	Director

Thomas W. Adams is our President, Chief Executive Officer and Director. Mr. Adams has served as President of Kerr-McGee Chemical LLC since September 2004, Vice President and General Manager of the Pigment Division from May to September 2004, Vice President of Strategic Planning and Business Development of Kerr-McGee Shared Services from 2003 to 2004, Vice President of Acquisitions from March 2003 to September 2003, Vice President of Information Management and Technology from 2002 to 2003. Mr. Adams joined Sun Oil Co., predecessor of Oryx Energy Company, in 1982. Oryx and Kerr-McGee Corporation merged in 1999.

Mary Mikkelson is our Vice President and Chief Financial Officer. Ms. Mikkelson has served as Vice President and Controller of Kerr-McGee Chemical, LLC since December 2004 and Assistant Corporate Controller of Kerr-McGee Shared Services from February 2004 to December 2004. Prior to joining Kerr-McGee, Ms. Mikkelson was an independent consultant from January 2003 to January 2004 and rose to the level of Vice President and Controller of Foodbrands America, Inc., where she worked from April 1996 until December 2002. Ms. Mikkelson also spent over nine years working for an international public accounting firm.

Robert M. Wohleber is a Director. Mr. Wohleber has served as Senior Vice President and Chief Financial Officer of Kerr-McGee since December 1999. Prior to joining Kerr-McGee in 1999, Mr. Wohleber served as Executive Vice President and Chief Financial Officer of Freeport-McMoRan Exploration Company, President and Chief Executive Officer of Freeport-McMoRan Sulfur and Senior Vice President of Freeport-McMoRan Gold and Copper Corporation, each of which is a natural resources company.

J. Michael Rauh is a Director. Mr. Rauh has served as a Vice President of Kerr-McGee since 1987. In addition, Mr. Rauh served as Controller of Kerr-McGee from 1987 to 1996 and from January 2002 to present. Mr. Rauh also served as its Treasurer from 1996 to 2002.

Upon completion of this offering, our board of directors will be composed of three members and will be divided into three classes serving staggered, three-year terms. At each annual meeting of our stockholders, directors will be elected to succeed the class of directors whose terms have expired. Class I directors' terms will expire at the 2006 annual meeting of our stockholders, Class II directors' terms will expire at the 2007 annual meeting of our stockholders and Class III directors' terms will expire at the 2008 annual meeting of our stockholders.

A company of which more than 50% of the voting power is held by a single entity is considered a "controlled company" under the New York Stock Exchange listing standards. A controlled company need not comply with the New York Stock Exchange corporate governance rules requiring its board of directors to have a majority of independent directors and independent compensation and nominating and corporate governance committees. We intend to avail ourselves of the controlled company exception. In the event that we are no longer a controlled company, we will be required to have a

majority of independent directors on our board of directors and to have our compensation and nominating and corporate governance committees be composed entirely of independent directors, subject to a phase-in period during the first year we cease to be a controlled company.

Upon completion of this offering, our board of directors will establish an audit committee, an executive compensation committee, and a corporate governance and nominating committee. The functions of each committee are described below.

Audit Committee. Our audit committee will consist of at least three directors and will be responsible for acting on behalf of our board of directors for the engagement of our independent auditors and the authorization of all audit and other services provided to us by our internal and independent auditors. In addition, the audit committee will assist the board of directors with the oversight of our financial statements, financial reporting process, systems of internal accounting and financial controls, disclosure controls and procedures, and compliance with legal and regulatory requirements. The audit committee also will evaluate enterprise risk issues and the performance of internal and independent auditors, among other things. Our board of directors will adopt a written charter for the audit committee which we intend to make available on our website.

Upon completion of this offering, at least one of the directors serving on our audit committee will qualify as "independent," as such term is defined in Rule 10A3(b)(i) under the Exchange Act and in Rule 303A under the New York Stock Exchange Rules. We plan to nominate additional independent members so that, within 90 days after completion of this offering, our audit committee has a majority of independent members and within one year after completion of this offering has only independent members.

Executive Compensation Committee. Our executive compensation committee will consist of at least two directors. For as long as we are a controlled company, we will be exempt from the New York Stock Exchange requirement to have an independent compensation committee and to adopt a written charter for the committee.

Our executive compensation committee will evaluate and determine the salary and benefits of our chief executive officer and will review the salaries and benefits determined by the chief executive officer for all of our other officers, recommending to the board of directors such changes as it may deem appropriate. In addition, the executive compensation committee will determine the incentive compensation awards for all officers and will administer our employee benefit plans.

Corporate Governance and Nominating Committee. Upon completion of this offering, our corporate governance and nominating committee will consist of at least two directors. For as long as we are a controlled company, we will be exempt from the requirement to have an independent corporate governance and nominating committee and to adopt a written charter for the committee.

Our corporate governance and nominating committee will recommend to our board of directors nominees for election to the board of directors based on board-approved criteria for nomination as a director. We intend to make the criteria for nomination available on our website. In making its recommendations to our board of directors, the corporate governance and nominating committee will consider and review the background and qualifications of candidates recommended to it by current directors as well as candidates recommended by our stockholders. The corporate governance and nominating committee also will make recommendations to our board of directors regarding corporate governance and will oversee the evaluation of our board of directors and our management.

Prior to completion of this offering, we expect to adopt a policy that provides for the payment of customary compensation to each of our directors, other than those who are employed by us, as well as reimbursement of travel, lodging and other expenses related to their service on our board of directors.

All of our common stock is currently owned by Kerr-McGee, and thus none of our officers or directors owns any of our common stock. The following table sets forth the number of shares of Kerr-McGee common stock and options to purchase Kerr-McGee common stock beneficially owned by each director, our chief executive officer and our chief financial officer at May 31, 2005. We refer to our chief executive officer and our chief financial officer collectively as our "named executive officers." Except as otherwise noted, the individual director or named executive officer had sole voting and investment power with respect to such securities. The total number of shares of Kerr-McGee common stock outstanding as of May 31, 2005 was 115,117,067. No individual director or executive officer owned, nor did the directors and executive officers as a group own, more than 1% of Kerr-McGee's common stock.

Directors and Named Executive Officers	Kerr-McGee Common Stock Beneficially Owned⁽¹⁾
Thomas W. Adams	28,233	⁽²⁾
Mary Mikkelson	1,453
Robert M. Wohleber	233,087	⁽³⁾
J. Michael Rauh	94,390	⁽⁴⁾
Directors and executive officers as a group (4 persons)	357,163	⁽⁵⁾

The following table shows the compensation awarded or paid by Kerr-McGee to, or earned by, our named executive officers during the fiscal year ended December 31, 2004.

							Long-Term Compensation Awards
	Annual Compensation
		No. of Securities Underlying Options
Name and Principal Position	Year	Salary		Bonus		Other Annual Compensation⁽²⁾	Restricted Stock Awards⁽³⁾⁽⁴⁾	All Other Compensation⁽⁵⁾
Thomas W. Adams, President and Chief Executive Officer	2004	$	285,600		$	169,513	—	$	81,625	5,155	$	17,946
Mary Mikkelson,⁽¹⁾ Vice President and Chief Financial Officer	2004	$	131,592		$	85,648	—		—	—	$	6,236

The following table contains information concerning grants of options to acquire shares of Kerr-McGee common stock during the fiscal year ended December 31, 2004, to the named executive officers.

Name		No. of Securities Underlying Options Granted⁽¹⁾		Percent of Total Options Granted to Kerr-McGee Employees in Fiscal Year 2004		Per Share Exercise Price		Expiration Date		Grant Date Present Value⁽³⁾
Thomas W. Adams		5,155		⁽²⁾		$	49.45		January 13, 2014		$	44,281
Mary Mikkelson		—		—			—		—			—

Pursuant to the employee benefits agreement between us and Kerr-McGee, if the Distribution occurs, Kerr-McGee unvested stock options and restricted shares of Kerr-McGee common stock held by our employees, including our named executive officers, that are outstanding on the effective date of the Distribution will be converted to stock-based awards under our proposed equity plan. Employees, including our named executive officers, who hold vested stock options generally may exercise such options for the lesser of three months after the effective date of the Distribution or the remaining term of the option award. Employees eligible for retirement on the effective date of the Distribution, however, may exercise their vested stock options for the lesser of four years after the effective date of the Distribution or the remaining term of the option award. See "Arrangements between Kerr-McGee and Our Company—Employee Benefits Agreement—Kerr-McGee Stock Options and Restricted Stock."

The following table contains information with respect to options to acquire Kerr-McGee common stock that were exercised during 2004 and the value of unexercised options held as of December 31, 2004 for the named executive officers.

The following table contains information regarding each long-term incentive award, other than stock option and restricted stock awards, made during the fiscal year ended December 31, 2004, to the named executive officers.

						Estimated Future Payouts Under Non-Stock Price-Based Plans
				Performance or Other Period Until Maturation or Payout
Name		No. of Shares, Units or Other Rights
	Threshold		Target		Maximum
Thomas W. Adams		85,430		January 2004 - December 2006		$	42,715	$	85,430	$	170,860
Mary Mikkelson		—		—			—		—		—

At the end of 2006, Total Stockholder Return (stockholder return assuming dividend reinvestment) will be the sum of (x) the total stockholder return on Kerr-McGee Common Stock from January 1, 2004 until the effective date of the Distribution and (y) the total stockholder return on our Class A common stock from the effective date of the Distribution until December 31, 2006. Total Stockholder Return will be compared to the Total Stockholder Return of our peers during the same period, and final award payouts will be made to executive officers based on our rank relative to our peers. We intend to allocate the award payout expenses between us and Kerr-McGee in accordance with the

terms of the employee benefits agreement (see "Arrangements between Kerr-McGee and Our Company—Employee Benefits Agreement—Incentive Plans").

Prior to the Distribution, Kerr-McGee will maintain retirement plans for all our employees, including our named executive officers. See "Arrangements between Kerr-McGee and Our Company—Employee Benefits Agreement." The following table illustrates the pension benefits that may accrue to our named executive officers under those retirement plans, assuming various service periods. The table shows the estimated annual pension benefits payable to a covered participant at a retirement age of 65. Pension benefits include benefits payable under our qualified defined benefit plan and our nonqualified benefits restoration plan, or the BRP. The BRP provides benefits that would be provided under the qualified defined benefit plan but for certain limitations imposed by the Internal Revenue Code on qualified plan benefits.

Average Annual Compensation		15 Years Service		20 Years Service		25 Years Service		30 Years Service		35 Years Service
$	400,000		$	96,715		$	128,954		$	161,192		$	193,430		$	208,430
	600,000			146,715			195,620			244,526			293,431			315,931

Covered compensation under the retirement plans consists of salary, bonus and pretax Section 125 and 401(k) benefit contributions, all based on the highest 36 consecutive months out of the last 120 months prior to retirement. Amounts shown are computed on a straight life annuity basis. As of December 31, 2004, Mr. Adams had 22 years of credited service and Ms. Mikkleson had no years of credited service.

If the Distribution occurs, we intend to establish a tax-qualified defined benefit retirement plan and related trust for our employees, including our named executive officers, who participated in Kerr-McGee's defined benefit retirement plan. Kerr-McGee will transfer assets and liabilities from the trust for its defined benefit retirement plan to the trust for our plan. We also plan to establish a defined benefit non-qualified deferred compensation plan that will assume the liabilities of the defined benefit portion of the BRP. See "Arrangements between Kerr-McGee and Our Company—Employee Benefits Agreement."

Upon completion of this offering, we intend to enter into continuity agreements with certain of our named executive officers that will provide certain benefits in the event of a qualifying termination that occurs in connection with "change in control" of New-Co.

Upon completion of this offering, we intend to create our own equity plan so that our employees receive stock option or other equity-based awards that relate to the value of our common stock and not Kerr-McGee's stock.

We are currently a wholly-owned subsidiary of Kerr-McGee. After completion of this offering, Kerr-McGee will own 100% of the outstanding shares of our Class B common stock, which will represent:

Under applicable provisions of the Delaware General Corporation Law and our amended and restated certificate of incorporation, prior to the Distribution, Kerr-McGee will be able, acting alone, to elect our entire board of directors and to approve any action requiring stockholder approval. Except for Kerr-McGee, we are not aware of any person or group that will beneficially own more than 5% of the outstanding shares of either our Class A common stock or our Class B common stock following this offering. The address of Kerr-McGee's principal executive office is Kerr-McGee Center, 123 Robert S. Kerr Avenue, Oklahoma City, Oklahoma 73125.

Provided below are summary descriptions of the contribution agreement and the master separation and distribution agreement between us and Kerr-McGee and the other key agreements that relate to our separation from Kerr-McGee. These descriptions, which summarize the material terms of these agreements, are not complete. You should read the full text of these agreements, which will be filed as exhibits to the registration statement, of which this prospectus is a part, prior to its effectiveness.

Some of the subsidiaries that will be transferred to us pursuant to the contribution agreement currently have, or have in the past had, businesses and properties that are unrelated to the chemical business we will operate after the closing. As a result, we will have liabilities that are not typical of other titanium dioxide producers. See "Risk Factors—Risks Related to Our Business and Industry—We will have liabilities that are not typical of other titanium dioxide producers."

The master separation and distribution agreement contains the key provisions related to our separation from Kerr-McGee, this offering and the distribution of the shares of our Class B common stock held by Kerr-McGee to its stockholders following completion of this offering.

Under the master separation and distribution agreement, we and Kerr-McGee will agree to use commercially reasonable efforts to satisfy certain conditions to the completion of this offering, any of which may be waived by Kerr-McGee, in its sole discretion, including:

Distribution). Kerr-McGee has the sole discretion to determine the form, structure and all other terms of any transactions to effect the Distribution. The Distribution is subject to several conditions that must either be satisfied or waived by Kerr-McGee, in its sole discretion, including:

In addition, if Kerr-McGee's board of directors determines, in its sole discretion, that the Distribution is not in the best interests of Kerr-McGee or its stockholders, Kerr-McGee may elect not to complete the Distribution. Because the Distribution is subject to a number of conditions, the Distribution may not occur, and if it does occur, we may not achieve the expected benefits of the Distribution. See "Risk Factors—Risks Related to Our Relationship with Kerr-McGee—The Distribution may not occur, and we may not achieve the expected benefits of the Distribution."

We are required by the master separation and distribution agreement to cooperate with Kerr-McGee in all respects to accomplish the Distribution and to promptly take any and all actions necessary or desirable to effect the Distribution.

Under the master separation and distribution agreement, we will indemnify Kerr-McGee from all losses suffered by Kerr-McGee arising out of or due to any of the following:

Kerr-McGee will indemnify us from all losses suffered by us arising out of or due to any of the following:

We and Kerr-McGee generally will be responsible for our own costs (including all third-party costs) incurred in connection with the transactions contemplated by the master separation and distribution agreement. However, we have agreed to pay all costs and expenses (including all third-party costs) related to this offering, including underwriting discounts and commissions and Kerr-McGee's financial, legal,

accounting and other expenses, and Kerr-McGee has agreed to pay all costs and expenses (including all third-party costs) related to the Distribution.

Kerr-McGee may terminate the master separation and distribution agreement at any time prior to completion of this offering. After completion of this offering, the master separation and distribution agreement may be terminated by Kerr-McGee if it determines in its sole and absolute discretion that the Distribution would not be in the best interests of it and its stockholders, an action to enjoin or otherwise prevent the Distribution is commenced by any person, or in the event the Distribution does not occur by.

In addition to the terms and provisions described above, the master separation and distribution agreement provides for the sharing of information, dispute resolution, the licensing of intellectual property and our lease of certain real property from Kerr-McGee.

The interim services agreement governs the provision by Kerr-McGee to us and by us to Kerr-McGee of support services, such as:

The terms of these services generally will expire one year after completion of this offering, subject to certain exceptions.

The financial reporting and corporate governance agreement governs certain financial reporting and corporate governance matters related to and arising from our separation from Kerr-McGee.

With respect to financial reporting matters, the agreement provides that, among other things, until Kerr-McGee is no longer required to consolidate our results of operations and financial position or account for its investment in us on the equity method of accounting, we will use our commercially

reasonable efforts to enable our independent registered public accounting firm to complete their audit of our financial statements in a timely manner so to permit timely filing of Kerr-McGee's financial statements. We have also agreed to provide Kerr-McGee and its independent registered public accounting firm all information required for Kerr-McGee to meet its schedule for the filing of its financial statements. We have agreed to adhere to certain specified accounting policies and to notify and consult with Kerr-McGee regarding any changes to our accounting principles and estimates used in the preparation of our financial statements.

With respect to governance matters, we have agreed that, for so long as Kerr-McGee owns at least 50% of our outstanding common stock, we will not, among other things:

The registration rights agreement provides Kerr-McGee with certain rights relating to the shares of our Class B common stock held by Kerr-McGee. These registration rights generally become effective if Kerr-McGee informs us that it no longer intends to complete the Distribution of our Class B common stock to its stockholders. Under the agreement, Kerr-McGee has the right to require us to register for offer and sale all or a portion of the shares of our Class B common stock covered by the agreement, so long as the shares Kerr-McGee requires us to register represent at least % of the aggregate shares of our common stock the issued and outstanding and Kerr-McGee holds not less than % of our then-outstanding common stock on the date the registration request is made.

The registration rights agreement covers those shares of our Class B common stock that are held by Kerr-McGee or a transferee of Kerr-McGee.

Kerr-McGee may request registration under the Securities Act of all or any portion of our shares covered by the registration rights agreement and we will be obligated, subject to limited exceptions, to register such shares as requested by Kerr-McGee. The maximum number of registrations Kerr-McGee may require us to effect is and the number of shares to be registered in each such registration must have an aggregate expected offering price of at least $ . Kerr-McGee has the right to designate the terms of each offering it requests.

We are not required to undertake any demand registration requested by Kerr-McGee within days of completion of a previously-requested demand registration other than pursuant to a shelf registration statement. In addition, we have the right, which may be exercised once in any period, to postpone the filing or effectiveness of any demand registration for up to days if we

determine in our good faith judgment that such registration would reasonably be expected to require the disclosure of material information we have a business purpose to keep confidential.

If we at any time intend to file on our behalf or on behalf of any of our other security holders a registration statement in connection with a public offering of any of our securities on a form and in a manner that would permit the registration for offer and sale of the shares of our Class B common stock, Kerr-McGee has the right to have those shares included in that offering.

We are responsible for all registration expenses incurred in connection with the performance of our obligations under the registration rights agreement. Kerr-McGee is responsible for all of the fees and expenses of counsel to Kerr-McGee, any applicable underwriting discounts or commissions, and any registration or filing fees incurred with respect to shares of our Class B common stock being sold under the registration rights agreement.

The registration rights agreement contains indemnification and contribution provisions by us for the benefit of Kerr-McGee and its affiliates and representatives and, in limited situations, by Kerr-McGee for the benefit of us and any underwriters with respect to information included in any registration statement, prospectus or related documents.

Kerr-McGee may transfer shares covered by the registration rights agreement and the holders of such transferred shares will be entitled to the benefits of the registration rights agreement, provided that each such transferee agrees to be bound by the terms of the registration rights agreement.

The registration rights under the registration rights agreement will remain in effect with respect to any shares of Class B common stock covered by the agreement until:

The tax sharing agreement governs Kerr-McGee's and our respective rights, responsibilities and obligations after this offering with respect to taxes for tax periods ending on or before this offering. Generally, taxes incurred or accrued prior to this offering that are attributable to the business of one party will be borne solely by that party. In addition, the tax sharing agreement addresses the allocation

of liability for taxes incurred as a result of restructuring activities undertaken to implement the separation and distribution. We are required to indemnify Kerr-McGee for any tax liability incurred by reason of the Distribution by Kerr-McGee of our Class B common stock to its stockholders being considered a taxable transaction to Kerr-McGee as a result of a breach of any of our representations, warranties or covenants contained in the tax sharing agreement.

Under U.S. federal income tax laws, we and Kerr-McGee are jointly and severally liable for Kerr-McGee's federal income taxes attributable to the periods prior to and including Kerr-McGee's current taxable year, which ends on December 31, 2005. This means that if Kerr-McGee fails to pay the taxes attributable to it under the tax sharing agreement for periods prior to and including its current taxable year, we may be liable for any part of, including the whole amount of, these tax liabilities.

Tax Limitations on Additional Issuances of Our Stock and Other Transactions

After the completion of this offering, we will be limited in our ability to issue shares and our ability to enter into transactions involving acquisitions of our stock because of potential adverse tax consequences.

First, in order for the Distribution to be tax-free to Kerr-McGee and its stockholders, Kerr-McGee must distribute "control" of us, as defined in Section 368(c) of the Internal Revenue Code. Under Section 368(c), "control" means ownership of stock possessing at least 80% of the total combined voting power of all classes of stock entitled to vote for the election and removal of directors and at least 80% of the total number of shares of each other class of nonvoting stock outstanding. Because we will have only voting stock outstanding, Kerr-McGee must distribute stock representing at least 80% of the total combined voting power of our common stock for the election and removal of directors to satisfy the Section 368(c) control test. If the option to purchase additional shares granted by us to the underwriters is exercised in full, we will have issued stock representing % of our voting power in this offering. Thus, before the Distribution we may issue only a limited amount of our stock in acquisitions (or otherwise) without violating the Section 368(c) "control" test.

Second, under Section 355(e) of the Internal Revenue Code, Kerr-McGee will recognize taxable gain on the Distribution if there are (or have been) one or more acquisitions of our stock representing 50% or more of our stock, measured by vote or value, and the stock acquisitions are part of a plan or series of related transactions that includes the Distribution. The shares issued in this offering will be considered to be part of a plan that includes the Distribution. In addition, any other shares of our common stock acquired (directly or indirectly) within two years before or after the Distribution are presumed to be part of such a plan unless Kerr-McGee can rebut that presumption. Applicable Treasury Regulations contain various safe harbors for purposes of determining whether other transactions will be considered part of a single "plan" that includes the Distribution, including a safe harbor for certain acquisitions occurring more than six months after the Distribution.

The tax sharing agreement prohibits us, for a two-year period following the Distribution, from issuing more than % of our shares or from entering into transactions involving acquisitions of our shares. This prohibition does not apply if we obtain either a private letter ruling from the Internal Revenue Service or an independent counsel's opinion (satisfactory to Kerr-McGee) to the effect that the proposed transaction or share issuance will not cause the Distribution to be taxable to Kerr-McGee under Section 355(e). We are required to indemnify Kerr-McGee and its subsidiaries for any violation of the terms of the tax sharing agreement. Consequently, we are significantly limited in our ability to issue our shares in transactions that are negotiated or closed within six months after the Distribution, and in transactions involving acquisitions of our shares within such six-month period, and we will continue to be subject to restrictions on such transactions and the use of stock for acquisitions or otherwise after this six-month period.

The employee benefits agreement will provide detailed requirements with respect to the provision of retirement and other employee benefits to our employees and former employees.

During the period immediately following the completion of this offering and before the completion of the Distribution by Kerr-McGee of our Class B common stock to its stockholders, our employees and former employees will continue to participate in Kerr-McGee's employee benefit plans, programs, and arrangements, except that we will create our own equity plan effective as of the date of this offering so that our employees will receive stock options or other equity-based awards that relate to the value of our common stock and not Kerr-McGee's common stock. We will bear our allocable share of the costs of the benefits and the administration of the Kerr-McGee plans (other than the equity plan) during this period.

As of the effective date of the Distribution, we will establish independent retirement and other employee benefit plans that are aligned with the retirement and other employee benefit plans generally made available by our competitors in the chemical industry. The employee benefits agreement permits us, at any time, to amend or terminate any plan we establish to the extent permitted by law, except that we cannot change the retiree medical benefits available to our employees or former employees before the third anniversary of the Distribution.

The employee benefits agreement generally provides that we will be responsible for all retirement and other employee benefit liabilities to our current employees and to former employees of the chemical division of Kerr-McGee (including former employees of our former businesses involving the treatment of forest products, the production of ammonium perchlorate, the refining and marketing of petroleum products and the mining, milling and processing of nuclear materials), regardless of when these individuals retired or otherwise terminated their employment. As of the completion of the Distribution, Kerr-McGee will cease to have any responsibility for these liabilities.

Annual incentive awards for the 2005 calendar year will be paid in two separate pieces, each with its own performance targets. Kerr-McGee's plan will prorate the applicable performance targets for the period from January 1, 2005, until the date of this offering, and pay an award to each eligible employee that reflects the extent to which those prorated targets were achieved. Our plan will then provide separate performance targets and corresponding award opportunities for eligible employees from the date of the offering through the end of the 2005 calendar year.

Long-term performance awards with performance cycles that began before the offering and end after the completion of the offering will be treated differently. At the time of the completion of the offering, Kerr-McGee will determine the extent to which the applicable performance targets have been attained as of that date and transfer to us funds that would be sufficient to pay the awards if the performance cycle had ended on that date. At the end of the performance cycle, we will determine the extent to which the applicable performance targets were attained over the entire performance cycle, and we will be responsible for paying our employees the entire amount of any such award based on the extent to which the targets were attained over the entire performance cycle. Regardless of the extent to which the performance targets are attained over the entire performance cycle, Kerr-McGee will not be required to provide us any additional funds after the initial transfer, and we will not be required to refund any amounts to Kerr-McGee.

We will adopt appropriate health and welfare benefit plans to provide benefits to our employees, including medical, dental, vision, life, disability and workers' compensation benefits, that are, in most instances, substantially similar to the health and welfare benefits provided to our employees by Kerr-McGee immediately prior to completion of the Distribution. We expect that Kerr-McGee will transfer to us the projected benefit obligation relating to eligible retired and active vested participants in the health and welfare benefit plans at the time of the Distribution. Kerr-McGee will not transfer to us any assets associated with the health and welfare plans. Under the employee benefits agreement, we are not permitted to change the retiree medical benefits before the third anniversary of the Distribution.

Effective upon completion of the Distribution, we will establish a tax-qualified defined benefit retirement plan and related trust for our employees and former employees who participated in Kerr-McGee's defined benefit retirement plan. Kerr-McGee will transfer assets and liabilities, based on formulas set forth in the employee benefits agreement, from the trust for Kerr-McGee's defined benefit retirement plans to the trust for our plan. It is anticipated that our plan will be fully funded as of the completion of the Distribution.

We will establish a tax-qualified savings plan and related trust effective upon completion of the Distribution. Each of our employees and former employees will be permitted to roll over all or part of their account balance, including outstanding participant loans, from Kerr-McGee's Savings Investment Plan into our plan, except that our plan will not accept the rollover of participant account balances held in Kerr-McGee common stock. In general, any employee or former employee who wishes to continue to invest all or a portion of his or her savings account balance in Kerr-McGee common stock will be permitted to do so by leaving all or a portion of his or her account in the Kerr-McGee plan.

Pursuant to the employee benefits agreement, Kerr-McGee unvested stock options and restricted shares of Kerr-McGee common stock held by our employees and outstanding on the effective date of the Distribution will be converted to stock-based awards under our equity plan. As part of the conversion, we will multiply the number of Kerr-McGee shares covered by each converted stock-based award by a ratio determined in accordance with the terms of the employee benefits agreement. Employees who hold vested stock options generally may exercise such options for the lesser of three months after the effective date of the Distribution or the remaining term of the option award. Employees eligible for retirement on the effective date of the Distribution, however, may exercise their vested stock options for the lesser of four years after the effective date of the Distribution or the remaining term of the option award.

Effective upon completion of the Distribution, we will establish a defined benefit non-qualified deferred compensation plan that will assume the liabilities of the defined benefit portion of the Kerr-McGee Benefits Restoration Plan with respect to our employees and former employees who participated in that plan. We will also be assuming certain other supplemental pension liabilities with respect to certain of our employees and former employees as provided in the employee benefits agreement. Kerr-McGee will transfer assets and liabilities based on formulas set forth in the employee benefits agreement, but it is anticipated that this plan will not be fully funded.

We currently provide defined benefit retirement plans for our employees in Germany and the Netherlands. The responsibility for providing other benefits for those employees and benefits for other of our employees outside the United States will, to the extent permitted by applicable law, be divided in a manner similar to the manner in which we and Kerr-McGee have divided benefit obligations for our U.S. employees. Similarly, stock opportunity grants relating to shares of Kerr-McGee common stock will be treated in a manner similar to shares of restricted stock, as discussed above. However, as provided in the employee benefits agreement, in many of the non-U.S. countries in which we do business, we will be assuming employee benefit plans currently sponsored by Kerr-McGee or an entity related to Kerr-McGee rather than establishing new plans.

The following is a description of the material terms of our capital stock as to be provided in our amended and restated certificate of incorporation and amended and restated bylaws, as each is anticipated to be in effect upon the closing of this offering. We also refer you to our amended and restated certificate of incorporation and amended and restated bylaws, copies of which will be filed as exhibits to the registration statement of which this prospectus forms a part prior to its effectiveness.

Following completion of this offering, our authorized capital stock will consist of (i) shares of Class A common stock, par value $0.01 per share, (ii) shares of Class B common stock, par value $0.01 per share, and (iii) shares of Series A junior participating preferred stock, par value $0.01 per share. Of the shares of Class A common stock, shares are being offered in this offering (or if the underwriters fully exercise their option to purchase additional shares). Of the shares of Class B common stock, shares will be outstanding and held by Kerr-McGee after completion of this offering. No shares of our preferred stock will be outstanding.

Authorized but unissued shares of our capital stock may be used for a variety of corporate purposes, including future public offerings, to raise additional capital or to facilitate acquisitions. The Delaware General Corporation Law does not require stockholder approval for any issuance of authorized shares. However, the listing requirements of the New York Stock Exchange, which would apply so long as our Class A common stock were listed on the New York Stock Exchange, require stockholder approval of certain issuances equal to or exceeding 20% of the then outstanding voting power or then outstanding number of shares of Class A common stock.

Voting Rights. The holders of Class A common stock and Class B common stock generally have identical rights, except that holders of Class A common stock are entitled to one vote per share while holders of Class B common stock are entitled to votes per share on all matters to be voted on by stockholders. Holders of shares of Class A common stock and Class B common stock are not entitled to cumulate their votes in the election of directors. Generally, except as discussed in "—Anti-Takeover Effects of Certain Certificate of Incorporation and Bylaws Provisions," all matters to be voted on by stockholders must be approved by a majority of the votes entitled to be cast by the holders of Class A common stock and Class B common stock present in person or represented by proxy, voting together as a single class, subject to any voting rights granted to holders of any preferred stock. Except as otherwise provided by law or in the amended and restated certificate of incorporation (as further discussed in "—Anti-Takeover Effects of Certain Certificate of Incorporation and Bylaws Provisions"), and subject to any voting rights granted to holders of any outstanding preferred stock, amendments to the amended and restated certificate of incorporation must be approved by a majority of the votes entitled to be cast by the holders of Class A common stock and Class B common stock, voting together as a single class. Any provision for the voluntary, mandatory and other conversion or exchange of the Class B common stock into or for Class A common stock on a one-for-one basis, whether by amendment to the amended and restated certificate of incorporation, will be deemed not to affect adversely the rights of the Class A common stock.

Dividends. Holders of Class A common stock and Class B common stock will share equally on a per share basis in any dividend declared by our board of directors, subject to any preferential rights of any outstanding shares of preferred stock. Dividends payable in shares of common stock may be paid only as follows:

The number of shares so paid will be equal on a per share basis with respect to each outstanding share of Class A common stock and Class B common stock.

We may not reclassify, subdivide or combine shares of either class of common stock without at the same time proportionally reclassifying, subdividing or combining shares of the other class.

Conversion. Each share of Class B common stock is convertible while beneficially owned by Kerr-McGee or any of its affiliates at the option of the holder thereof into one share of Class A common stock. Following any distribution of Class B common stock to Kerr-McGee common stockholders in a transaction (including any distribution in exchange for Kerr-McGee shares or securities) intended to qualify as a tax-free distribution under Section 355 of the Internal Revenue Code, or any corresponding provision of any successor statute (a Tax-Free Spin-Off), shares of Class B common stock will no longer be convertible into shares of Class A common stock.

Prior to a Tax-Free Spin-Off, any shares of Class B common stock transferred to a person other than Kerr-McGee or any of its affiliates will be converted automatically into shares of Class A common stock upon such transfer. Shares of Class B common stock transferred to stockholders of Kerr-McGee in a Tax-Free Spin-Off will not be converted into shares of Class A common stock and, following a Tax-Free Spin-Off, shares of Class B common stock will be transferable as Class B common stock, subject to applicable laws.

All shares of Class B common stock will be converted automatically into Class A common stock if a Tax-Free Spin-Off has not occurred and the number of outstanding shares of Class B common stock beneficially owned by Kerr-McGee and its affiliates falls below 50% of the aggregate number of outstanding shares of our common stock. This automatic conversion of Class B common stock into Class A common stock will prevent Kerr-McGee from decreasing its economic interest in our company to less than 50% while still retaining control of more than 80% of our voting power. All conversions will be effected on a one-for-one basis.

Other Rights. Unless approved by 75% of the votes entitled to be cast by the holders of each class of our common stock, voting separately as a class, in the event of any reorganization or consolidation of New-Co with one or more corporations or a merger of New-Co with another corporation in which shares of common stock are converted into or exchangeable for shares of stock, other securities or property (including cash), all holders of our common stock, regardless of class, will be entitled to receive the same kind and amount of shares of stock and other securities and property (including cash).

On liquidation, dissolution or winding up of New-Co, after payment in full of the amounts required to be paid to holders of preferred stock, if any, all holders of common stock, regardless of class, are entitled to receive the same amount per share with respect to any distribution of assets to holders of shares of common stock.

No shares of either class of common stock are subject to redemption or have preemptive rights to purchase additional shares of our common stock or other securities.

Upon completion of this offering, all the outstanding shares of Class A common stock and Class B common stock will be validly issued, fully paid and nonassessable.

Our amended and restated certificate of incorporation authorizes our board of directors to establish one or more series of preferred stock. Unless required by law or by any stock exchange on which our common stock is listed, the authorized shares of preferred stock will be available for issuance

without further action by you. Our board of directors is able to determine, with respect to any series of preferred stock, the terms and rights of that series, including the following:

Our board of directors intends to adopt a rights agreement prior to this offering. Under such rights agreement, one preferred share purchase right will be issued for each outstanding share of our Class A common stock and Class B common stock (Class A Rights and Class B Rights). The rights being issued are subject to the terms of our rights agreement.

The purpose of the rights agreement is to protect our stockholders from coercive or otherwise unfair takeover tactics. In general terms, our rights agreement will work by imposing a significant penalty upon any person or group that acquires 15% or more of all of our outstanding Class A common stock, 15% or more of our outstanding Class B common stock, or any combination of our Class A and Class B common stock representing 15% or more of the votes of all shares entitled to vote in the election of directors without the approval of our board of directors.

Provided below is the summary description of the Rights Agreement. Please note, however, that this description is only a summary, is not complete, and should be read together with our entire rights agreement, which will be filed as an exhibit to the registration statement, of which this prospectus forms a part, prior to its effectiveness.

Our board of directors will authorize the issuance of one Class A Right for each share of our Class A common stock and one Class B Right for each share of our Class B common stock outstanding on the date this offering is completed. Our rights will initially trade with, and be inseparable from, our common stock. Our Class A Rights and Class B Rights will be evidenced only by certificates that represent shares of our Class A or Class B common stock. New rights will accompany any new shares

of common stock we issue after the date this offering is completed until the date on which the rights are distributed as described below.

Each of our rights will allow its holder to purchase from us one one-hundredth of a share of our Series A junior participating preferred stock for $ (subject to certain anti-dilution adjustments), once the rights become exercisable. Prior to exercise, our rights will not give its holder any dividend, voting or liquidation rights.

In light of Kerr-McGee's substantial ownership position, our rights agreement will contain provisions excluding Kerr-McGee and its affiliates from the operation of the adverse terms of our rights agreement.

Until the date our rights become exercisable, our common stock certificates also evidence our rights, and any transfer of shares of our common stock constitutes a transfer of our rights. After that date, our rights will separate from our common stock and be evidenced by book-entry credits or by rights certificates that we will mail to all eligible holders of our common stock. Any of our rights held by an acquiring person will be void and may not be exercised.

The value of one one-hundredth interest in a share of our preferred stock purchasable upon exercise of each right should approximate the value of one share of our Class A common stock.

After a person or group becomes an acquiring person, but before an acquiring person owns 50% or more of our outstanding common stock, our board of directors may extinguish our rights by exchanging one share of our common stock or an equivalent security for each right, other than rights held by the acquiring person.

Our board of directors will have the right to redeem our rights for $0.01 per right at any time before any person or group becomes an acquiring person. If our board of directors redeems any of our rights, it will be required to redeem all of our rights. Once our rights are redeemed, the only right of the holders of our rights will be to receive the redemption price of $0.01 per right. The redemption price will be adjusted if we have a stock split or stock dividends of our common stock.

Our board of directors will have the right to adjust the purchase price of our preferred stock, the number of shares of our preferred stock issuable and the number of our outstanding rights to prevent dilution that may occur from a stock dividend, a stock split or a reclassification of our preferred stock or common stock. No adjustments to the purchase price of our preferred stock of less than 1% will be made.

Our board of directors will have the right to amend the terms of our rights agreement without the consent of the holders of our rights. After a person or group becomes an acquiring person, our board of directors will not be able to amend the agreement in a way that adversely affects holders of our rights.

Anti-Takeover Effects of Certain Certificate of Incorporation and Bylaws Provisions

Some provisions of our amended and restated certificate of incorporation and amended and restated bylaws could make the following more difficult, although they have little significance while we are controlled by Kerr-McGee:

These provisions, summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions also are designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of the potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure our company outweigh the disadvantages of discouraging those proposals because negotiation of them could result in an improvement of their terms.

Our amended and restated certificate of incorporation provides that our board of directors is divided into three classes. The term of the first class of directors expires at our 2006 annual meeting of stockholders, the term of the second class of directors expires at our 2007 annual meeting of stockholders and the term of the third class of directors expires at our 2008 annual meeting of stockholders. At each of our annual meetings of stockholders, the successors of the class of directors whose term expires at that meeting of stockholders will be elected for a three-year term, one class being elected each year by our stockholders. This system of electing and removing directors may discourage a third party from making a tender offer or otherwise attempting to obtain control of us if Kerr-McGee no longer controls us because it generally makes it more difficult for stockholders to replace a majority of our directors.

Directors may be removed, with or without cause, by the affirmative vote of shares representing a majority of the votes entitled to be cast by the outstanding capital stock in the election of our board of directors as long as Kerr-McGee owns shares representing at least a majority of the votes entitled to be cast by the outstanding capital stock in the election of our board of directors. Once Kerr-McGee ceases to own shares representing at least a majority of the votes entitled to be cast by the outstanding capital stock in the election of our board of directors, our amended and restated certificate of incorporation requires that directors may only be removed for cause and only by the affirmative vote of not less than 75% of votes entitled to be cast by the outstanding capital stock in the election of our board of directors.

Our amended and restated certificate of incorporation provides that the number of directors on our board of directors will be fixed exclusively by our board of directors. Newly created directorships resulting from any increase in our authorized number of directors will be filled solely by the vote of our remaining directors in office. Any vacancies in our board of directors resulting from death, resignation, retirement, disqualification, removal from office or other cause will be filled solely by the vote of our remaining directors in office; provided, however, that as long as Kerr-McGee continues to beneficially own shares representing at least a majority of the votes entitled to be cast by the outstanding capital stock in the election of our board of directors and such vacancy was caused by the action of stockholders, then such vacancy also may be filled by the affirmative vote of shares representing at least

a majority of the votes entitled to be cast by the outstanding capital stock in the election of our board of directors.

Our amended and restated certificate of incorporation permits our stockholders to act by written consent without a meeting as long as Kerr-McGee continues to beneficially own shares representing at least a majority of the votes entitled to be cast by the outstanding capital stock in the election of our board of directors. Once Kerr-McGee ceases to beneficially own at least a majority of the votes entitled to be cast by the outstanding capital stock in the election of our board of directors, our amended and restated certificate of incorporation eliminates the right of our stockholders to act by written consent.

Our amended and restated certificate of incorporation and amended and restated bylaws provide that the provisions of our amended and restated bylaws relating to the calling of meetings of stockholders, notice of meetings of stockholders, stockholder action by written consent, advance notice of stockholder business or director nominations, the authorized number of directors, the classified board structure, the filling of director vacancies or the removal of directors (and any provision relating to the amendment of any of these provisions) may only be amended by the vote of a majority of our entire board of directors or, as long as Kerr-McGee owns shares representing at least a majority of the votes entitled to be cast by the outstanding capital stock in the election of our board of directors, by the vote of holders of a majority of the votes entitled to be cast by outstanding capital stock in the election of our board of directors. Once Kerr-McGee ceases to own shares representing at least a majority of the votes entitled to be cast by the outstanding capital stock in the election of our board of directors, our amended and restated certificate of incorporation and amended and restated bylaws provide that these provisions may only be amended by the vote of a majority of our entire board of directors or by the vote of holders of at least 75% of the votes entitled to be cast by the outstanding capital stock in the election of our board of directors.

The amendment of any of the above provisions in our amended and restated certificate of incorporation requires approval by holders of shares representing at least a majority of the votes entitled to be cast by the outstanding capital stock in the election of our board of directors, as long as Kerr-McGee owns shares representing at least a majority of the votes entitled to be cast by the outstanding capital stock in the election of our board of directors. Once Kerr-McGee ceases to own shares representing at least a majority of the votes entitled to be cast by the outstanding capital stock in the election of our board of directors, our amended and restated certificate of incorporation and amended and restated bylaws provide that these provisions may only be amended by the vote of a majority of our entire board of directors followed by the vote of holders of at least 75% of the votes entitled to be cast by the outstanding capital stock in the election of our board of directors.

Our amended and restated certificate of incorporation and amended and restated bylaws provide that a special meeting of our stockholders may be called only by (i) Kerr-McGee, so long as it beneficially own at least a majority of the votes entitled to be cast by the outstanding capital stock in the election of our board of directors or (ii) the chairman of our board of directors or our board of directors.

Requirements for Advance Notification of Stockholder Nominations and Proposals

Our amended and restated bylaws establish advance notice procedures with respect to stockholder proposals and nomination of candidates for election as directors other than nominations made by or at the direction of our board of directors or a committee of our board of directors.

Our amended and restated certificate of incorporation and amended and restated bylaws do not provide for cumulative voting in the election of directors.

The authorization of our undesignated preferred stock makes it possible for our board of directors to issue our preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of us. These and other provisions may have the effect of deferring hostile takeovers or delaying changes of control of our management.

We are subject to Section 203 of the Delaware General Corporation Law. Subject to specific exceptions, Section 203 prohibits a publicly held Delaware corporation from engaging in a "business combination" with an "interested stockholder" for a period of three years after the date of the transaction in which the person became an interested stockholder, unless:

"Business combinations" include mergers, asset sales and other transactions resulting in a financial benefit to the "interested stockholder." Subject to various exceptions, an "interested stockholder" is a person who, together with his or her affiliates and associates, owns, or within the previous three years did own, 15% or more of the corporation's outstanding voting stock. These restrictions could prohibit or delay the accomplishment of mergers or other takeover or change in control attempts with respect to us and, therefore, may discourage attempts to acquire us.

The Delaware General Corporation Law authorizes corporations to limit or eliminate the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors' fiduciary duties. Under our amended and restated certificate of incorporation, subject to

certain limitations imposed by the Delaware General Corporation Law, no director shall be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except for liability:

Our amended and restated bylaws provide that we must indemnify our directors and officers to the fullest extent authorized by the Delaware General Corporation Law. We are also expressly authorized to advance certain expenses (including attorneys' fees and disbursements and court costs) and carry directors' and officers' insurance providing indemnification for our directors, officers and certain employees for some liabilities. We believe that these indemnification provisions and insurance are useful to attract and retain qualified directors and executive officers. There is currently no pending material litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought.

We intend to apply to list our Class A common stock on the New York Stock Exchange under the symbol " ."

Prior to this offering, there has not been any public market for our Class A common stock, and a significant public market for our Class A common stock may not develop or be sustained after this offering. We cannot predict what effect, if any, market sales of shares of our Class A common stock or the availability of shares of our Class A common stock for sale will have on the market price of our Class A common stock prevailing from time to time. Nevertheless, sales of our Class A common stock in the public market, or the perception that such sales could occur, could adversely affect the market price of our Class A common stock and could make it more difficult for us to raise capital through the sale of our equity or equity-related securities at a time and price that we deem appropriate.

Upon the closing of this offering, we expect to have a total of shares of our Class A common stock outstanding. If the underwriters fully exercise their option to purchase additional shares, we expect to have shares of our Class A common stock outstanding upon the closing of this offering. All of the shares of our Class A common stock sold in this offering will be freely tradable without restriction or further registration under the Securities Act, except for "restricted" shares held by persons who may be deemed our "affiliates," as that term is defined under Rule 144 of the Securities Act. An "affiliate" is a person that directly, or indirectly through one or more intermediaries, controls or is controlled by us or is under common control with us.

Affiliates will be permitted to sell their shares of Class A common stock that they purchase in this offering only through registration under the Securities Act or pursuant to an exemption from registration under the Securities Act, such as the exemption available by complying with Rule 144 of the Securities Act. In general, under Rule 144 in effect as of the date of this prospectus, beginning 90 days after the date of this prospectus, an affiliate who has beneficially owned shares of our Class A common stock for at least one year would be entitled to sell in brokers' transactions a number of shares of such stock within any three-month period that does not exceed the greater of:

Sales under Rule 144 are also subject to other requirements regarding the manner of sale, notice filing and the availability of current public information about us.

We, our directors, executive officers and Kerr-McGee have agreed with the underwriters not to sell, dispose of or hedge any shares of our common stock, subject to specified exceptions, during the period from the date of this prospectus continuing through the date that is 180 days or, in the case of the proposed Distribution of our Class B shares by Kerr-McGee to its stockholders and certain related transfers, 120 days, after the date of this prospectus, except with the prior written consent of each of Lehman Brothers Inc. and J.P. Morgan Securities Inc. See "Underwriting—Lock-Up Agreements."

We intend to establish our own equity plan effective as of the date of this offering. We have reserved shares of our Class A common stock for issuance under that plan. In addition, under our employee benefits agreement with Kerr-McGee, Kerr-McGee unvested stock options and restricted shares of Kerr-McGee common stock held by our employees and outstanding on the effective date of

the Distribution will be converted into stock-based awards under our equity plan. The number of options we will assume, and the number of replacement options or shares of restricted stock we will issue, will be determined in accordance with the employee benefits agreement. We currently expect to file a registration statement under the Securities Act to register shares reserved for issuance under our equity plan. Shares issued pursuant to awards after the effective date of such registration statement, other than shares issued to affiliates, generally will be freely tradable without further registration under the Securities Act.

After the completion of this offering and the expiration of the lock-up period described above, Kerr-McGee will be entitled to certain rights with respect to the registration of its shares of our Class B common stock under the Securities Act, under the terms of a registration rights agreement between us and Kerr-McGee. We will bear all registration expenses if these registration rights are exercised, other than underwriting discounts and commissions. These registration rights terminate as to Kerr-McGee's shares when Kerr-McGee may sell those shares under Rule 144(k) of the Securities Act. Shares of our Class B common stock that are registered pursuant to the registration rights agreement will be freely transferable.

Kerr-McGee has advised us that, subject to the terms of its agreement with the underwriters (as discussed in "Underwriting—Lock-Up Agreements"), following completion of this offering, it intends to distribute all of the shares of our Class B common stock that it owns to its stockholders. Kerr-McGee expects to accomplish the Distribution through a spin-off, split-off or a combination of both transactions. Completion of the Distribution is contingent upon the satisfaction or waiver of a variety of conditions described elsewhere in this prospectus. Kerr-McGee is not required to complete the Distribution and has the sole discretion to decide if and when the Distribution will occur and to determine the form, structure and all other terms of any transactions to effect the Distribution. For a discussion of the conditions to the distribution, see "Arrangements between Kerr-McGee and Our Company." Shares of our Class B common stock distributed to Kerr-McGee common stockholders in the Distribution generally will be freely transferable, except for shares of our Class B common stock received by persons who may be deemed to be our affiliates.

CERTAIN UNITED STATES FEDERAL INCOME AND ESTATE
TAX CONSEQUENCES TO NON-U.S. HOLDERS

The following is a summary of certain United States federal income and estate tax consequences of the purchase, ownership and disposition of our Class A common stock as of the date of this prospectus. Except where noted, this summary deals only with Class A common stock that is held as a capital asset by a non-U.S. holder.

A "non-U.S. holder" means a person (other than a partnership) that is not for United States federal income tax purposes any of the following:

This summary is based upon provisions of the Internal Revenue Code, or the Code, and regulations, rulings and judicial decisions as of the date of this prospectus. Those authorities may be changed, perhaps retroactively, so as to result in United States federal income and estate tax consequences different from those summarized below. This summary does not address all aspects of United States federal income and estate taxes and does not deal with foreign, state, local or other tax considerations that may be relevant to non-U.S. holders in light of their personal circumstances. In addition, it does not represent a detailed description of the United States federal income and estate tax consequences applicable to you if you are subject to special treatment under the United States federal income tax laws (including if you are a United States expatriate, "controlled foreign corporation," "passive foreign investment company," corporation that accumulates earnings to avoid United States federal income tax or an investor in a pass-through entity). A change in law could alter significantly the tax considerations that we describe in this summary.

If a partnership holds our Class A common stock, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding our Class A common stock, you should consult your tax advisors.

If you are considering the purchase of our Class A common stock, you should consult your own tax advisors concerning the particular United States federal income and estate tax consequences to you of the ownership of our Class A common stock, as well as the consequences to you arising under the laws of any other taxing jurisdiction.

Dividends paid to a non-U.S. holder of our Class A common stock generally will be subject to withholding of United States federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. However, dividends that are effectively connected with the conduct of a trade or business by the non-U.S. holder within the United States (and, where a tax treaty applies, are attributable to a United States permanent establishment of the non-U.S. holder) are not subject to the withholding tax, provided certain certification and disclosure requirements are satisfied. Instead, such dividends are subject to United States federal income tax on a net income basis in the same

manner as if the non-U.S. holder were a United States person as defined under the Code. Any such effectively connected dividends received by a foreign corporation may be subject to an additional "branch profits tax" at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.

A non-U.S. holder of our Class A common stock who wishes to claim the benefit of an applicable treaty rate for dividends will be required to complete Internal Revenue Service Form W-8BEN (or other applicable form) and certify under penalty of perjury that such holder is eligible for benefits under the applicable treaty. Special certification and other requirements apply to certain non-U.S. holders that are pass-through entities rather than corporations or individuals. In addition, Treasury regulations provide special procedures for payments of dividends through certain intermediaries.

A non-U.S. holder of our Class A common stock eligible for a reduced rate of United States withholding tax pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the Internal Revenue Service.

Any gain realized on the disposition of our Class A common stock generally will not be subject to United States federal income tax unless:

An individual non-U.S. holder described in the first bullet point immediately above will be subject to tax on the net gain derived from the sale under regular graduated United States federal income tax rates. An individual non-U.S. holder described in the second bullet point immediately above will be subject to a flat 30% tax on the gain derived from the sale, which may be offset by United States source capital losses, even though the individual is not considered a resident of the United States. If a non-U.S. holder that is a foreign corporation falls under the first bullet point immediately above, it will be subject to tax on its net gain in the same manner as if it were a United States person as defined under the Code and, in addition, may be subject to the branch profits tax equal to 30% of its effectively connected earnings and profits or at such lower rate as may be specified by an applicable income tax treaty.

We believe we are not and do not anticipate becoming a "United States real property holding corporation" for United States federal income tax purposes.

Class A common stock held by an individual non-U.S. holder at the time of death will be included in such holder's gross estate for United States federal estate tax purposes, unless an applicable estate tax treaty provides otherwise.

We must report annually to the Internal Revenue Service and to each non-U.S. holder the amount of dividends paid to such holder and the tax withheld with respect to such dividends, regardless of whether withholding was required. Copies of the information returns reporting such dividends and

withholding may also be made available to the tax authorities in the country in which the non-U.S. holder resides under the provisions of an applicable income tax treaty.

A non-U.S. holder will be subject to backup withholding for dividends paid to such holder unless such holder certifies under penalty of perjury that it is a non-U.S. holder (and the payor does not have actual knowledge or reason to know that such holder is a United States person as defined under the Code), or such holder otherwise establishes an exemption.

Information reporting and, depending on the circumstances, backup withholding will apply to the proceeds of a sale of our Class A common stock within the United States or conducted through certain United States-related financial intermediaries, unless the beneficial owner certifies under penalty of perjury that it is a non-U.S. holder (and the payor does not have actual knowledge or reason to know that the beneficial owner is a United States person as defined under the Code) or such owner otherwise establishes an exemption. Certain stockholders, including all corporations, are exempt from the backup withholding rules.

Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a non-U.S. holder's United States federal income tax liability provided the required information is furnished to the Internal Revenue Service.

Lehman Brothers Inc. and J.P. Morgan Securities Inc. are acting as representatives of the underwriters. Under the terms of an Underwriting Agreement, which will be filed as an exhibit to the registration statement, of which this prospectus forms a part, prior to its effectiveness, each of the underwriters named below has severally agreed to purchase from us the respective number of shares of our Class A common stock shown opposite its name below:

The underwriting agreement provides that the underwriters' obligation to purchase shares of our Class A common stock depends on the satisfaction of the conditions contained in the underwriting agreement including:

The following table summarizes the underwriting discounts and commissions we will pay to the underwriters. These amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase additional shares. The underwriting fee is the difference between the initial price to the public and the amount the underwriters pay us for the shares.

The representatives of the underwriters have advised us that the underwriters propose to offer the shares of our Class A common stock directly to the public at the public offering price on the cover of this prospectus and to selected dealers, which may include the underwriters, at such offering price less a selling concession not in excess of $ per share. The underwriters may allow, and the selected dealers may re-allow, a discount from the concession not in excess of $ per share to other dealers. After the offering, the representatives may change the offering price and other selling terms.

The expenses of the offering that are payable by us are estimated to be $ (excluding underwriting discounts and commissions).

We have granted the underwriters an option, exercisable for 30 days after the date of this prospectus, to purchase, from time to time, in whole or in part, up to an aggregate of shares at the public offering price less underwriting discounts and commissions. This option may be exercised if the underwriters sell more than shares in connection with this offering. To the

extent that this option is exercised, each underwriter will be obligated, subject to certain conditions, to purchase its pro rata portion of these additional shares based on the underwriter's percentage underwriting commitment in the offering as indicated in the table at the beginning of this Underwriting Section.

We, all of our directors and executive officers and Kerr-McGee have agreed that, without the prior written consent of each of Lehman Brothers Inc. and J.P. Morgan Securities Inc., we and they will not directly or indirectly, offer, pledge, announce the intention to sell, sell, contract to sell, sell an option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of any shares of our common stock or any securities which may be converted into or exchanged for any shares of our common stock or enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of shares of our common stock for a period of 180 days, or, in the case of the proposed Distribution of our shares by Kerr-McGee to its stockholders and certain related transfers, 120 days, after the date of this prospectus other than permitted transfers.

Each restricted period described in the preceding paragraph will be extended if:

in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the announcement of the material news or material event, as applicable.

Prior to this offering, there has been no public market for our common stock. The initial public offering price will be negotiated between the representatives and us. In determining the initial public offering price of our common stock, the representatives will consider:

We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act and liabilities incurred in connection with the directed share program referred to below, and to contribute to payments that the underwriters may be required to make for these liabilities.

At our request, the underwriters have reserved for sale at the initial public offering price up to shares offered by this prospectus for officers, directors, employees and certain other persons associated with us. The number of shares available for sale to the general public will be reduced to the extent such persons purchase such reserved shares. Any reserved shares not so purchased will be offered by the underwriters to the general public on the same basis as the other shares offered by this prospectus.

The representatives may engage in stabilizing transactions, short sales and purchases to cover positions created by short sales, and penalty bids or purchases for the purpose of pegging, fixing or maintaining the price of the common stock, in accordance with Regulation M under the Securities Exchange Act of 1934:

These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of the common stock. As a result, the price of the common stock may be higher than the price that might otherwise exist in the open market. These transactions may be effected on The New York Stock Exchange or otherwise and, if commenced, may be discontinued at any time.

Neither we nor any of the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the common stock. In addition, neither we nor any of the underwriters make representation that the representatives will engage in these stabilizing transactions or that any transaction, once commenced, will not be discontinued without notice.

A prospectus in electronic format may be made available on the Internet sites or through other online services maintained by one or more of the underwriters or selling group members participating in this offering, or by their affiliates. In those cases, prospective investors may view offering terms online and, depending upon the particular underwriter or selling group member, prospective investors may be allowed to place orders online. The underwriters may agree with us to allocate a specific number of shares for sale to online brokerage account holders. Any such allocation for online distributions will be made by the representatives on the same basis as other allocations.

Other than the prospectus in electronic format, the information on any underwriter's or selling group member's web site and any information contained in any other web site maintained by an underwriter or selling group member is not part of the prospectus or the registration statement of which this prospectus forms a part, has not been approved or endorsed by us or any underwriter or selling group member in its capacity as underwriter or selling group member and should not be relied upon by investors.

We intend to apply to list our shares of common stock for quotation on the New York Stock Exchange under the symbol " ."

The underwriters have informed us that they do not intend to confirm sales to discretionary accounts that exceed 5% of the total number of shares offered by them.

If you purchase shares of common stock offered in this prospectus, you may be required to pay stamp taxes and other charges under the laws and practices of the country of purchase, in addition to the offering price listed on the cover page of this prospectus.

The underwriters may in the future perform investment banking and financial advisory services for us in the ordinary course of their business for which they may receive customary fees and expenses.

Each of Lehman Brothers Inc. or its affiliate and J.P. Morgan Securities Inc. or its affiliate has in the past provided dealer manager, investment banking and financial advisory services to Kerr-McGee for which they received customary fees. Additionally, each of Lehman Brothers Inc. or its affiliate and J.P. Morgan Securities Inc. or its affiliate is currently providing financial advisory services to Kerr-McGee and is an agent and a lender under Kerr-McGee's credit agreement for which, in each case, they will receive customary fees.

The validity of the issuance of the shares of Class A common stock offered by this prospectus will be passed upon for us by Covington & Burling, Washington, D.C., and for the underwriters by Akin Gump Strauss Hauer & Feld LLP, Houston, Texas.

Ernst & Young LLP, independent registered public accounting firm, has audited our combined financial statements and schedule at December 31, 2004 and 2003, and for each of the three years in the period ended December 31, 2004, as set forth in their report. We have included our combined financial statements and schedule in this prospectus and elsewhere in the registration statement in reliance on Ernst & Young LLP's report, given on their authority as experts in accounting and auditing.

We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the issuance of shares of our Class A common stock being offered by this prospectus. This prospectus, which forms a part of the registration statement, does not contain all of the information set forth in the registration statement. For further information with respect to us and the shares of our Class A common stock, reference is made to the registration statement. Statements contained in this prospectus as to the contents of any contract or other document are not necessarily complete, and, where such contract or other document is an exhibit to the registration statement, each such statement is qualified by the provisions in such exhibit, to which reference is hereby made.

We are not currently subject to the informational requirements of the Exchange Act. As a result of this offering, we will become subject to the informational requirements of the Exchange Act, and, in accordance therewith, will file reports and other information with the SEC. The registration statement, such reports and other information can be inspected and copied at the Public Reference Room of the SEC located at Room 1580, Headquarters Office, 100 F Street, N.E., Washington D.C. 20549. Copies of such materials, including copies of all or any portion of the registration statement, can be obtained from the Public Reference Room of the SEC at prescribed rates. You can call the SEC at 1-800-SEC-0330 to obtain information on the operation of the Public Reference Room. Such materials may also be accessed electronically by means of the SEC's home page on the Internet (http://www.sec.gov).

We intend to establish our own website address prior to completion of this offering. We also intend to make our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed with or furnished to the SEC available free of charge on our website as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. The information on our website will not be incorporated by reference into this prospectus, and you should not consider information on our website a part of this prospectus.


New-Co Chemical, Inc. Combined Financial Statements
Report of Independent Registered Public Accounting Firm
Combined Statement of Operations for the years ended December 31, 2004, 2003 and 2002
Combined Balance Sheet at December 31, 2004 and 2003
Combined Statement of Cash Flows for the years ended December 31, 2004, 2003 and 2002
Combined Statement of Comprehensive Income (Loss) and Business Equity for the years ended December 31, 2004, 2003 and 2002
Notes to Combined Financial Statements
Interim New-Co Chemical, Inc. Condensed Combined Financial Statements (Unaudited)
Condensed Combined Statement of Operations for the three months ended March 31, 2005 and 2004
Condensed Combined Balance Sheet at March 31, 2005 and December 31, 2004
Condensed Combined Statement of Cash Flows for the three months ended March 31, 2005 and 2004
Condensed Combined Statement of Comprehensive Income (Loss) and Business Equity for the three months ended March 31, 2005 and 2004
Notes to Condensed Combined Financial Statements

We have audited the accompanying combined balance sheets of New-Co Chemical, Inc. as of December 31, 2004 and 2003, and the related combined statements of operations, comprehensive income (loss) and business equity, and cash flows for each of the three years in the period ended December 31, 2004. Our audits also included the financial statement schedule listed at Item 16(b). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the combined financial position of New-Co Chemical, Inc. at December 31, 2004 and 2003, and the combined results of their operations and their cash flows for each of the three years in the period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

As discussed in Notes 2 and 17 to the combined financial statements, effective January 1, 2003, the Company adopted Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations.

				At December 31,
				2004		2003
				(Millions of dollars)
ASSETS
Current Assets
	Cash and cash equivalents			$	23.8	$	59.3
	Accounts receivable, net of allowance for doubtful accounts of $11.0 in 2004 and $9.0 in 2003				222.2		150.8
	Inventories				285.1		352.6
	Prepaid and other assets				34.4		53.0
	Income tax receivable				12.7		6.9
	Deferred income taxes				17.9		27.9
	Assets held for sale				3.4		3.8

		Total Current Assets			599.5		654.3
Property, Plant and Equipment—Net					883.5		962.1
Long-term Receivables, Investments and Other Assets					48.3		126.6
Goodwill and Other Intangible Assets					65.1		66.6

			Total Assets	$	1,596.4	$	1,809.6

LIABILITIES AND BUSINESS EQUITY
Current Liabilities
	Accounts payable			$	196.0	$	198.0
	Accrued liabilities				165.7		164.0

		Total Current Liabilities			361.7		362.0

Noncurrent Liabilities
	Deferred income taxes				101.2		212.8
	Environmental remediation and/or restoration				130.8		135.9
	Other				112.3		87.2

		Total Noncurrent Liabilities			344.3		435.9

Contingencies and Commitments (Notes 21 and 22)
Business Equity
	Owner's net investment				819.1		947.2
	Accumulated other comprehensive income				71.3		64.5

		Total Business Equity			890.4		1,011.7

			Total Liabilities and Business Equity	$	1,596.4	$	1,809.6

NEW-CO CHEMICAL, INC.

COMBINED STATEMENT OF COMPREHENSIVE INCOME (LOSS) AND BUSINESS EQUITY

New-Co Chemical, Inc. ("New-Co" or the "company") is currently an indirect wholly-owned subsidiary of Kerr-McGee Corporation ("Kerr-McGee"). On March 8, 2005, the Kerr-McGee Corporation Board of Directors authorized management to pursue alternatives for the separation of its chemical business, including a spin-off or sale. As a result, New-Co was formed to effect the separation. The company currently anticipates completing an initial public offering in the quarter ending December 31, 2005. Prior to the closing date of the offering, Kerr-McGee will contribute and transfer to the company certain subsidiaries, assets and liabilities related to its chemical business, including its indirect wholly-owned subsidiaries Kerr-McGee Chemical Worldwide LLC, KM Denmark International ApS and KM (Luxembourg) Holding S.a.r.l. (the "Contribution"). Kerr-McGee has announced that after completion of this offering it plans to distribute its remaining ownership interest in New-Co to its common stockholders (the "Distribution"). Kerr-McGee expects to accomplish this Distribution through a spin-off, split-off or a combination of both transactions. Kerr-McGee has the sole discretion to decide if and when the Distribution will occur and to determine form, structure and all other terms of any transactions to effect the Distribution.

On May 17, 2005, the company was incorporated in Delaware as an indirect wholly-owned subsidiary of Kerr-McGee. On this date, 10,000 shares of the company's common stock, par value of $0.01, were issued, authorized and outstanding. Prior to the completion of the offering, there will be a recapitalization of the company, the extent of which is currently unknown.

New-Co is primarily engaged in production and marketing of titanium dioxide pigment. Kerr-McGee Chemical Worldwide LLC has production facilities in the United States and mining and production facilities in Australia and has, directly and indirectly through its subsidiaries, owned and operated various businesses that are unrelated to the chemical business but continue to have certain ongoing regulatory requirements. KM Denmark International ApS has production facilities in Germany and Netherlands and KM (Luxembourg) Holding S.a.r.l. has a European marketing entity based in Switzerland.

The combined financial statements have been derived from the accounting records of Kerr-McGee, principally representing the Chemical—Pigment and Chemical—Other segments of Kerr-McGee, using the historical results of operations, and historical basis of assets and liabilities of the subsidiaries that the company will own and the chemical business the company will operate after completion of this offering. Certain of the subsidiaries that will be transferred to the company by Kerr-McGee have in the past, directly or through predecessor entities, owned and operated businesses that are unrelated to the chemical business we will operate after the closing of this offering. Certain of these businesses, including the company's former forest products operations, thorium manufacturing, uranium and oil and gas refining, distribution and marketing, have been reflected as discontinued operations in the combined financial statements. The discontinued operations have been included in the combined financial statements because certain contingent obligations directly related to such operations have been retained, resulting in charges to operations in periods subsequent to the exit from these businesses and related liabilities associated with the exit from these businesses (see Notes 15 and 21).

Management believes the assumptions underlying the combined financial statements are reasonable. However, the combined financial statements included herein may not necessarily reflect the company's results of operations, financial position and cash flows in the future or what its results of operations, financial position and cash flows would have been had the company been a stand-alone

company during the periods presented. Because a direct ownership relationship did not exist among all the various worldwide entities comprising the company, Kerr-McGee's net investment in the company is shown as owner's net investment in lieu of stockholders' equity in the combined financial statements. Transactions between New-Co and other Kerr-McGee operations have been identified in the Combined Statement of Comprehensive Income (Loss) and Business Equity as net transfers (to) from Kerr-McGee (see Note 3). The accompanying combined financial statements do not reflect any changes that will occur upon the Contribution and recapitalization of New-Co, or may occur in the capitalization and operations of New-Co as a result of, or after, the spin-off.

The combined financial statements include the accounts of all majority-owned subsidiary companies and the proportionate share of joint ventures in which the company has an undivided interest. Investments in affiliated companies that are 20% to 50% owned are carried as a component of long-term receivables, investments and other assets in the Combined Balance Sheet at cost adjusted for equity in undistributed earnings. Except for dividends and changes in ownership interest, changes in equity in undistributed earnings are included in other income (expense) in the Combined Statement of Operations. All material intercompany transactions have been eliminated.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates as additional information becomes known.

The U.S. dollar is considered the functional currency for the company's international operations, except for its European operations. Foreign currency transaction gains or losses are recognized in the period incurred and are included in other income (expense) in the Combined Statement of Operations. The company recorded net foreign currency transaction gains (losses) of $(5.4) million, $(3.7) million and $6.4 million in 2004, 2003 and 2002, respectively.

The euro is the functional currency for the company's European operations. Translation adjustments resulting from translating the functional currency financial statements into U.S. dollar equivalents are reflected as a separate component of other comprehensive income (see Note 4).

The company considers all investments with maturity of three months or less to be cash equivalents. Cash equivalents totaling $2.3 million in 2004 and $25.3 million in 2003 were comprised of time deposits.

Accounts receivable are reflected at their net realizable value, reduced by an allowance for doubtful accounts to allow for expected credit losses. The allowance is estimated by management, based on factors such as age of the related receivables and historical experience, giving consideration to customer profiles. The company does not generally charge interest on accounts receivable; however, certain operating agreements have provisions for interest and penalties that may be invoked, if deemed necessary. Accounts receivable are aged in accordance with contract terms and are written off when deemed uncollectible. Any subsequent recoveries of amounts written off are credited to the allowance for doubtful accounts.

Under an accounts receivable monetization program maintained by the company through April 2005, selected pigment customers' accounts receivable were sold to a special-purpose entity (SPE). The company did not own any of the common stock of the SPE. When the receivables were sold, the company retained an interest in excess receivables that served as over-collateralization for the program and retained interests for servicing and in preference stock of the SPE. The interest in the preference stock was essentially a deposit to provide further credit enhancement to the securitization program, if needed, but otherwise was recoverable by the company at the end of the program. Management believes the servicing fee represented adequate compensation and was equal to what would otherwise be charged by an outside servicing agent. The loss associated with the receivable sales was determined as the difference in the book value of receivables sold and the total of cash and fair value of the deposit retained by the SPE. The losses were recorded in other income (expense). The estimate of fair value of the retained interests was based on the present value of future cash flows discounted at rates estimated by management to be commensurate with the risks. As discussed more fully in Note 6, this program was terminated in April 2005.

Inventories are stated at the lower of cost or market. The costs of the company's product inventories are determined by the first-in, first-out (FIFO) method. Inventory carrying values include material costs, labor and associated indirect manufacturing expenses. Costs for materials and supplies, excluding ore, are determined by average cost to acquire. Raw materials (ore) are carried at actual cost.

Property, plant and equipment is stated at cost less reserves for depreciation and amortization. Maintenance and repairs are expensed as incurred, except that costs of replacements or renewals that improve or extend the lives of existing properties are capitalized.

Depreciation—Property, plant and equipment is depreciated over its estimated useful life by the straight-line method. Useful lives range from 10 to 40 years for buildings and from three to 25 years for machinery and equipment.

Retirements and Sales—The cost and related depreciation reserves are removed from the respective accounts upon retirement or sale of property, plant and equipment. Upon retirement, any resulting loss is included in costs of goods sold in the Combined Statement of Operations and upon sale, the resulting gain or loss is included in other income (expense) in the Combined Statement of Operations.

Interest Capitalized—The company capitalizes interest costs on major projects that require an extended period of time to complete. Interest capitalized in 2004, 2003 and 2002 was $2.0 million, $1.6 million and $4.0 million, respectively.

The company evaluates impairments by asset group for which the lowest level of independent cash flows can be identified. If the sum of these estimated future cash flows (undiscounted and without interest charges) is less than the carrying amount of the asset, an impairment loss is recognized for the excess of the carrying amount of the asset over its estimated fair value.

Assets are classified as held for sale when the company commits to a plan to sell the assets, the sale is probable and is expected to be completed within one year. Upon transfer to the held-for-sale category, long-lived assets are no longer depreciated. A loss is recognized at the time of transfer, and subsequently thereafter, based on the difference between fair value less costs to sell and the assets' carrying value. Losses may be reversed up to the original carrying value as estimates are revised; however, any gains above the assets' original carrying value are only recognized upon disposition.

Goodwill is initially measured as the excess of the purchase price of an acquired entity over the fair value of individual assets acquired and liabilities assumed. Goodwill and other indefinite-lived intangibles are not amortized but are reviewed annually for impairment, or more frequently if impairment indicators arise. The annual test for goodwill impairment is completed at June 30. Based upon the most recent test, no impairment was indicated.

From time to time, the company enters into foreign currency forward contracts to hedge a portion of its foreign currency risk associated with pigment sales, raw material purchases and operating costs. The company also uses natural gas swaps to hedge a portion of its commodity price risk arising from natural gas consumption. All derivative instruments are accounted for in accordance with FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities" (FAS No. 133), as amended. Derivative instruments are recorded in prepaid and other assets or accrued liabilities in the Combined Balance Sheet, measured at fair value. When available, quoted market prices are used in determining fair value; however, if quoted market prices are not available, the company estimates fair value using either quoted market prices of financial instruments with similar characteristics or other valuation techniques. For contracts that qualify and are designated as cash flow hedges of forecasted transactions under the provisions of FAS No. 133, unrealized gains and losses are initially reflected in accumulated other comprehensive income and recognized in earnings in the periods during which the hedged forecasted transactions affect earnings (i.e., when the hedged forecasted pigment sales occur or operating costs are incurred, and upon the sale of finished inventory in the case of a hedged raw material purchase). The ineffective portion of the change in fair value of such hedges, if any, is included in current earnings. For derivatives not designated for hedge accounting, gains and losses are recognized in earnings in the periods incurred. Cash flows associated with derivative instruments are

included in the same category in the Combined Statement of Cash Flows as the cash flows from the item being hedged.

As sites of environmental concern are identified, the company assesses the existing conditions, claims and assertions, and records an estimated undiscounted liability when environmental assessments and/or remedial efforts are probable and the associated costs can be reasonably estimated. Estimates of environmental liabilities, which include the cost of investigation and remediation, are based on a variety of matters, including, but not limited to, the stage of investigation, the stage of the remedial design, evaluation of existing remediation technologies, and presently enacted laws and regulations. In future periods, a number of factors could significantly change the company's estimate of environmental remediation costs, such as changes in laws and regulations, or changes in their interpretation or administration, revisions to the remedial design, unanticipated construction problems, identification of additional areas or volumes of contaminated soils and groundwater, and changes in costs of labor, equipment and technology.

To the extent costs of investigation and remediation have been incurred and are recoverable from the U.S. government under Title X of the Energy Policy Act of 1992 and have been incurred or are recoverable under certain insurance policies and such recoveries are deemed probable, the company records a receivable for the estimated amounts recoverable (undiscounted). Receivables are reflected in the Combined Balance Sheet as either accounts receivable or as a component of long-term receivables, investments and other assets, depending on estimated timing of collection.

In June 2001, the FASB issued Statement No. 143, "Accounting for Asset Retirement Obligations" (FAS No. 143). FAS No. 143 requires that an asset retirement obligation (ARO) associated with the retirement of a tangible long-lived asset be recognized as a liability in the period in which it is incurred or becomes determinable (as defined by the standard), with an associated increase in the carrying amount of the related long-lived asset. The cost of the tangible asset, including the asset retirement cost, is depreciated over the useful life of the asset. The company adopted the new standard on January 1, 2003, as discussed further in Note 17.

Generally, the company does not recognize an asset retirement obligation associated with its operating facilities either because no legal obligation exists or the life of such facilities is indeterminate. However, if a decision to decommission a facility is made and the timing of liability settlement becomes known, a liability is recognized and the remaining asset retirement cost is depreciated over the remaining useful life of the assets. The ARO is recorded at its estimated fair value and accretion expense is recognized over time as the discounted liability is accreted to its expected settlement value. Fair value is measured using expected future cash outflows discounted at Kerr-McGee's credit-adjusted risk-free interest rate. No market risk premium has been included in the company's calculation of ARO balances since no reliable estimate can be made by the company.

Research and development costs were $6.3 million, $8.0 million and $7.5 million in 2004, 2003 and 2002, respectively, and were expensed as incurred.

Certain of company's employees participated in Kerr-McGee's long-term incentive plans. Under the plans, employees received various stock-based compensation awards, including stock options, restricted stock, stock opportunity grants and performance units. The company accounts for such awards under the intrinsic-value method of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB No. 25). This method of accounting for stock options generally results in no expense being recognized for fixed-price stock options with an exercise price equal to the fair value of the stock on the grant date. Compensation expense for restricted stock and stock opportunity grants was measured at the market price of the shares of Kerr-McGee stock on the grant date and amortized ratably over the vesting periods of the underlying grants, ranging from three to five years, or over the service period, if shorter.

FAS No. 123, "Accounting for Stock-Based Compensation," (FAS No. 123) prescribes a fair-value method of accounting for employee stock-based awards. Following this method, compensation expense for such awards is measured based on the estimated grant-date fair value and recognized as the related employee services are provided. If compensation expense for stock-based awards had been determined using the fair-value based method, both stock-based compensation expense and net loss would have increased, as shown in the following table.

The fair value of each Kerr-McGee option granted in 2004, 2003 and 2002 was estimated as of the date of the grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

Revenue is recognized when persuasive evidence of a sales arrangement exists, delivery has occurred, sales price is fixed or determinable and collectibility is reasonably assured. All amounts billed to a customer in a sales transaction related to shipping and handling represent revenues earned and are reported as net sales. Costs incurred by the company for shipping and handling are reported as cost of goods sold.

The company is a member included in the consolidated tax return of Kerr-McGee. The company has not historically been a party to a tax-sharing agreement with Kerr-McGee but has consistently followed an allocation policy whereby Kerr-McGee has allocated its members of the consolidated return provisions and/or benefits based upon each member's taxable income or loss. This allocation methodology results in the recognition of deferred assets and liabilities for the differences between the financial statement carrying amounts and their respective tax basis, except to the extent for deferred taxes on income considered to be permanently reinvested in foreign jurisdictions. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Kerr-McGee has allocated current tax benefits to the members of its consolidated return, including the company, that have generated losses that are utilized or expected to be utilized on the consolidated return. This allocation methodology is not consistent with that calculated on a stand-alone tax return basis. In addition, Kerr-McGee manages its tax position for the benefit of its entire portfolio of businesses, and its tax strategies are not necessarily reflective of those tax strategies that the company would have followed as a stand-alone company.

Historical earnings per share are not presented since New-Co common stock was not part of the capital structure of Kerr-McGee for the periods presented. New-Co will present basic and diluted earnings per share in the first report it issues after the effective date of the spin-off.

In November 2004, the FASB issued FAS No. 151, "Inventory Costs—an Amendment of ARB No. 43, Chapter 4," which requires that abnormal amounts of idle facilities cost, freight, handling costs and spoilage be expensed as incurred and not capitalized as inventory. FAS No. 151 is effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The company will adopt the standard effective January 1, 2006. The effect of adoption is not expected to have a material effect on the company's financial position or results of operations.

In December 2004, the FASB issued FASB Staff Position No. FAS 109-2 (FSP No. 109-2), "Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provisions within the American Jobs Creation Act of 2004" (the Jobs Act). FSP No. 109-2 provides guidance with respect to reporting the potential impact of the repatriation provisions of the Jobs Act on an enterprise's income tax expense and deferred tax liability. The Jobs Act was enacted on October 22, 2004, and provides for a temporary 85% dividends received deduction on certain foreign earnings repatriated during a one-year period. The deduction would result in an approximate 5.25% federal tax rate on the repatriated earnings. Additionally, withholding taxes may be due in certain tax jurisdictions. To qualify for the deduction, the earnings must be reinvested in the United States pursuant to a domestic reinvestment plan established by a company's chief executive officer and approved by a company's board of directors. Certain other criteria in the Jobs Act must be satisfied as well. FSP No. 109-2 states that an enterprise is allowed time beyond the financial reporting period to evaluate the effect of the Jobs Act on its plan for reinvestment or repatriation of foreign earnings. The status of the company's evaluation of the repatriation provisions of the Jobs Act and related financial statement effects are disclosed in Note 16.

In December 2004, the FASB issued Statement No. 123 (revised 2004), "Share-Based Payment" (FAS No. 123R), which replaces FAS No. 123 and supersedes APB No. 25. FAS No. 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values beginning with the first interim period after June 15, 2005, with early adoption encouraged. In April 2005, the Securities and Exchange Commission (the "SEC") amended its rule to allow public companies more time to implement the standard. Following the SEC's rule, the company intends to implement FAS No. 123R effective January 1, 2006. The pro forma disclosures previously permitted under FAS No. 123 no longer will be an alternative to financial statement recognition. Under FAS No. 123R, the company must determine the appropriate fair value model to be used for valuing share-based payments, the amortization method for compensation cost and the transition method to be used at the date of adoption. The company plans to adopt the standard using the modified prospective method, as permitted by the standard. The modified prospective method requires that compensation expense be recorded for all unvested share-based compensation awards at the beginning of the first quarter of adoption. The company expects that the adoption will not have a material effect on its financial condition, and that the effect on its results of operations will be comparable to the current pro forma disclosures under FAS No. 123 included elsewhere in this note.

In March 2005, the FASB issued FASB Interpretation No. 47, "Accounting for Conditional Asset Retirement Obligations" (FIN No. 47) to clarify that an entity must recognize a liability for the fair value of a conditional asset retirement obligation when incurred, if the liability's fair value can be reasonably estimated. Conditional asset retirement obligations under this pronouncement are legal obligations to perform asset retirement activities when the timing and/or method of settlement are conditional on a future event or may not be within the control of the entity. FIN No. 47 also provides additional guidance for evaluating whether sufficient information to reasonably estimate the fair value of an asset retirement obligation is available. FIN No. 47 is effective for the company as of December 31, 2005. The company does not expect implementation of this pronouncement to have a material effect on its financial statements, unless additional information enabling the company to estimate the fair value of its conditional asset retirement obligations becomes available in future periods.

In May 2005, FASB issued FAS No. 154, "Accounting Changes and Error Corrections" (FAS No. 154), which will require that, unless it is impracticable to do so, a change in an accounting principle be applied retrospectively to prior periods' financial statements for all voluntary changes in accounting principles and upon adoption of a new accounting standard if the standard does not include specific transition provisions. FAS No. 154 supersedes Accounting Principles Board Opinion No. 20, Accounting Changes (APB No. 20), which previously required that most voluntary changes in accounting principles be recognized by including in the current period's net income (loss) the cumulative effect of changing to the new accounting principle. FAS No. 154 also provides that if an entity changes its method of depreciation, amortization, or depletion for long-lived, nonfinancial assets, the change must be accounted for as a change in accounting estimate. Under APB No. 20, such a change would have been reported as a change in an accounting principle. FAS No. 154 will be applicable to accounting changes and error corrections made by the company starting in 2006. The effect of applying this new standard on the company will depend upon whether material voluntary changes in accounting principles, changes in estimates or error corrections occur and transition and other provisions included in new accounting standards.

Prior to the Distribution, New-Co expects to enter into agreements with Kerr-McGee in connection with its separation from Kerr-McGee and related matters. These agreements are expected to include:

The Combined Statement of Operations includes allocation of costs for certain corporate functions historically provided by Kerr-McGee, including:

General Corporate Expenses—Represents costs related to corporate functions such as accounting, tax, treasury, human resources, legal and information management and technology. These costs have historically been allocated primarily based on estimated use of services as compared to Kerr-McGee's other businesses. These costs are included in selling, general and administrative expenses in the Combined Statement of Operations.

Employee Benefits and Incentives—Represents fringe benefit costs and other incentives, including group health and welfare benefits, U.S. pension plans, U.S. postretirement benefit plans and stock-based compensation plans. These costs have historically been allocated on an active headcount basis for health and welfare benefits, including postretirement benefits, on the basis of salary for U.S. pension plans and on a specific identification basis for stock-based compensation plans. These costs are included in costs of goods sold, selling, general and administrative expenses and restructuring charges in the Combined Statement of Operations.

Interest Expense—Kerr-McGee has provided financing to the company through cash flows from its other operations and debt incurred. Although the incurred debt has not been allocated to the company, a portion of the interest expense has been allocated based on specifically-identified borrowings from Kerr McGee at Kerr-McGee's average borrowing rates. These costs are included in other income (expense) in the Combined Statement of Operations, net of interest income that has been allocated from the company to Kerr-McGee on certain monies the company has loaned to Kerr-McGee.

Expense allocations from Kerr-McGee reflected in the loss from continuing operations in the company's Combined Statement of Operations were as follows:

These allocations were based on what Kerr-McGee considered to be reasonable reflections of the historical utilization levels of the services required in support of our business. The company's management currently estimates that general corporate expenses may be $20.0 to $25.0 million greater on an annual basis in the future as a stand-alone company (unaudited).

Kerr-McGee utilizes a worldwide centralized approach to cash management and the financing of its operations with all related activity between Kerr-McGee and the company reflected as net transfers from (to) Kerr-McGee in the company's Combined Statement of Comprehensive Income (Loss) and Business Equity. In connection with our separation from Kerr-McGee, the net amount due from the company to Kerr-McGee at the closing date of this offering, will be contributed by Kerr-McGee to the company, forming a part of the continuing equity of the company. Subsequent to the closing of this offering, amounts due from or to Kerr-McGee arising from transactions subsequent to that date will be settled in cash. We intend to distribute all of the net proceeds from this offering to Kerr-McGee.

In 2001, Kerr-McGee issued $1.5 billion of long-term notes in a public offering. The notes have been fully and unconditionally guaranteed, on a joint and several basis, by Kerr-McGee Chemical Worldwide LLC and another Kerr-McGee subsidiary.

Components of other comprehensive income for the years ended December 31, 2004, 2003 and 2002 were as follows:

Components of accumulated other comprehensive income at December 31, 2004 and 2003, net of applicable tax effects, were as follows:

Net cash provided by operating activities reflects cash payments for income taxes as follows:

Additionally, in 2004 Kerr-McGee paid income taxes of $37.0 million on the company's behalf.

Other noncash items included in the reconciliation of net loss to net cash provided by operating activities include the following:

Details of changes in other assets and liabilities within the operating section of the Combined Statement of Cash Flows are as follows:

In addition to transactions with Kerr-McGee affecting the company's net loss, the company periodically has had other transactions with Kerr-McGee that have not affected net loss but have affected recognized assets and liabilities and owner's net investment. Such noncash items are excluded from operating and financing activities in the accompanying Combined Statement of Cash Flows.

Summarized below are accounts receivable, net of the related allowance for doubtful accounts, at December 31, 2004 and 2003:

Through April 2005, the company had an accounts receivable monetization program that began in December 2000, through the sale of selected accounts receivable with a three-year, credit-insurance-backed asset securitization program with a maximum availability of $165.0 million. On July 30, 2003, the company restructured the program to include the sale of receivables originated by the company's European operations. Under the terms of the program, selected qualifying customer accounts receivable were sold monthly to a special-purpose entity (SPE), which in turn sold an undivided ownership interest in the receivables to a third-party multi-seller commercial paper conduit sponsored by an independent financial institution. The company sold, and retained an interest in, excess receivables to the SPE as over-collateralization for the program. The company's retained interest in the SPE's receivables is classified in trade accounts receivable in the accompanying Combined Balance Sheet. The retained interest was subordinate to, and provided credit enhancement for, the conduit's ownership interest in the SPE's receivables, and was available to the conduit to pay certain fees or expenses due to the conduit, and to absorb credit losses incurred on any of the SPE's receivables in the event of termination. However, the company believed that the risk of credit loss was very low since its bad-debt experience has historically been insignificant. The company retained servicing responsibilities and received a servicing fee of 1.07% of the receivables sold for the period of time outstanding, generally 60 to 120 days. No recourse obligations were recorded since the company had no obligations for any recourse actions on the sold receivables. The company also holds preference stock in the SPE, which essentially represents a retained deposit to provide further credit enhancements, if needed, but is otherwise recoverable by the company. The carrying value of our investment in the preference stock was $4.0 million at both December 31, 2004 and 2003 and is expected to be recovered upon dissolution of the SPE later in 2005.

During 2004, 2003 and 2002, the company sold $1.1 billion, $836.2 million and $609.4 million, respectively, of its pigment receivables, resulting in pretax losses reflected in other income (expense) of $8.2 million, $4.8 million and $4.7 million, respectively. The losses were equal to the difference in the book value of the receivables sold and the total of cash and the fair value of the deposit retained by the SPE. At year-end 2004 and 2003, the outstanding balance on receivables sold, net of the company's

retained interest in receivables serving as over-collateralization, totaled $165.0 million and $164.7 million, respectively. The outstanding balance of receivables serving as over-collateralization totaled $38.8 million and $36.4 million at December 31, 2004 and 2003, respectively. There were no delinquencies as of year-end 2004.

The accounts receivable monetization program included ratings downgrade triggers based on Kerr-McGee's corporate senior unsecured debt rating that provided for certain program modifications, including a program termination event upon which the program would effectively liquidate over time and the third-party multi-seller commercial paper conduit would be repaid with the collections on accounts receivable sold by the SPE. In April 2005, Kerr-McGee's corporate senior unsecured debt was downgraded, triggering program termination. As opposed to liquidating the program over time or modifying its terms, Kerr-McGee elected to terminate the program by advancing the then outstanding balance of receivables sold of $165.0 million to the SPE, which in turn used the funds to repay the financial institution. The balances of outstanding receivables are expected to be collected as they become due and will be used by the SPE to repay Kerr-McGee for its advance. The company's trade receivables will increase as a result of the program termination with a corresponding increase in amounts due to Kerr-McGee. As stated in Note 3, amounts due from the company to Kerr-McGee at the date of the offering will be contributed to capital in the company.

The company holds or issues financial instruments for other than trading purposes, including the following at December 31, 2004 and 2003: cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, long-term receivables and foreign currency and natural gas derivatives. At December 31, 2004 and 2003, the carrying amounts of all financial instruments, as reflected in the Combined Balance Sheet, approximated their estimated fair values due to the nature or short maturities of such items.

A significant portion of our liquidity is concentrated in trade accounts receivable that arise from sales of titanium dioxide pigment to customers in the paint and coatings industry. The industry concentration has the potential to impact our overall exposure to credit risk, either positively or negatively, in that our customers may be similarly affected by changes in economic, industry or other conditions. We perform ongoing credit evaluations of our customers and generally do not require

collateral. We maintain reserves for potential credit losses based on historical experience and such losses have been within our expectations.

Long-term receivables, investments and other assets were as follows at December 31, 2004 and 2003:

The changes in the carrying value of goodwill, all of which is associated with the company's pigment reportable segment, for 2003 and 2004 were as follows:

The changes in the carrying value of indefinite-lived intangible assets for 2003 and 2004 were as follows:

The net carrying amount of intangible assets subject to amortization at both December 31, 2004 and 2003 was $0.2 million.

At December 31, 2004 and 2003, the net fair value of foreign currency and commodity hedging contracts included in the Combined Balance Sheet was a liability of $1.6 million and an asset of $7.4 million, respectively, and the related balance of deferred after-tax gains (losses) in accumulated other comprehensive income was $(1.2) million and $5.9 million, respectively. All contracts outstanding at December 31, 2004 are expected to settle in 2005. In 2004, 2003 and 2002, pre-tax gains (losses) on cash flow hedges of $10.5 million, $10.4 million and $(5.6) million, respectively, were reclassified from accumulated other comprehensive income to earnings. Substantially all of such gains (losses) are reflected as a component of cost of goods sold in the Combined Statement of Operations. No hedges were discontinued and no ineffectiveness was recognized in the periods presented.

Noncurrent liabilities—other consisted of the following at December 31, 2004 and 2003:

Restructuring and Exit Activities—The following table presents a reconciliation of the beginning and ending balances of reserves for restructuring and exit activities for 2004 and 2003, with discussion of material components of the activity provided below.

		2004									2003
		Personnel Costs			Dismantlement and Closure			Total⁽¹⁾⁽²⁾			Personnel Costs			Dismantlement and Closure			Total⁽¹⁾⁽²⁾
		(Millions of dollars)
Beginning balance		$	16.3		$	12.6		$	28.9		$	3.8		$	22.8		$	26.6
	Provisions		4.2			2.8			7.0			25.8			0.6			26.4
	Payments		(12.5	)		(6.4	)		(18.9	)		(14.8	)		(5.6	)		(20.4	)
	Adjustments		(0.9	)		1.4			0.5			1.5			(5.2	)		(3.7	)

Ending balance		$	7.1		$	10.4		$	17.5		$	16.3		$	12.6		$	28.9

In 2004, the company shutdown sulfate and gypsum production at the Savannah, Georgia facility, wrote down assets that were no longer in service and recognized a pretax charge of $123.0 million. Of the total charge in 2004, $86.6 million represented a write-down of plant assets (of which $12.7 million related to an asset retirement obligation recognized during the third quarter of 2004), $15.6 million for inventory revaluation, $7.4 million for impairment of intangible assets, $6.7 million for severance and benefit plan curtailment costs, and $6.7 million for other closure costs. Severance cost of $2.1 million was paid during 2004 and $2.1 million remained in the reserve at the end of the year. The shutdown resulted in the elimination of approximately 100 positions. The company's 2004 Combined Statement of Operations includes $15.6 million in cost of goods sold and $107.4 million in restructuring charges, for total pretax charges of $123.0 million associated with the Savannah facility. (See Note 17 for additional discussion regarding the asset retirement obligation.)

The company began production through a new high-productivity oxidation line at its Savannah, Georgia, chloride process pigment plant in January 2004. This new technology results in low-cost,

incremental capacity increases through modification of existing chloride oxidation lines and allows for improved operating efficiencies through simplification of hardware configurations and reduced maintenance requirements. The Company continues to evaluate the performance of this new oxidation line and expects to determine how the Savannah site might be reconfigured to exploit its capabilities in 2005. The possible reconfiguration of the Savannah site, if any, could include redeployment or idling of certain assets and reduction of their future useful lives resulting in the acceleration of depreciation expense and the recognition of other charges.

In September 2003, Kerr-McGee implemented a workforce reduction program through which it reduced its U.S. non-bargaining work force through both voluntary retirements and involuntary terminations. As a result of the program, the company's work force was reduced by 138 employees. Qualifying employees terminated under this program were eligible for enhanced benefits under Kerr-McGee's pension and postretirement plans, along with severance payments. In connection with the work force reduction program, the company incurred a pretax charge of $9.4 million for severance-related costs and $14.2 million for curtailment and special termination benefits associated with the company's participation in Kerr-McGee's U.S. retirement plans. These charges are reflected in restructuring charges in the Combined Statement of Operations. Of the total severance provision, $2.6 million was paid in 2003, and $6.5 million was paid in 2004. The remaining reserve balance of $0.3 million, representing an excess of estimated provisions over actual costs, was eliminated in 2004.

During 2003, the company provided $60.8 million pretax for costs associated with the closure of its synthetic rutile plant in Mobile, Alabama. Included in the $60.8 million were $14.1 million for the cumulative effect of change in accounting principle related to the recognition of an asset retirement obligation, $15.2 million for accelerated depreciation, $14.9 million for other closure costs, $10.5 million for severance benefits and $6.1 million for benefit plan curtailment costs. The company's 2003 Combined Statement of Operations includes $6.1 million in cost of goods sold, $0.5 million in selling, general and administrative expenses, $38.6 million in restructuring charges and $1.5 million in provision for environmental remediation and restoration, net of reimbursements. In 2004, $6.8 million was provided by the company for additional costs associated with the plant closure, of which $5.6 million was accelerated depreciation of additional asset retirement cost and is included in restructuring charges. See Note 17 for a discussion of the related asset retirement obligation. The reserve balance related to this plant closure was $2.0 million and $2.2 million at the end of 2004 and 2003, respectively. Approximately 127 employees will ultimately be terminated in connection with this plant closure, of which 111 had been terminated as of December 31, 2004. Payments are expected to continue through the end of 2007.

During 2002, the company approved a plan to exit its forest products business, which was a component of the company's electrolytic and other chemical products segment. This decision was made as part of the company's strategic plan to focus on its core business. At the time of this decision, five plants were in operation. Four of these plants were closed and abandoned during 2003. The fifth plant, a leased facility, was operated throughout 2004 until the lease expired and the fixed assets at the facility were sold in January 2005. Criteria for classification of these assets as held for sale were met in 2004, at which time the results of forest products operations met the requirements for reporting as discontinued operations in the accompanying Combined Statements of Operations for all years presented. Therefore, the provisions for plant closures discussed below are included in loss from discontinued operations. The assets held for sale at December 31, 2004 are stated in the Combined Balance Sheet at estimated sales price less costs to sell of $3.4 million. No gain or loss was recognized upon the disposition of these assets in 2005. Environmental liabilities associated with the forest

products sites were retained by the company and are included in the Combined Balance Sheets in accrued liabilities and environmental remediation and/or restoration and other liabilities.

The company provided $1.9 million, $5.2 million and $16.5 million for costs associated with exiting its forest products business in 2004, 2003 and 2002, respectively, for a total of $23.6 million over the three-year period. Of this amount, $17.0 million was provided for dismantlement and closure costs and $6.6 million for severance costs. Through December 31, 2004, $17.1 million was paid, with $6.5 million remaining in the reserve at year-end. Payments related to the plant closures are expected to continue for several years in connection with dismantlement and cleanup efforts; however, all of the severance costs were paid by the end of March 2005. In connection with the plant closures, approximately 235 employees were terminated of which 216 were terminated as of year-end 2004. In addition to the provisions for severance, dismantlement and closure, the company recognized $8.8 million in 2003 and $8.1 million in 2004 for other costs associated with the shutdown. The 2003 costs included accelerated depreciation on plant assets, curtailment costs and special termination benefits related to pension and postretirement plans, while 2004 costs represented operating costs during the shutdown period.

In 2001, the company provided $31.8 million related to the closure of a plant in Antwerp, Belgium. The provision consisted of $12.0 million for severance costs, $12.3 million for dismantlement costs, $6.7 million for contract settlement costs and $0.8 million for other plant closure costs. Of this total accrual, $4.6 million and $4.9 million remained in the restructuring accrual at the end of 2004 and 2003, respectively. As a result of this plant closure, 121 employees have been terminated as of December 31, 2004. Payments related to severance are expected to continue until early 2016. Payments related to other shutdown costs could extend into 2017.

Discontinued Operations—As discussed above, in 2004 the company's forest product operations met the criteria for reporting as discontinued operations. Revenues applicable to discontinued forest products operations totaled $21.8 million, $105.0 million and $131.0 million and pretax losses totaled $15.7 million, $15.5 million and $104.8 million for the years 2004, 2003, and 2002, respectively.

In addition to the company's forest products operations, losses from discontinued operations for all periods presented include adjustments to amounts previously reported as discontinued operations upon disposition of the company's thorium manufacturing, uranium and refining operations. These adjustments resulted from changes in estimated cost of environmental remediation and restoration activities directly related to the disposed operations. Disposals of the company's uranium and refining operations were completed in 1989 and 1995, respectively. The company ceased operations at its West Chicago thorium facility in 1973. The company retained certain environmental remediation obligations and continues remediation activities directly related to these former operations, as more fully discussed in Note 21.

The 2004, 2003 and 2002 income tax benefit (provision) from continuing operations are summarized below:

In the following table, the U.S. Federal income tax rate is reconciled to the company's effective tax rates for income or loss from continuing operations as reflected in the Combined Statement of Operations.

				2004		2003		2002
U.S. statutory rate—benefit				35.0	%	35.0	%	35.0	%
	Increases (decreases) resulting from—
		Adjustment of deferred tax balances due to tax rate changes		3.4		—		—
		Taxation of foreign operations		(5.8	)	(7.8	)	(137.5	)
		State income taxes		—		(0.1	)	0.2
		Other—net		(0.7	)	(3.1	)	(1.5	)

			Total	31.9	%	24.0	%	(103.8	)%

Net deferred tax liabilities at December 31, 2004 and 2003, were comprised of the following:

			2004			2003
			(Millions of dollars)
Deferred tax liabilities—
	Property, plant and equipment		$	156.4		$	186.1
	Investments			5.9			55.2
	Notes and payables			20.0			19.3
	Intangible assets			9.1			11.7
	Other			0.1			9.8

		Total deferred tax liabilities		191.5			282.1

Deferred tax assets—
	Net operating loss and other carryforwards			(45.9	)		(46.7	)
	Reserves for environmental remediation and restoration			(48.1	)		(38.0	)
	Obligations for pension and other employee benefits			(3.9	)		(5.7	)
	Bad debt allowance			(5.3	)		(5.3	)
	Inventory			(3.7	)		(3.5	)
	Other			(7.4	)		(3.0	)

				(114.3	)		(102.2	)
	Valuation allowance associated with loss carryforwards			6.1			5.0

		Net deferred tax assets		(108.2	)		(97.2	)

Net deferred tax liability			$	83.3		$	184.9

Taxation for a company with operations in several foreign countries involves many complex variables, such as tax structures that differ from country to country and the effect on U.S. taxation of international earnings. These complexities do not permit meaningful comparisons between the U.S. and international components of income before income taxes and the provision for income taxes, and disclosures of these components do not necessarily provide reliable indicators of relationships in future periods. Loss from continuing operations before income taxes is comprised of the following:

At December 31, 2004, the company had foreign operating loss carryforwards totaling $204.6 million. Of this amount, $8.7 million expires in 2009, $29.5 million in 2011, and $166.4 million has no expiration date. Realization of these operating loss carryforwards depends on generating sufficient taxable income in future periods. A valuation allowance of $6.1 million has been recorded at December 31, 2004, to reduce deferred tax assets associated with loss carryforwards that the company does not expect to fully realize prior to expiration.

Kerr-McGee allocates tax benefit from U.S. net operating losses generated by its U.S. tax consolidated subsidiaries, including the company and company's U.S. subsidiaries, through

intercompany accounts. Deferred tax assets related to U.S. consolidated net operating losses, including those of the company and the company's U.S. subsidiaries, are recorded on Kerr-McGee's balance sheet. Kerr-McGee believes that the company and the company's subsidiaries have been adequately compensated for all U.S. tax net operating losses sustained by the company and the company's U.S. subsidiaries.

Undistributed earnings of certain combined foreign subsidiaries totaled $132.1 million at December 31, 2004. At December 31, 2004, no provision for deferred U.S. income taxes had been made for these earnings because they were considered to be indefinitely invested outside the United States. As discussed below, the distribution of these earnings in the form of dividends or otherwise, may subject the company to U.S. income taxes and, possibly, foreign withholding taxes. However, because of the complexities of U.S. taxation of foreign earnings, it is not practicable to estimate the amount of additional tax that might be payable on the eventual remittance of these earnings.

On October 22, 2004, the President of the United States signed into law the American Jobs Creation Act of 2004 (the "Act"). A provision of the Act includes a one-time dividends received deduction of 85% of certain foreign earnings that are repatriated, as defined in the Act. As of December 31, 2004, management had not decided on whether, and to what extent, foreign earnings may be repatriated under the Act, and accordingly, the financial statements do not reflect any provision for taxes on unremitted foreign earnings. On April 11, 2005, management completed its analysis of the impact of the Act on the company's plans for repatriation. Based on this analysis, the company repatriated $100.0 million in extraordinary dividends, as defined in the Act, in April 2005. Accordingly, a tax liability of approximately $5 million will be recognized in the quarter ending June 30, 2005. Cash requirements for the dividends were met with cash on hand at the time the distribution was made.

The Internal Revenue Service has completed its examination of Kerr-McGee and subsidiaries' federal income tax returns for all years through 1998 and is conducting an examination of the years 1999 through 2002. The years through 1996 have been closed with the exception of issues for which a refund claim has been filed. Contingent tax liabilities of $45.3 million and $30.8 million at December 31, 2004 and 2003, respectively, have been included in noncurrent liabilities separate and apart from deferred income taxes. It is not expected that these contingent amounts will be paid prior to the close of calendar year 2005. These contingencies relate primarily to certain deductions associated with plant shutdown activities, deductions related to the effects of foreign currency translation and other tax-related matters. The company believes that it has made adequate provision for income taxes that may be payable with respect to years open for examination.

Tax Sharing Agreement and Tax Allocations—The company intends to enter into a tax sharing agreement with Kerr-McGee that will govern Kerr-McGee's and the company's respective rights, responsibilities and obligations after this offering with respect to taxes for tax periods ending in 2005 and prior. Generally, taxes incurred or accrued prior to this offering that are attributable to the business of one party will be borne solely by that party.

The company may incur certain restructuring taxes as a result of the Contribution and Distribution. The tax sharing agreement addresses the allocation of liability for any restructuring taxes incurred as a result of the Contribution and Distribution. In addition, the company is required to indemnify Kerr-McGee for any tax liability incurred by reason of the Distribution being considered a taxable transaction to Kerr-McGee as a result of a breach of any of our representations, warranties or covenants contained in the tax sharing agreement.

Under U.S. federal income tax laws, the company and Kerr-McGee are jointly and severally liable for Kerr-McGee's federal income taxes attributable to the periods prior to and including the taxable calendar year of Kerr-McGee, which includes the Distribution date. If Kerr-McGee fails to pay the taxes attributable to it under the Tax Sharing Agreement for periods prior to and including the current taxable year of Kerr-McGee, the company may be liable for any part of, including the whole amount of, these tax liabilities.

As a result of the adoption of FAS No. 143 on January 1, 2003, and the company's expressed intent to close the synthetic rutile plant in Mobile, Alabama, the company recorded an abandonment liability of $17.6 million and an increase in net property of $3.5 million. The net result was a pre-tax charge to earnings of $14.1 million to recognize the cumulative effect of adopting the new standard.

A summary of the changes in the abandonment liability during 2004 and 2003 is included in the table below.

		2004			2003
		(Millions of dollars)
Balance, January 1		$	17.6		$	17.6
	New obligations incurred		12.7			—
	Accretion expense		0.2			—
	Changes in estimates, including timing		3.6			—
	Abandonment expenditures		(3.2	)		—

Balance, December 31		$	30.9		$	17.6

Current portion⁽¹⁾		$	6.6		$	0.3

Noncurrent portion⁽²⁾		$	24.3		$	17.3

As discussed in Note 15, the company closed its synthetic rutile plant in Mobile, Alabama, in 2003. In September 2004, the company shutdown sulfate and gypsum production at its Savannah, Georgia, plant. Until the decisions to shutdown these facilities had been made, it was undeterminable when the asset retirement liability associated with these facilities would be settled. Upon deciding to shutdown the facilities, the timing of settlement became estimable and the related asset retirement obligation was recorded at the estimated fair value. For the synthetic rutile plant in Mobile, Alabama, a $17.6 million liability was recognized at the beginning of 2003. For the sulfate production facility at the company's Savannah, Georgia, plant, an abandonment liability of $12.7 million was recognized in September 2004.

Operations at the Mobile, Alabama, facility included production of feedstock for one of company's titanium dioxide pigment plants. The facility ceased operations in June 2003. Operations prior to closure had resulted in minor contamination of groundwater adjacent to surface impoundments. A groundwater recovery system was installed prior to closure and continues in operation as required under the National Pollutant Discharge Elimination System (NPDES) permit. Future remediation work, including groundwater recovery, closure of the impoundments and other minor work, is expected to be substantially completed in about five years. As of December 31, 2004, the company had remaining

abandonment reserves of $11.3 million related to the remediation work described above and $6.7 million related to decommissioning of the facility. Although actual costs may exceed current estimates, the amount of any increases cannot be reasonably estimated at this time.

In 2004, an abandonment reserve related to the titanium dioxide pigment sulfate production at Savannah, Georgia, was established to address probable remediation activities, including environmental assessment, closure of certain impoundments, groundwater monitoring, asbestos abatement, and other work, which are expected to take over 25 years. As of December 31, 2004, the reserve was $12.9 million. Although actual costs may exceed current estimates, the amount of any increase cannot be reasonably estimated at this time.

U.S. Plans—U.S. employees of the company participate in the contributory and noncontributory defined benefit pension plans and the contributory postretirement plans for health care and life insurance sponsored by Kerr-McGee. Benefits under the qualified defined benefit plan are generally based on years of service and final average pay. Company employees also participate in a Kerr-McGee sponsored supplemental nonqualified plan designed to maintain benefits for all employees at the plan formula level. Substantially all U.S. employees may become eligible for the postretirement benefits if they reach retirement age while working for Kerr-McGee.

Kerr-McGee allocates costs associated with its U.S. plans based on salary for defined benefit pension plans and based on active headcount for postretirement plans. Net periodic (benefit) cost associated with the U.S. plans allocated to the company for each of the last three years was as follows:

		U.S. Retirement Plans Allocation									U.S. Postretirement Plans Allocation
		2004			2003			2002			2004		2003		2002
		(Millions of dollars)
Net periodic (benefit) cost, excluding special termination benefits, settlement and curtailment losses		$	(6.2	)	$	(15.0	)	$	(20.1	)	$	10.0	$	7.2	$	10.2
Special termination benefits, settlement and curtailment losses			8.6			23.7			—			0.5		5.0		—

	Total net periodic (benefit) cost	$	2.4		$	8.7		$	(20.1	)	$	10.5	$	12.2	$	10.2

The 2004 period includes curtailment loss and special termination benefits associated with the shutdown of sulfate production at the Savannah, Georgia facility and losses on settlement of certain qualified benefits as a result of cash settlements associated with retirements, including retirements associated with the work force reduction program announced in 2003. In 2003, the company recognized a curtailment loss with respect to pension and postretirement benefits in connection with its U.S. work force reduction program and plant closures and recognized special termination benefits associated with its U.S. work force reduction program.

The costs that have historically been allocated to the company are not necessarily indicative of the costs that will be incurred in the future by the company for U.S. benefit plans. Only costs associated with active and inactive employees of the company's domestic chemical business are included in the above table and do not include any amounts for Kerr-McGee corporate employees that may become employees of New-Co after the spin-off.

The company plans to establish a defined benefit retirement plan and related trust for the company employees and former employees who participated in Kerr-McGee's defined benefit retirement plans at the Distribution date. Kerr-McGee will transfer assets and liabilities, based on formulas set forth in the employee benefits agreement, from the trust for Kerr-McGee's defined benefit retirement plans to the trust for New-Co's plan. It is anticipated that the company's defined benefit obligation will be fully funded at the Distribution date.

Kerr-McGee manages its worldwide pension benefit plans on a consolidated basis and separate company information is not readily available. Therefore, the company's share of the Kerr-McGee U.S. plan assets and liabilities are not included in the company's combined balance sheet.

The company plans to establish a defined benefit non-qualified deferred compensation plan that will assume the liabilities of the defined benefit portion of the Kerr-McGee Benefits Restoration Plan with respect to the company employees or former employees. Kerr-McGee will transfer assets and liabilities, based on formulas set forth in the employee benefits agreement, but it is anticipated that this plan will be underfunded by approximately $5.0 million (unaudited). This liability is not reflected in the company's Combined Balance Sheet.

The company plans to establish appropriate health and welfare benefit plans prior to completion of the Distribution to provide benefits to the company's employees that are anticipated to be similar to the health and welfare benefits provided currently to the employees by Kerr-McGee. Certain retiree medical benefits are available to eligible U.S. employees meeting certain age and service requirements upon termination of employment. It is anticipated that the projected benefit obligation relating to all eligible retired and active vested participants related to the company of approximately $147.0 million, will be transferred to the company at the Distribution date (unaudited). There are no assets associated with this plan that will be transferred. The company has also agreed that the Material Features (as defined in the Employee Benefits Agreement) of the plan that apply to retirees will not be amended before the third anniversary of the Distribution.

Kerr-McGee manages its worldwide postretirement health care benefit plan on a consolidated basis and separate company information is not readily available. Therefore, the company's share of the Kerr-McGee U.S. plan liabilities are not included in the company's Combined Balance Sheet.

Foreign Plans—The company's employees in Germany and in the Netherlands will continue to participate in pension plans in place at the date of the Distribution. The company uses a December 31 measurement date for foreign plans. Following are disclosures related to those plans.

Changes in the total projected benefit obligation for the foreign pension plans during 2004 and 2003 were as follows:

		2004			2003
		(Millions of dollars)
Benefit obligation, beginning of year		$	63.4		$	51.1
	Service cost		1.9			1.7
	Interest cost		3.4			3.1
	Plan amendments/law changes		0.7			(2.8	)
	Net actuarial loss		7.9			0.9
	Foreign exchange rate changes		6.2			10.2
	Contributions by plan participants		0.4			—
	Benefits paid		(1.4	)		(0.8	)

Benefit obligation, end of year		$	82.5		$	63.4

Expected benefit payments for the next five years and, in the aggregate for the years 2010 through 2014 are $1.7 million in 2005, $1.9 million in 2006, $2.1 million in 2007, $2.3 million in 2008, $2.6 million in 2009 and $14.8 million in 2010 through 2014.

The following summarizes the accumulated and projected benefit obligations and the funded status of each of the company's foreign plans at December 31, 2004 and 2003:

	At December 31, 2004						At December 31, 2003
	The Netherlands Retirement Plan			Germany Retirement Plan			The Netherlands Retirement Plan			Germany Retirement Plan
	(Millions of dollars)
Accumulated benefit obligation	$	60.9		$	12.2		$	48.9		$	9.9
Projected benefit obligation	$	69.9		$	12.6		$	53.2		$	10.2
Market value of plan assets		59.2			—			51.3			—

Funded status	$	(10.7	)	$	(12.6	)	$	(1.9	)	$	(10.2	)

Changes in the fair value of plan assets during 2004 and 2003 and the reconciliation of the plans' funded status to the amounts recognized in the financial statements for the foreign retirement plans at December 31, 2004 and 2003 were as follows:

The company expects to contribute $2.2 million to its foreign retirement plans in 2005.

Classification of the amounts recognized in the Combined Balance Sheet for the foreign retirement plans at December 31, 2004 and 2003 is shown below:

For 2004, 2003 and 2002, the company had after-tax losses of $6.1 million, $0.6 million and nil, respectively, included in other comprehensive income resulting from changes in the additional minimum pension liability.

Net periodic pension cost components for the foreign retirement plans for the years ended December 31, 2004, 2003 and 2002 were as follows:

Assumptions used in estimating the net periodic pension cost for the foreign plans were as follows:

The following presents assumptions used in estimating the actuarial present value of the foreign plans' benefit obligations:

Kerr-McGee based the discount rate assumptions for the foreign plans on local corporate bond index rates. The expected long-term rate of return for the Netherlands plan is based on the advice of third-party consultants, considering portfolio mix and the rates of return on local government and corporate bonds.

Asset categories for the funded retirement plan of employees in the Netherlands and the weighted-average asset allocations at December 31, 2004 and 2003, by asset category are as follows:

The Netherlands plan is administered by a pension committee representing the employer, the employees and the pensioners, each with one equal vote. The pension committee members are approved by the state's lead pension agency based upon experience and character. The pension committee meets at least quarterly to discuss regulatory changes, asset performance and asset allocation. The plan assets are managed by one Dutch fund manager against a mandate set at least annually by the pension committee. Annually the plan assets are evaluated by a multinational benefits consultant against state defined actuarial tests to determine funding requirements.

Under Kerr-McGee's incentive compensation plans, the company's employees were granted stock options, restricted stock, stock opportunity grants and performance unit awards. It is expected that the company will establish its own stock-based compensation plan at the time of the offering.

Stock Options—Stock options held by the company's employees are fixed-price options granted at the fair market value of the underlying common stock on the date of the grant. Generally, one-third of each grant vests and becomes exercisable over a three-year period immediately following the grant date and expires 10 years after the grant date.

The following table summarizes transactions in Kerr-McGee stock options during 2004, 2003 and 2002 held by the company's employees. This information does not include options activity associated with Kerr-McGee employees currently performing corporate and administrative functions for the company that may become employees of the company at the time of the spin-off.

The following table summarizes information about stock options described above that are outstanding and exercisable at December 31, 2004:

It is anticipated that unvested options to purchase Kerr-McGee common stock held by the company's employees and outstanding on the effective date of the Distribution will be converted to options to acquire the company's stock. The stock options, as converted, will assume the same vesting provisions, contractual life and other terms and conditions as the Kerr-McGee options they replaced. The number of shares and exercise price of each stock option will be adjusted so that each company option will have the same ratio of the exercise price per share to the market value per share and the same aggregate difference between market value and exercise price as the Kerr-McGee stock options prior to the conversion. No new measurement date is expected to occur upon conversion. Employees who hold vested options to purchase Kerr-McGee common stock as of the date of the Distribution may exercise such options for the lesser of three months after the effective date of the Distribution or the remaining term of the option award. However, employees who are eligible for retirement on the effective date of the Distribution may exercise their vested stock options for the lesser of four years after the effective date of the Distribution or the remaining term of the option award. Vested options not exercised during the specified time period will expire. Following the January 2005 grant, approximately 481,800 options to purchase Kerr-McGee common stock were held by the company's employees at March 31, 2005.

Restricted Stock and Stock Opportunity Grants—Restricted stock under Kerr-McGee's plans was awarded in the name of the employee and, except for the right of disposal, holders have full stockholders' rights during the period of restriction, including voting rights and the right to receive dividends. Certain key employees in Europe and Australia have received stock opportunity grants giving them the opportunity to earn unrestricted stock in the future, provided that certain conditions are met. These stock opportunity grants do not carry voting privileges or dividend rights since the related shares are not issued until vested. Restricted stock and stock opportunity grants generally vest between three and five years. The following table summarizes certain information with respect to restricted stock and stock opportunity grants made by Kerr-McGee in 2004, 2003 and 2002 to the company's employees. These transactions do not include shares associated with certain employees performing corporate and

administrative functions for the company that may become employees of New-Co at the time of spin-off.

Compensation expense allocated to the company associated with restricted stock and stock opportunity awards made to the company's employees was $2.2 million, $1.2 million and nil in 2004, 2003, and 2002, respectively.

On the effective date of the Distribution, restricted stock and stock opportunity awards are expected to be converted to awards of the company's stock with the same terms and conditions, except that the number of shares covered by the awards will be increased using a ratio of Kerr-McGee share price to the company's share price, as defined in the Employee Benefits Agreement between the company and Kerr-McGee. Following the January 2005 grant, approximately 112,000 shares of Kerr-McGee restricted stock and 20,000 shares of Kerr-McGee stock opportunity awards were held by the company's employees at March 31, 2005.

Performance Units—Performance units provide for cash awards that are based on Kerr-McGee's total stockholder return over a stated period as compared to selected peer companies. At December 31, 2004 and 2003, the company's employees held 1,243,234 and 1,332,000 performance units, respectively. Compensation expense allocated to the company associated with performance units was not material for all periods presented. Following the January 2005 grant, approximately 2,468,000 performance units were held by the company's employees at March 31, 2005.

Performance unit awards held by the company's employees as of the date of the Distribution will be converted to awards with comparable terms, except that total stockholder return will be determined by reference to Kerr-McGee's stock through the date of the offering and to the company's stock from the date of the offering through the end of the performance cycle. A portion of the total cash award due to the company's employees at the end of the performance cycle will be paid by the company, as provided in the Employee Benefits Agreement between the company and Kerr-McGee.

Employee Stock Ownership Plan—The company's employees participate in the Kerr-McGee Corporation Savings Investment Plan (SIP), a defined contribution plan sponsored by Kerr-McGee. Kerr-McGee makes matching contributions to a leveraged Employee Stock Ownership Plan (ESOP), which is a part of the SIP. Shares held in the ESOP trust are allocated to participant's accounts in the SIP in satisfaction of the matching contribution. Compensation expense associated with the Kerr-McGee SIP allocated to the company was $3.5 million, $9.8 million and $3.7 million in 2004, 2003 and 2002, respectively. The company expects to establish, effective on the date of the Distribution, its own defined contribution plan.

The following table summarizes the contingency reserve balances, provisions, payments and settlements for 2002, 2003 and 2004, as well as balances, accruals and receipts of reimbursements of environmental costs from other parties.

Management believes, after consultation with its counsel, that currently the company has reserved adequately for the reasonably estimable costs of environmental matters and other contingencies. However, additions to the reserves may be required as additional information is obtained that enables the company to better estimate its liabilities, including liabilities at sites now under review, though the company cannot now reliably estimate the amount of future additions to the reserves. Following are discussions regarding certain environmental sites and litigation. Reserves for each environmental site are based on assumptions regarding the volumes of contaminated soils and groundwater involved, as well as associated excavation, transportation and disposal costs.

The company provides for costs related to contingencies when a loss is probable and the amount is reasonably estimable. It is not possible for the company to reliably estimate the amount and timing of all future expenditures related to environmental and legal matters and other contingencies because, among other reasons:

In 1998, Kerr-McGee Chemical LLC ("KM Chemical"), an affiliate of the company, decided to exit the ammonium perchlorate business. At that time, the affiliate curtailed operations and began preparation for the shutdown of the associated production facilities in Henderson, Nevada, that produced ammonium perchlorate and other related products. Manufacture of perchlorate compounds began at Henderson in 1945 in facilities owned by the U.S. government. The U.S. Navy expanded production significantly in 1953 when it completed construction of a plant for the manufacture of

ammonium perchlorate. The Navy continued to own the ammonium perchlorate plant as well as other associated production equipment at Henderson until 1962, when the plant was purchased by a predecessor of the company. The ammonium perchlorate produced at the Henderson facility was used primarily in federal government defense and space programs. Perchlorate that may have originated, at least in part, from the Henderson facility has been detected in nearby Lake Mead and the Colorado River, which contribute to municipal water supplies in Arizona, Southern California and Southern Nevada.

KM Chemical began decommissioning the facility and remediating associated perchlorate contamination, including surface impoundments and groundwater, when it decided to exit the business in 1998. In 1999 and 2001, KM Chemical entered into consent orders with the Nevada Division of Environmental Protection (NDEP) that requires it to implement both interim and long-term remedial measures to capture and remove perchlorate from groundwater. In April 2005, KM Chemical entered into an amended consent order with NDEP that requires, in addition to the capture and treatment of groundwater, the closure of a certain impoundment related to the past production of ammonium perchlorate, including treatment and disposal of solution and sediment contained in the impoundment.

In 1999, KM Chemical initiated the interim measures required by the consent orders. A long-term remediation system is operating in compliance with the consent orders. Initially, the remediation system was projected to operate through 2007. However studies of the decline of perchlorate levels in the groundwater indicate that KM Chemical may need to operate the system through 2011. The scope, duration and cost of groundwater remediation ultimately will be driven in the long term by drinking water standards regarding perchlorate, which to date have not been formally established by applicable state or federal regulatory authorities. The Environmental Protection Agency (EPA) and other federal and state agencies continue to evaluate the health and environmental risks associated with perchlorate as part of the process for ultimately setting drinking water standards. One state agency, the California Environmental Protection Agency (CalEPA), has set a public health goal for perchlorate, and the federal EPA has established a reference dose for perchlorate, which are preliminary steps to setting drinking water standards. The establishment of drinking water standards could materially affect the scope, duration and cost of the long-term groundwater remediation that KM Chemical is required to perform.

Financial Reserves—Reserves for Henderson totaled $11.0 million as of December 31, 2004. In the first quarter of 2005, $26.2 million was added to the reserve for Henderson to cover the operating and maintenance costs over the extended period for groundwater treatment and $4.2 million was added for closure of the ammonium perchlorate pond. Remaining reserves for Henderson totaled $40.0 million as of March 31, 2005. As noted above, the long-term scope, duration and cost of groundwater remediation and impoundment closure are uncertain and, therefore, additional costs beyond those accrued may be incurred in the future. However, the amount of any additional costs cannot be reasonably estimated at this time.

Litigation—In 2000, KM Chemical initiated litigation against the United States seeking contribution for its Henderson response costs. The suit is based on the fact that the government owned the plant in the early years of its operation, exercised significant control over production at the plant and the sale of products produced at the plant, even while not the owner, and was the largest consumer of products produced at the plant. The discovery stage of litigation is substantially complete, and the parties have filed certain pretrial motions that are being considered by the court. Although the outcome of the litigation is uncertain, the company believes it is likely to recover a portion of its costs from the

government. The amount and timing of any recovery cannot be estimated at this time and, accordingly, the company has not recorded a receivable or otherwise reflected in the financial statements any potential recovery from the government.

In addition, on July 26, 2004, KM Chemical, was served with a lawsuit, which was filed in the United States District Court for the District of Arizona. The lawsuit, Alan Curtis and Linda Curtis v. City of Bullhead City, et al., in which the affiliate is one of several defendants (the Defendants), alleges various causes of action under a variety of common law theories and federal environmental laws and seeks recovery for damages allegedly caused by the alleged exposure to and the migration of various chemical contaminants contained in the Colorado River. The two plaintiffs, who are not suing on behalf of any other party, also seek an order requiring the Defendants to remediate the contamination. The company intends to vigorously defend against the lawsuit. The company believes that the litigation will not have a material adverse effect on its financial condition or results of operations.

Insurance—In 2001, KM Chemical purchased a 10-year, $100 million environmental cost cap insurance policy for groundwater and other remediation at Henderson. The insurance policy provides coverage only after KM Chemical exhausts a self-insured retention of approximately $61.3 million and covers only those costs incurred to achieve a cleanup level specified in the policy. As noted above, federal and state agencies have not established a drinking water standard and, therefore, it is possible that KM Chemical may be required to achieve a cleanup level more stringent than that covered by the policy. If so, the amount recoverable under the policy may be less than the ultimate cleanup cost.

At December 31, 2004, expenditures incurred to date of approximately $67.2 million plus remaining costs to be incurred of approximately $9.5 million exceeded the self-insured retention, resulting in an expected insurance reimbursement based on those cost estimates. The company believes that the reimbursement is probable and, accordingly, recorded a receivable in the financial statements of $15.0 million as of December 31, 2004. In connection with the additional reserve recorded in the first quarter of 2005 discussed above, the company expects an additional $19.0 million to be covered by the insurance policy. The company believes that at March 31, 2005, a reimbursement of $34.0 million is probable and, accordingly, has recorded a receivable in the financial statements for the first quarter of 2005 for that amount.

In 1973, KM Chemical closed a facility in West Chicago, Illinois, that processed thorium ores for the federal government and for certain commercial purposes. Historical operations had resulted in low-level radioactive contamination at the facility and in surrounding areas. The original processing facility is regulated by the State of Illinois (the State), and four vicinity areas are designated as Superfund sites on the National Priorities List (NPL).

Closed Facility—Pursuant to agreements reached in 1994 and 1997 among KM Chemical, the City of West Chicago (the City) and the State regarding the decommissioning of the closed West Chicago facility, KM Chemical has substantially completed the excavation of contaminated soils and has shipped those soils to a licensed disposal facility. Surface restoration was completed in 2004, except for areas designated for use in connection with the Kress Creek and Sewage Treatment Plant remediation discussed below. Groundwater monitoring and remediation is expected to continue for approximately ten years.

Vicinity Areas—EPA has listed four areas in the vicinity of the closed West Chicago facility on the NPL and has designated KM Chemical as a Potentially Responsible Party (PRP) in these four areas.

KM Chemical has substantially completed remedial work for two of the areas (known as the Residential Areas and Reed-Keppler Park). The other two NPL sites, known as Kress Creek and the Sewage Treatment Plant, are contiguous and involve low levels of insoluble thorium residues, principally in streambanks and streambed sediments, virtually all within a floodway. KM Chemical has reached an agreement with the appropriate federal and state agencies and local communities regarding the characterization and cleanup of the sites, past and future government response costs, and the waiver of natural resource damages claims. The agreement has been incorporated in a consent decree, which must be entered by a federal court. The consent decree was lodged with the court in April 2005 and is expected to be approved by the court in due course. The cleanup work, which is expected to take about four to five years to complete following entry of the consent decree, will require excavation of contaminated soils and stream sediments, shipment of excavated materials to a licensed disposal facility and restoration of affected areas.

Financial Reserves—In 2004, $30.9 million was added to the reserve for the West Chicago site to cover increased soil volumes encountered at the closed facility, anticipated groundwater remediation the company believes will be required following soil removal at the closed facility, increased soil volumes at Kress Creek and required future payments for past costs and access fees. As of December 31, 2004, the company had reserves of $102.1 million for costs related to the West Chicago facility and vicinity properties. In the first quarter of 2005, $10.0 million was added to the reserve for West Chicago site to cover increased soil volumes encountered during the final stage of characterization of Kress Creek and increases in labor and materials. Although actual costs may exceed current estimates, the amount of any increase cannot be reasonably estimated at this time. The amount of the reserve is not reduced by reimbursements expected from the federal government under Title X of the Energy Policy Act of 1992 (Title X) (discussed below).

Government Reimbursement—Pursuant to Title X, the U.S. Department of Energy (DOE) is obligated to reimburse the company for certain decommissioning and cleanup costs incurred in connection with the West Chicago sites in recognition of the fact that about 55% of the facility's production was dedicated to U.S. government contracts. The amount authorized for reimbursement under Title X is $365 million plus inflation adjustments. That amount is expected to cover the government's full share of West Chicago cleanup costs. Through December 31, 2004, the company had been reimbursed approximately $215.0 million under Title X.

Reimbursements under Title X are provided by congressional appropriations. Historically, congressional appropriations have lagged the company's cleanup expenditures. As of December 31, 2004, the government's share of costs incurred by the company but not yet reimbursed by the DOE totaled approximately $78.8 million. The company believes receipt of the $78.8 million government share in due course following additional congressional appropriations is probable and has reflected that amount as a receivable in the financial statements. Approximately $65.7 million of the $78.8 million arrearage was received during the first quarter of 2005. The company will recognize recovery of the government's share of future remediation costs for the West Chicago sites as it incurs the cash expenditures.

From the late 1950s until 1988, affiliates of the company, operated a uranium mining and milling operation at Ambrosia Lake near Grants, New Mexico pursuant to a license issued by the Atomic Energy Commission (AEC) (now the Nuclear Regulatory Commission (NRC)). When the operation was sold, an affiliate of the company retained responsibility for certain environmental conditions

existing at the site, including mill tailings, selected ponds and groundwater contamination. Since 1988, the current owner of the site has been decommissioning the site pursuant to the license issued by NRC. Mill tailings and selected pond sediments have been consolidated in an onsite containment unit. A request to cease groundwater treatment has been under review by the NRC since 2001. In addition, a decommissioning plan for remaining impacted soil was submitted by the current owner to the NRC in January 2005 and is currently under review. If approved, the soil decommissioning plan would take about two to three years to complete.

Financial Reserves—As of December 31, 2004, the company had reserves of $7.7 million for the costs of the remediation activities described above, including groundwater remediation. Although actual costs may exceed current estimates, the amount of any increases cannot be reasonably estimated at this time.

In addition, the current owner is investigating soil contamination potentially caused by past discharge of mine water from the site. Also, the State of New Mexico has recently raised issues about certain non-radiological constituents in the groundwater at the site. The request to cease groundwater treatment, which is being reviewed by the NRC, will be amended to include these non-radiological constituents. Discussions regarding these issues are ongoing, and resolution of them could affect remediation costs and/or delay ultimate site closure.

Beginning in 1965, Cimarron Corporation ("Cimarron"), an affiliate of the company, operated a facility near Crescent, Oklahoma at which it produced uranium and mixed oxide nuclear fuels pursuant to licenses issued by AEC (now NRC). Operations at the facility ceased in 1975. Since that time, buildings and soils were decommissioned in accordance with the NRC licenses. In limited areas of the site, groundwater is contaminated with radionuclides, and, in 2003, Cimarron submitted to the NRC and the Oklahoma Department of Environmental Quality (ODEQ) a draft remediation work plan addressing the groundwater contamination. It is anticipated that in 2005 the company will evaluate available technologies and submit a final plan to the NRC and the ODEQ addressing remaining groundwater issues. Duration of remedial activities currently cannot be estimated.

Financial Reserves—As of December 31, 2004, the company had reserves of $7.1 million for the costs of the remediation activities, including those currently under evaluation, described above. Although actual costs may exceed current estimates, the amount of any increases cannot be reasonably estimated at this time.

A predecessor of Kerr-McGee Chemical Worldwide LLC ("KM Chemical Worldwide"), an affiliate of the company, operated two uranium mines near Lakeview, Oregon from 1958 to 1960. The mines are currently designated as a Superfund site. In 2001, EPA issued a Record of Decision requiring consolidation and capping of contaminated soils and continued neutralization of acidic waters in one of the two mines. It is anticipated that required work will take about two to three more years to complete.

Litigation—In April 2005, KM Chemical Worldwide and two other parties reached an agreement in principle with the federal government to settle a lawsuit filed by the government with respect to the remediation of contaminated materials at the site and to settle related claims by the parties. The suit sought reimbursement of Forest Service response costs, an injunction requiring compliance with a Unilateral Administrative Order issued to the private parties regarding cleanup of the site, and civil

penalties for alleged noncompliance with the administrative order. As a result of the settlement, the parties have resolved their respective claims and agree to apportion responsibility for the cleanup. Provided the settlement is formalized, the remediation would begin in the third quarter of 2005 and take between one and two years to complete.

Financial Reserves—As of December 31, 2004, the company had reserves of $8.3 million for the costs of the remediation activities described above. Although actual costs may exceed current estimates, the amount of any increases cannot be reasonably estimated at this time.

From 1963 to 2000, KM Chemical owned and operated a vanadium processing facility near Soda Springs, Idaho. In 1989, EPA designated this site as a Superfund site under CERCLA, listed the site on the NPL and named KM Chemical as a PRP. In 2000, EPA amended a Record of Decision (ROD) previously issued by it, requiring KM Chemical to address the presence of calcine tailings, a byproduct of vanadium processing. The amended ROD required the capping of the calcine tailings in place and the closure of certain impoundments.

Since 2000, the vanadium processing facility plant and a fertilizer plant on the site have been closed, dismantled and removed from the site. All former impoundments included in the amended ROD have been closed. A ten-acre pond not covered by the ROD is scheduled for closure within the next two years. KM Chemical anticipates constructing a landfill onsite as part of the closure.

Financial Reserves—As of December 31, 2004, the company had reserves of $3.0 million for the costs of the remediation required by the ROD as well as closure of the above mentioned ten-acre pond. Although actual costs may exceed current estimates, the amount of any increases cannot be reasonably estimated at this time.

In 1976, KM Chemical closed a wood-treatment facility it had operated in Milwaukee, Wisconsin. Operations at the facility prior to its closure had resulted in the contamination of soil and groundwater at and around the site with creosote and other substances used in wood treating. In 1984, EPA designated the Milwaukee wood-treatment facility as a Superfund site under CERCLA, listed the site on the NPL and named KM Chemical as a PRP. The affiliate executed a consent decree in 1991 that required it to perform soil and groundwater remediation at and below the former wood-treatment area and to address a tributary creek of the Menominee River that had become contaminated as a result of the wood-treatment operations. Actual remedial activities were deferred until after the decree was finally entered in 1996 by a federal court in Milwaukee.

Groundwater treatment was initiated in 1996 to remediate groundwater contamination below and in the vicinity of the former wood-treatment area. It is not possible to reliably predict how groundwater conditions will be affected by soil removal in the vicinity of the former wood-treatment area, which has been completed, and by ongoing groundwater treatment. It is unknown, therefore, how long groundwater treatment will continue. Soil cleanup of the former wood-treatment area began in 2000 and was completed in 2002. Also in 2002, remedial designs for the upper portion of the tributary creek were agreed to with EPA, after which KM Chemical began the implementation of a remedy to reroute the creek and to remediate associated sediment and stream bank soils. Remediation of the upper portion of the creek is expected to take about three more years. KM Chemical has not yet agreed with relevant regulatory authorities regarding remedial designs for the lower portion of the tributary creek.

Financial Reserves—As of December 31, 2004, the company had reserves of $6.5 million for the costs of the remediation work described above. Although actual costs may exceed current estimates, the amount of any increases cannot be reasonably estimated at this time. The costs associated with remediation, if any, of the lower portion of the tributary creek are not reasonably estimable.

KM Chemical was named in 1999 as a PRP under CERCLA at a former wood-treatment site in New Jersey at which EPA is conducting a cleanup. On April 15, 2005, KM Chemical and its ultimate parent received a letter from the EPA asserting that they are liable under CERCLA as a former owner or operator of the site and demanding reimbursement of costs expended by the EPA at the site. The demand is for payment of past costs in the amount of approximately $179 million, plus interest. KM Chemical did not operate the site, which had been sold to a third party before KM Chemical succeeded to the interests of a predecessor owner in the 1960's. The predecessor also did not operate the site, which had been closed down before it was acquired by the predecessor. Based on historical records, there are substantial uncertainties about whether or under what terms the predecessor assumed liabilities for the site. In addition, it appears there may be other PRPs, though it is not known whether the other PRPs have received similar letters from EPA. The company intends to vigorously defend against EPA's claim. The company has not recorded a reserve for the site as it is not possible to reliably estimate the liability, if any, it may have for the site because of the aforementioned defenses and uncertainties and the potential existence of other PRPs.

From 1927 to 1969, KM Chemical operated a wood-treatment plant on a 60-acre site in the Village of Sauget (formerly known as Monsanto) in St. Clair County, Illinois. Operations on the property resulted in the contamination of soil, surface water, and groundwater at the site with creosote and other substances used in wood treating. In 1988, KM Chemical entered into a court-approved consent order with the Illinois Attorney General and Illinois Environmental Protection Agency. The consent order requires KM Chemical to perform an environmental investigation and remediation feasibility study, and this work is ongoing. Soil remediation and groundwater monitoring are being conducted, and further remediation options to address sediment and surface water are being evaluated. Duration of remedial activities currently cannot be estimated.

Financial Reserves—As of December 31, 2004, the company had reserves of approximately $4.1 million for the remediation activities, including those currently under evaluation, described above. Although actual costs may exceed current estimates, the amount of any increases cannot be reasonably estimated at this time.

In January 2003, KM Chemical entered into a consent order with the Mississippi Department of Environmental Quality to implement a remedy pursuant to an approved remediation work plan for a wood-treatment site in Hattiesburg, Mississippi. Components of the work plan included excavation of certain materials from the former processing areas and off-site sediments and containment of other on-site and off-site materials. Remediation of the former processing and certain off-site areas was completed in 2003. Some off-site remediation required by the work plan has not been completed where access by current leaseholders has been denied. Efforts to obtain necessary access are ongoing, and remedial activities are expected to take about one to two more years once access is obtained.

Financial Reserves—As of December 31, 2004, the company had reserves of approximately $2.9 million for the remediation activities described above. Although actual costs may exceed current estimates, the amount of any increases cannot be reasonably estimated at this time.

Kerr-McGee Refining Corporation ("KM Refining"), an affiliate of the company, owned and operated a petroleum refinery near Cleveland, Oklahoma until the facility was closed in 1972. In 1992, KM Refining entered into a Consent Order with the Oklahoma Department of Health (later, the ODEQ), which addresses the remediation of air, soil, surface water and ground water contaminated by hydrocarbons and other refinery related materials. Facility dismantling and several interim remedial measures have been completed. In 2004, ODEQ approved the soil and waste feasibility study, which includes construction of an on-site disposal cell. Design of the cell is in process. In addition, a feasibility study of surface and groundwater remedial measures has been submitted to ODEQ and currently is under review. Duration of remedial activities currently cannot be estimated.

Financial Reserves—As of December 31, 2004, the company had reserves of approximately $3.8 million for the remediation activities described above, including the remedial measures recommended in the feasibility study currently under review. Although actual costs may exceed current estimates, the amount of any increases cannot be reasonably estimated at this time.

In 1972, KM Refining closed a petroleum refinery it had operated near Cushing, Oklahoma. Prior to closing the refinery, KM Refining also had produced uranium and thorium fuel and metal at the site pursuant to licenses issued by the AEC. The uranium and thorium operations commenced in 1962 and were shutdown in 1966, at which time KM Refining decommissioned and cleaned up to applicable standards the portion of the facility related to uranium and thorium operations. The refinery also was cleaned up to applicable standards at the time of closing.

Subsequent regulatory changes have required more extensive remediation at the site. In 1990, KM Refining entered into a consent agreement with the State of Oklahoma to investigate the site and take appropriate remedial actions related to petroleum refining and uranium and thorium residuals. Investigation and remediation of hydrocarbon contamination is being performed under the oversight of the ODEQ. Soil remediation to address hydrocarbon contamination is expected to take about four more years. The long-term scope, duration and cost of groundwater remediation are uncertain and, therefore, additional costs beyond those accrued may be incurred in the future.

Additionally, in 1993, KM Refining received a decommissioning license from the NRC, the successor to AEC's licensing authority, to perform certain cleanup of uranium and thorium residuals. All known radiological contamination has been removed from the site and shipped to a licensed disposal facility.

Financial Reserves—As of December 31, 2004, the company had reserves of $21.4 million for the costs of the ongoing remediation and decommissioning work described above. Although actual costs may exceed current estimates, the amount of any increases cannot be reasonably estimated at this time.

From 1973 until 1988, KM Refining owned and operated a gas condensate stripping facility located near Calhoun, Louisiana. When the facility was sold in 1988, KM Refining retained responsibility for environmental conditions existing prior to the date of closing. Operations at the facility prior to the sale had resulted in the contamination of soil and groundwater with petroleum hydrocarbons. The Louisiana Department of Environmental Quality has approved a Corrective Action Plan for remediating the soil and groundwater contamination. Remediation is ongoing and expected to take about three more years.

Financial Reserves—As of December 31, 2004, the company had reserves of $5.8 million for the costs of the remediation activities described above. Although actual costs may exceed current estimates, the amount of any increases cannot be reasonably estimated at this time.

In addition to the sites described above, the company's affiliates are responsible for environmental costs related to certain other sites. These sites relate primarily to wood-treating, chemical production, landfills, mining, and oil and gas refining, distribution and marketing. As of December 31, 2004, the company had reserves of $32.1 million for the environmental costs in connection with these other sites. Although actual costs may exceed current estimates, the amount of any increases cannot be reasonably estimated at this time.

A predecessor of KM Chemical Worldwide entered into a coal supply contract with Peabody Coaltrade, Inc. ("PCI") in February 1998. In 1998, the predecessor exited the coal business and assigned its rights and obligations under the coal supply contract to a third party. In connection with the assignment, the predecessor agreed to guarantee performance under the contract. PCI has notified KM Chemical Worldwide of a threatened default by the assignee under the coal supply contract and that PCI may seek to hold KM Chemical Worldwide liable under the 1998 guaranty in the event of a default. In addition to other defenses to the enforceability of the guaranty, the company believes the guaranty expired in January 2003 when the primary term of the coal supply contract expired. No reserve has been provided for performance under the guaranty because the company does not believe a loss is probable and the amount of any loss is not reasonably estimable.

In 1995, an affiliate of the company executed an exclusive agreement with Western Fertilizer, Inc. ("Western Fertilizer") for the storage and distribution of fertilizer produced by the affiliate. In May 2000, the affiliate terminated the agreement because the owner, operator and the key person of Western Fertilizer, had been sentenced to serve 17 years in prison for federal crimes involving activities unrelated to the company, thus rendering Western Fertilizer unable to perform its duties under the

agreement. In June 2000, Western Fertilizer filed for bankruptcy, and its trustee alleged that the company's affiliate did not have the right to terminate the agreement. In May 2003, Western Fertilizer's bankruptcy claim against Kerr-McGee and KM Chemical was transferred to a litigation trust, and, in October 2004, the litigation trust filed an amended complaint in a pending federal lawsuit in the U.S. District Court in Idaho, seeking monetary damages of approximately $13 million for alleged breaches of contract. The litigation is in the early stages of discovery. The company believes that the claims made in the complaint are without substantial merit and is vigorously defending against them. The company believes that damages, if any, related to the claims will not have a material adverse effect on the company.

On October 11, 2004, Kerr-McGee and Southwestern Refining Corporation, an affiliate of the company, were named defendants in a lawsuit filed by Flint Hills Resources, LP. In the lawsuit, which has been removed to the U.S. District Court in the Southern District of Texas, Corpus Christi division, Flint Hills alleges that Kerr-McGee and Southwestern Refining Corporation breached certain environmental representations and warranties contained in the agreement pursuant to which Southwestern Refining Corporation sold its refinery in Corpus Christi, Texas to a predecessor of Flint Hills. Flint Hills claims damages of approximately $7 million. The litigation is in the early stages of discovery. The company believes that the claims made in the complaint are without substantial merit and is vigorously defending against them. The company believes that damages, if any, related to the claims will not have a material adverse effect on the company.

Between 1999 and 2001, KM Chemical was named in 22 lawsuits in three states (Mississippi, Louisiana and Pennsylvania) in connection with former forest products operations located in those states (in Columbus, Mississippi; Bossier City, Louisiana; and Avoca, Pennsylvania). The lawsuits sought recovery under a variety of common law and statutory legal theories for personal injuries and property damages allegedly caused by exposure to and/or release of creosote and other substances used in the wood-treatment process. KM Chemical has executed settlement agreements that are expected to resolve substantially all of the Louisiana, Pennsylvania and Mississippi lawsuits described above. Resolution of the remaining cases is not expected to have a material adverse effect on the company.

Following the adoption by the Mississippi legislature of tort reform, plaintiffs' lawyers filed many new lawsuits across the state of Mississippi in advance of the reform's effective date. On December 31, 2002, August 31, 2004, September 27, 2004 and May 2, 2005, approximately 250 lawsuits were filed against the company's affiliates on behalf of approximately 5,100 claimants in connection with the company's Columbus, Mississippi, operations, seeking recovery on legal theories substantially similar to those advanced in the litigation referred to above. Substantially all of these lawsuits were filed in or have been removed to the U.S. District Court for the Northern District of Mississippi, and the court has consolidated these lawsuits for pretrial and discovery purposes. On December 31, 2002, June 13, 2003, and June 25, 2004, three lawsuits were filed against KM Chemical in connection with a former wood-treatment plant located in Hattiesburg, Mississippi. On September 9, 2004, February 11, 2005, and March 2, 2005, three lawsuits were filed against KM Chemical in connection with a former wood-treatment plant located in Texarkana, Texas. In addition, on January 3, 2005, February 16, 2005, and March 11, 2005, 32 lawsuits were filed against KM Chemical and KM Chemical Worldwide in connection with the Avoca, Pennsylvania facility described above. These lawsuits seek recovery on legal

theories substantially similar to those advanced in the litigation referred to above. A total of approximately 3,300 claimants now have asserted claims in connection with the Hattiesburg plant, there are 64 plaintiffs named in the Texarkana lawsuits and approximately 4,600 plaintiffs are named in the new Avoca lawsuits. KM Chemical has resolved approximately 1,490 of the Hattiesburg claims pursuant to a settlement reached in April 2003, which has resulted in aggregate payments by KM Chemical of approximately $0.6 million.

The company and its affiliates believe that the follow-on Columbus and Avoca claims, the remaining Hattiesburg claims and the claims related to the Texarkana plants are without substantial merit and are vigorously defending against them. The company has not provided a reserve for these lawsuits because at this time it cannot reasonably determine the probability of a loss, and the amount of loss, if any, cannot be reasonably estimated. The company believes that the ultimate resolution of the forest products litigation will not have a material adverse effect on the company's financial condition or results of operations.

In 2000, the company acquired its titanium dioxide production facility in Savannah, Georgia, from Kemira Pigments Oy, a Finnish company, and its parent, Kemira Oyj (together, "the Sellers"). After acquiring the facility, the company discovered that certain matters associated with environmental conditions and plant infrastructure was not consistent with representations made by the Sellers. The company sought recovery for breach of representations and warranties in a proceeding before the London Court of International Arbitration (LCIA). On May 9, 2005, the Company received notice from the LCIA that the LCIA had found in favor of the company as to liability with respect to certain of the claims. The LCIA still must determine the amount of damages, and, in that regard, the company is seeking in excess of $40 million in damages, together with interest, costs and attorney fees. In light of the recent receipt of the lengthy arbitration decision on the liability phase and the complexity of the matter, the company currently cannot reasonably estimate the amount of damages that will be awarded. The company will recognize a receivable, if and when damages are awarded and all contingencies associated with any recovery are resolved.

The company and/or its affiliates are parties to a number of legal and administrative proceedings involving environmental and/or other matters pending in various courts or agencies. These proceedings, individually and in the aggregate, are not expected to have a material adverse effect on the company. These are also proceedings associated with facilities currently or previously owned, operated or used by the company's affiliates and/or their predecessors, some of which include claims for personal injuries, property damages, clean up costs and other environmental matters. Current and former operations of the company's affiliates also involve management of regulated materials and are subject to various environmental laws and regulations. These laws and regulations will obligate the company's affiliates to clean up various sites at which petroleum and other hydrocarbons, chemicals, low-level radioactive substances and/or other materials have been contained, disposed of or released. Some of these sites have been designated Superfund sites by EPA pursuant to CERCLA or state equivalents. Similar environmental laws and regulations and other requirements exist in foreign countries in which the company's affiliates operate.

The company has various commitments under noncancelable operating lease agreements, principally for railcars and production equipment. Aggregate minimum annual rentals under all operating leases at December 31, 2004 are shown in the table below. Total rental expense was $17.4 million in 2004, $16.2 million in 2003 and $13.2 million in 2002.

In the normal course of business, the company enters into contractual agreements to purchase raw materials and utilities. Aggregate future payments under these contracts are shown in the table below.

As discussed in Note 18, the company will be obligated under the Employee Benefits Agreement with Kerr-McGee to maintain the Material Features (as defined in the Employee Benefits Agreement) of the U.S. postretirement plan without change for a period of three years following the Distribution date. Based on the actuarially projected obligations under that plan, the company expects contributions to be in the range of $12.0 to $16.0 million for each of the next three years.

At December 31, 2004, the company had outstanding letters of credit in the amount of approximately $7.5 million. These letters of credit have been granted by financial institutions to support our environmental clean-up costs and severance requirements in international locations.

The company has entered into certain agreements that require it to indemnify third parties for losses related to environmental matters, litigation and other claims. No material obligations have been recorded in connection with such indemnification agreements.

As discussed in Notes 2 and 17, the company has obligations associated with the retirement of tangible long-lived assets. In addition to asset retirement obligations reflected in the company's Combined Balance Sheet, obligations exist for certain facilities that are not estimable until the timing of settlement is known and, therefore, have not been reflected in the accompanying financial statements.

The company has two reportable segments: pigment, and electrolytic and other chemical products. The pigment unit primarily produces and markets titanium dioxide pigment and has production facilities in the United States, Australia, Germany and the Netherlands. The pigment segment also includes heavy minerals production operated through our joint venture. The heavy minerals production is integrated with our Australian pigment plant but also has sales to third parties. Electrolytic and other chemical products segment represents the company's electrolytic manufacturing and marketing

operations, all of which are located in the United States. Segment performance is evaluated based on operating profit (loss), which represents results of continuing operations before considering general expenses and environmental provisions related to sites no longer in operation, other income (expense) and income taxes.

NEW-CO CHEMICAL, INC.

CONDENSED COMBINED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
AND BUSINESS EQUITY

(UNAUDITED)

NEWCO CHEMICAL, INC.

NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS

MARCH 31, 2005

(UNAUDITED)

New-Co Chemical, Inc. ("New-Co" or the "company") is currently an indirect wholly-owned subsidiary of Kerr-McGee Corporation ("Kerr-McGee"). On March 8, 2005, the Kerr-McGee Corporation Board of Directors authorized management to pursue alternatives for the separation of its chemical business, including a spin-off or sale. As a result, New-Co was formed to effect the separation. The company currently anticipates completing an initial public offering in the quarter ending December 31, 2005. Prior to the closing date of the offering, Kerr-McGee will contribute and transfer to the company certain subsidiaries, assets and liabilities related to its chemical business, including its indirect wholly-owned subsidiaries Kerr-McGee Chemical Worldwide LLC, KM Denmark International ApS and KM (Luxembourg) Holding S.a.r.l (the "Contribution"). Kerr-McGee has announced that after completion of this offering it plans to distribute its remaining ownership interest in the company to its common stockholders (the "Distribution"). Kerr-McGee expects to accomplish this Distribution through a spin-off, split-off or a combination of both transactions. Kerr-McGee has the sole discretion to decide if and when the Distribution will occur and to determine form, structure and all other terms of any transactions to effect the Distribution.

The accompanying unaudited condensed combined financial statements have been prepared by the company, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) and, in the opinion of management, include all adjustments, consisting only of adjustments that are normal and recurring in nature, necessary to a fair statement of the results for the interim periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. Although the company believes that the disclosures are adequate to make the information presented not misleading, these condensed financial statements should be read in conjunction with the annual combined financial statements and the notes thereto included elsewhere in this Registration Statement.

Employee Stock-Based Compensation—Certain of the company's employees participated in Kerr-McGee's long-term incentive plans. Under the plans, employees received various stock-based compensation awards, including stock options, restricted stock, stock opportunity grants and performance units. The company accounts for such awards under the intrinsic-value method of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." This method of accounting for stock options generally results in no expense being recognized for fixed-price stock options with an exercise price equal to the fair value of the stock on the grant date. Compensation expense for restricted stock and stock opportunity grants was measured at the market price of the shares of Kerr-McGee stock on the grant date and amortized ratably over the vesting periods of the underlying grants, ranging from three to five years, or over the service period, if shorter.

FAS No. 123, "Accounting for Stock-Based Compensation," prescribes a fair-value method of accounting for employee stock-based awards. Following this method, compensation expense for such awards is measured based on the estimated grant-date fair value and recognized as the related employee services are provided. If compensation expense for stock-based awards had been determined using the fair-value based method, stock-based compensation expense would have increased, as shown in the following table.

		Three Months Ended March 31,
		2005			2004
		(Millions of dollars)
Net income (loss), as reported		$	4.0		$	(4.2	)
	Add: stock-based employee compensation expense included in reported net income (loss), net of taxes		0.6			0.3
	Deduct: stock-based employee compensation expense determined using a fair-value method, net of taxes		(1.0	)		(0.8	)

Pro forma net income (loss)		$	3.6		$	(4.7	)

The fair value of each Kerr McGee option granted in 2005 and 2004 was estimated as of the grant date using the Black-Scholes option pricing model with the following weighted-average assumptions:

The interim Condensed Combined Statement of Operations includes allocation of costs for certain corporate functions historically provided by Kerr-McGee, including:

Employee Benefits and Incentives—Represents fringe benefit costs and other incentives, including group health and welfare benefits, U.S. pension plans, U.S. postretirement benefit plans, and stock-based compensation plans. These costs have historically been allocated on an active headcount basis for health and welfare benefits, including postretirement benefits, on the basis of salary for U.S. pension plans, and on a specific identification basis for stock-based compensation plans. These costs are

included in costs of goods sold and selling, general and administrative expenses in the interim Condensed Combined Statement of Operations.

Interest Expense—Kerr-McGee has provided financing to the company through cash flows from its other operations and debt incurred. Although the incurred debt has not been allocated to the company, a portion of the interest expense has been allocated based on specifically-identified borrowings at Kerr-McGee's average borrowing rates. These costs are included in other income (expense) in the interim Condensed Combined Statement of Operations, net of interest income that has been allocated from the company to Kerr-McGee on certain monies the company has loaned to Kerr-McGee.

Expense allocations from Kerr-McGee reflected in income (loss) from continuing operations in the company's interim Condensed Combined Statement of Operations were as follows:

These allocations were based on what Kerr-McGee considered to be reasonable reflections of the historical utilization levels of the services required in support of our business and may be less than the expenses we will incur in the future as a stand-alone company. The company's management currently estimates that general corporate expenses may be $20.0 to $25.0 million greater on an annual basis in the future as a stand-alone company.

Kerr-McGee utilizes a worldwide centralized approach to cash management and the financing of its operations with all related activity between Kerr-McGee and the company reflected as net transfers from Kerr-McGee in the company's Condensed Combined Statement of Comprehensive Income (Loss) and Business Equity. Under the terms of the master separation and distribution agreement with Kerr-McGee, the net amount due from the company to Kerr-McGee at the closing date of this offering, will remain classified as equity forming a part of the continuing equity of the company. Subsequent to the closing of this offering, amounts due from or to Kerr-McGee arising from transactions subsequent to that date will be settled in cash. We intend to distribute all of the net proceeds from this offering to Kerr-McGee.

Comprehensive income (loss) for the three months ended March 31, 2005 and 2004, was as follows:

At March 31, 2005 and December 31, 2004, the net fair value of foreign currency and commodity hedging contracts included in the Condensed Combined Balance Sheet was an asset of $6.9 million and a liability of $1.6 million, respectively, and the related balance of deferred after-tax gains (losses) in accumulated other comprehensive income was $4.7 million and $(1.2) million, respectively. All contracts outstanding at March 31, 2005 are expected to settle in 2005. For the three months ended March 31, 2005 and 2004, pre-tax gains (losses) on cash flow hedges of $(1.8) million, and $3.2 million, respectively, were reclassified from accumulated other comprehensive income to earnings. Substantially all of such gains (losses) are reflected as a component of cost of goods sold in the Condensed Combined Statement of Operations. No hedges were discontinued and no ineffectiveness was recognized in the periods presented.

Through April 2005, the company had an accounts receivable monetization program with a maximum availability of $165 million. Under the terms of the program, selected qualifying customer accounts receivable were sold monthly to a special-purpose entity (SPE), which in turn sold an undivided ownership interest in the receivables to a third-party multi-seller commercial paper conduit sponsored by an independent financial institution. The company sold, and retained an interest in, excess receivables to the SPE as over-collateralization for the program. The retained interest in sold receivables was subordinate to, and provided credit enhancement for, the conduit's ownership interest in the SPE's receivables, and was available to the conduit to pay certain fees or expenses due to the conduit, and to absorb credit losses incurred on any of the SPE's receivables in the event of program termination. No recourse obligations were recorded since the company had no obligations for any recourse actions on the sold receivables.

During the quarters ended March 31, 2005 and 2004, the company sold $278.7 million and $236.8 million, respectively, of its pigment receivables, resulting in pretax losses reflected in other income (expense) of $2.8 million and $1.4 million, respectively. Both at March 31, 2005 and at

December 31, 2004, the outstanding balance of receivables sold, net of the company's retained interest in receivables serving as over-collateralization, totaled $165.0 million. The outstanding balance of receivables serving as over-collateralization totaled $37.1 million and $38.8 million at March 31, 2005 and December 31, 2004, respectively. These balances are included in accounts receivable in the accompanying Condensed Combined Balance Sheet.

The accounts receivable monetization program included ratings downgrade triggers based on Kerr-McGee's corporate senior unsecured debt rating that provided for certain program modifications, including a program termination event upon which the program would effectively liquidate over time and the third-party multi-seller commercial paper conduit would be repaid with the collections on accounts receivable sold by the SPE. In April 2005, Kerr-McGee's senior unsecured debt was downgraded, triggering program termination. As opposed to liquidating the program over time or modifying its terms, Kerr-McGee elected to terminate the program by advancing the then outstanding balance of receivables sold of $165.0 million to the SPE, which in turn used the funds to repay the financial institution. The balances of outstanding receivables are expected to be collected as they become due and will be used by the SPE to repay Kerr-McGee for its advance. The company's outstanding trade receivables will increase as a result of the program termination with a corresponding increase in amounts due to Kerr-McGee. As stated in Note 2, amounts due from the company to Kerr-McGee at the date of the offering will remain classified as equity forming a part of the continuing equity of the company.

Major categories of inventories at March 31, 2005 and December 31, 2004 were as follows:

Restructuring and Exit Activities—The following table presents a reconciliation of the beginning and ending balances of reserves for restructuring and exit activities for the first quarter of 2005. No significant changes in the status of such activities occurred during this period.

In April 2005, in connection with the planned separation of the company from Kerr-McGee discussed in Note 1, the company initiated an employee compensation program designed to provide an incentive to certain employees to remain with the company over a one-year period. A total of $3.7 million will be payable under these programs assuming all participating employees meet the service and other conditions. The cost associated with these programs generally will be recognized as the related services are provided by the participating employees.

The company began production through a new high-productivity oxidation line at its Savannah, Georgia, chloride process pigment plant in January 2004. This new technology results in low-cost, incremental capacity increases through modification of existing chloride oxidation lines and allows for improved operating efficiencies through simplification of hardware configurations and reduced maintenance requirements. As of March 31, 2005, the company continued to operate its new high-productivity oxidation line and continued to evaluate its performance. The company expects to have a better understanding of how the Savannah site might be reconfigured to exploit its capabilities in 2005. The possible reconfiguration of the Savannah site, if any, could include redeployment of certain assets, idling of certain assets and reduction of the future useful life of certain assets, which would result in the acceleration of depreciation expense and the recognition of other charges.

Discontinued Operations—In 2004, the company's forest product operations met the criteria for reporting as discontinued operations. Revenues applicable to discontinued forest products operations totaled $0.2 million and $7.5 million and pretax losses totaled $1.6 million and $4.3 million for the three months ended March 31, 2005 and 2004, respectively.

In addition to the company's forest products operations, losses from discontinued operations for all periods presented include adjustments to amounts previously reported as discontinued operations upon disposition of the company's forest products operations, thorium manufacturing, uranium and refining operations. These adjustments resulted from changes in estimated cost of environmental remediation and restoration activities directly related to the disposed operations. Disposals of the company's uranium and refining operations were completed in 1989 and 1995, respectively. The company ceased operations at its West Chicago thorium facility in 1973. The company retained certain environmental remediation obligations and continues remediation activities directly related to these former operations.

Employee Stock-Based Compensation—In January 2005, annual stock-based compensation awards were granted to eligible employees of the company under the Kerr-McGee's long-term incentive plan. The awards to the company's employees included approximately 25,000 shares of restricted stock, 6,000 shares of stock opportunity awards, 137,000 stock options and 1.2 million performance units that provide for cash awards based on Kerr-McGee's achievement of certain financial performance measures over a stated period. This grant activity does not include grants made to Kerr-McGee employees currently performing corporate and administrative functions for the company that may become employees of the company at the time of the spin-off. The aggregate fair value of the restricted stock and stock opportunity awards on the grant date was $1.7 million, which will be recognized as compensation expense (net of forfeitures) as the employee services are provided. The exercise price of the options granted of $56.57 per share of Kerr-McGee stock equaled the fair value of the underlying stock on the date of grant, and therefore, the grant did not result in compensation expense.

Kerr-McGee stock-based awards outstanding at the date of the Distribution, except for vested stock options, will be automatically converted into the company's stock-based awards using a conversion ratio determined consistent with the provisions of the Employee Benefits Agreement between the company and Kerr-McGee. Employees who hold vested options to purchase Kerr-McGee common stock as of the date of the Distribution may exercise such options for the lesser of three months after the effective date of the Distribution or the remaining term of the option award. However, employees who are eligible for retirement on the effective date of the Distribution may exercise their vested stock options for the lesser of four years after the effective date of the Distribution or the remaining term of the option award. Vested options not exercised during the specified time period will expire.

Benefit Plans—Net periodic pension cost for the company's foreign retirement plans for the three months ended March 31, 2005 and 2004 was $1.0 million and $0.6 million, respectively.

Kerr-McGee allocates costs associated with its U.S. retirement and postretirement plans based on salary for defined benefit pension plans and based on active headcount for postretirement plans. Net periodic cost (benefit) associated with Kerr-McGee's U.S. plans allocated to the company during the three months ended March 31, 2005 and 2004 was as follows:

The costs that have historically been allocated to the company are not necessarily indicative of the costs that will be incurred in the future by the company for U.S. benefit plans. The table above only includes costs associated with active and inactive employees of the company's domestic chemical business and does not include any amount for Kerr-McGee corporate employees that may become employees of New-Co after the spin-off.

Components of other income (expense) for the three months ended March 31, 2005 and 2004 were as follows:

The following table summarizes the contingency reserve balances, provisions, payments and settlements for the quarter ended March 31, 2005, as well as balances, accruals and receipts of environmental cost reimbursements from other parties.

The provision for environmental remediation in the first quarter of 2005 includes $26.2 million for Henderson to cover the operating and maintenance costs over the extended period for groundwater treatment and $4.2 million for closure of the ammonium perchlorate pond. The provision also includes a $10.0 million provision for the West Chicago site to cover increased soil volumes encountered during the final stage of characterization of Kress Creek and increases in labor and materials. The remaining provision was for other sites.

the company to better estimate its liabilities, including liabilities at sites now under review, though the company cannot now reliably estimate the amount of future additions to the reserves. The following summarizes the reserve balances for certain environmental sites as of March 31, 2005 and any reimbursements receivable. See Note 21 to the Combined Financial Statements included elsewhere in this prospectus for discussion regarding the company's contingencies including, these sites. Reserves for each environmental site are based on assumptions regarding the volumes of contaminated soils and groundwater involved, as well as associated excavation, transportation and disposal costs.

		Environmental Reserve Balance at March 31, 2005		Reimbursements Receivable at March 31, 2005
		(Millions of dollars)
Location of Site:
	Henderson, Nevada	$	40.0	$	34.0
	West Chicago, Illinois		110.5		14.0
	Ambrosia Lake, New Mexico		6.9		—
	Crescent, Oklahoma		6.7		—
	Lakeview, Oregon		8.4		—
	Soda Springs, Idaho		3.0		—
	Milwaukee, Wisconsin		6.0		—
	Sauget, Illinois		4.0		—
	Hattiesburg, Mississippi		2.8		—
	Cleveland, Oklahoma		3.6		—
	Cushing, Oklahoma		20.3		—
	Calhoun, Louisiana		6.7		—
	Other sites⁽¹⁾		29.6		—

		$	248.5	$	48.0

is integrated with our Australian pigment plant but also has sales to third parties. Electrolytic and other chemical products segment represents the company's electrolytic manufacturing and marketing operations, all of which are located in the United States.

Segment performance is evaluated based on operating profit (loss), which represents results of continuing operations before considering general expenses and environmental provisions related to sites no longer in operation, other income (expense) and income taxes. Following is a summary of revenues and operating profit (loss) for each of the company's business segments for the three months ended March 31, 2005 and 2004.

			Three Months Ended March 31,
			2005			2004
			(Millions of dollars)
Net sales
	Pigment		$	310.8		$	252.4
	Electrolytic and other chemical products			23.4			22.5

		Total	$	334.2		$	274.9

Operating profit (loss)
	Pigment		$	31.7		$	6.7
	Electrolytic and other chemical products⁽¹⁾			(8.7	)		(2.6	)

		Total		23.0			4.1
Expenses of nonoperating sites⁽²⁾				(0.2	)		(0.3	)
Provision for environmental remediation and restoration⁽²⁾				—			(0.9	)
Other income (expense)				(5.0	)		(6.9	)

Income (loss) from continuing operations before income taxes			$	17.8		$	(4.0	)

The following table sets forth our estimated costs and expenses (other than underwriting discounts) payable in connection with this offering.

New-Co Chemical, Inc., or the Registrant, is a Delaware corporation. Section 145 of the Delaware General Corporation Law, or the DGCL, grants each corporation organized thereunder the power to indemnify any person who is or was a director, officer, employee or agent of a corporation or enterprise, against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, other than an action by or in the right of the corporation, by reason of being or having been in any such capacity, if he acted in good faith in a manner reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.

Section 102(b)(7) of the DGCL enables a corporation in its certificate of incorporation or an amendment thereto to eliminate or limit the personal liability of a director to the corporation or its stockholders for monetary damages for violations or the directors' fiduciary duty of care, except (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the DGCL (providing for liability of directors for unlawful payment of dividends or unlawful stock purchases or redemptions) or (iv) for any transaction from which a director derived an improper personal benefit.

The Registrant's amended and restated certificate of incorporation provides that, except as otherwise provided by the DGCL, no director of the Registrant shall be personally liable to the Registrant or its stockholders for monetary damages for breach of fiduciary duty as a director.

The Registrant's amended and restated bylaws provide that the Registrant shall indemnify directors and officers of the Registrant as specified in the amended and restated certificate of incorporation. In addition, to the fullest extent permitted by the DGCL, the Registrant shall indemnify any current or former director or officer of the Registrant and may, at the discretion of the Board of Directors, indemnify any current or former employee or agent of the Registrant against all expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with any threatened, pending or completed action, suit or proceeding brought by or in the light of the Registrant

or otherwise, to which he or she was or is a party by reason of his or her current or former position with the Registrant or by reason of the fact that he or she is or was serving, at the request of the Registrant, as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust or other enterprise.

The Registrant's amended and restated bylaws also provide that expenses incurred by a person who is or was a director or officer of the Registrant in appearing at, participating in or defending any such action, suit or proceeding shall be paid by the Registrant at reasonable intervals in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Registrant as authorized by the Registrant's amended and restated bylaws. If a claim under the Registrant's amended and restated bylaws is not paid in full by the Registrant within 90 days after a written claim has been received by the Registrant, the claimant may at any time thereafter bring suit against the Registrant to recover the part, the claimant shall be paid also the expense of prosecuting such claim.

The Registrant has not sold any securities, registered or otherwise, within the past three years, except for the shares issued upon formation to Registrant's sole stockholder.

A list of exhibits filed with this registration statement on Form S-1 is set forth on the Exhibit Index and is incorporated in this Item 16(a) by reference.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrants have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

Pursuant to the requirements of the Securities Act of 1933, New-Co Chemical, Inc. has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Oklahoma City, State of Oklahoma, on June 6, 2005.

We, the undersigned directors and officers of New-Co Chemical, Inc. do hereby constitute and appoint Thomas W. Adams and Mary Mikkelson, or any of them, our true and lawful attorneys and agents, to do any and all acts and things in our name and on our behalf in our capacities as directors and officers and to execute any and all instruments for us and in our names in the capacities indicated below, which said attorneys and agents, or either of them, may deem necessary or advisable to enable said registrant to comply with the Securities Act of 1933 and any rules, regulations and requirements of the Securities and Exchange Commission, in connection with this Registration Statement, including specifically, but without limitation, power and authority to sign for us or any of us in our names in the capacities indicated below, any and all amendments (including post-effective amendments) hereto and registration statements filed pursuant to Rule 462 under the Securities Act of 1933, and we do hereby ratify and confirm all that said attorneys and agents, or any of them, shall do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on June 6, 2005.

Delaware		2810		20-2868245
(State or Other Jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

Title Of Each Class Of Securities To Be Registered	Proposed Maximum Aggregate Offering Price(2)	Amount of Registration Fee


Class A Common Stock, par value $0.01 per share, including the associated preferred share purchase rights(1)	$300,000,000	$35,310

	Per Share	Total
Public offering price	$	$
Underwriting discount	$	$
Proceeds to New-Co Chemical, Inc. (before expenses)	$	$

Other Financial Data:
Cash flows from:
	Operating activities	$	88.2		$	(13.5	)	$	$	190.8		$	120.4		$	82.4		$
	Investing activities		(11.1	)		(22.2	)			(91.4	)		(95.7	)		(86.6	)
	Financing activities		(31.9	)		27.5				(131.1	)		(10.3	)		4.1
Depreciation and amortization expense			26.8			26.1				104.6			106.5			105.7
Asset write-downs and impairments			—			—				122.4			28.7			20.2
Capital expenditures			11.8			22.7				92.5			99.4			86.7
Adjusted EBITDA⁽²⁾			61.4			26.3				106.3			94.3			139.7

	Three Months Ended March 31,		Year Ended December 31,
	2005	2004	2004		2003	2002
	(volumes and capacity in thousands of metric tonnes)
Titanium Dioxide Operating Statistics:
Production volumes⁽³⁾	146.9	149.0	584.3	⁽⁴⁾	578.9	556.2
Annual or quarterly production capacity, as applicable⁽³⁾⁽⁵⁾	153.9	166.5	624.0	⁽⁴⁾	668.0	607.0
Production rate as a percentage of capacity	95%	89%	94%		87%	92%

Issuer			New-Co Chemical, Inc.
Class A common stock offered by the issuer			shares
Underwriters' option to purchase additional shares of Class A common stock			shares
Class B common stock to be held by Kerr-McGee immediately after the offering			shares
Common stock outstanding immediately after the offering:
	Class A common stock		shares
	Class B common stock		shares
		Total	shares
Use of proceeds			We estimate that the net proceeds from this offering of Class A common stock, after deducting estimated underwriting discounts and commissions and estimated offering expenses, will be approximately $ million ($ million if the underwriters exercise in full their option to purchase additional shares). We intend to distribute all of the net proceeds from this offering to Kerr-McGee. See "Use of Proceeds."
Dividend policy			Following completion of this offering, we intend to pay a regular quarterly dividend of $ per share to holders of our Class A common stock and Class B common stock. The declaration and payment of dividends is discretionary, and the amount, if any, will be dependent upon our results of operations, financial condition, contractual restrictions and other factors deemed relevant by our board of directors. See "Dividend Policy."
Voting rights
	Class A common stock		One vote per share for all matters on which stockholders are entitled to vote, including the election and removal of directors.
	Class B common stock		votes per share for all matters on which stockholders are entitled to vote, including the election and removal of directors.

Other common stock provisions				Apart from the different voting rights described above, the holders of Class A common stock and Class B common stock generally have identical rights, except that the holders of Class A common stock are not eligible to vote on any alteration of the powers, preferences or special rights of the Class B common stock that would not adversely affect the Class A common stock. See "Description of Capital Stock."
New York Stock Exchange listing				We intend to apply to list our Class A common stock on the New York Stock Exchange under the symbol " ."
Rights				One preferred share purchase right will be issued and will trade together with each share of our Class A and Class B common stock. These rights will become exercisable only upon the occurrence of certain events, as described under "Description of Capital Stock—The Rights Agreement."

	As of March 31, 2005
	Actual		As Adjusted
	(millions of dollars)
Balance Sheet Data:
Cash and cash equivalents	$	69.7	$
Working capital⁽⁶⁾		258.4
Total assets		1,597.6
Business equity		867.2

		As of March 31, 2005
		Actual		As Adjusted
		(millions of dollars)
Cash and cash equivalents		$	69.7	$

Business equity/stockholders' equity:
	Series A junior participating preferred stock, $0.01 par value per share; shares authorized; no shares issued and outstanding	$	—	$
	Class A common stock, $0.01 par value per share; shares authorized; no shares issued and outstanding, actual; shares issued and outstanding, as adjusted		—
	Class B common stock, $0.01 par value per share; shares authorized; shares issued and outstanding, actual; shares issued and outstanding, as adjusted		—
Additional paid-in capital
Owner's net investment			803.7
Accumulated other comprehensive income			63.5

	Total business equity/stockholders' equity		867.2

	Total capitalization	$		$

Assumed initial public offering price per share		$
	Net tangible book value per share at March 31, 2005	$
	Increase in net tangible book value per share attributable to this offering	$
Net tangible book value per share after this offering
Dilution per share to investors		$

	Common Shares Purchased
				Total Consideration
				Total Consideration			Average Price Per Share
	Number	Percent		Amount	Percent		Average Price Per Share
Kerr-McGee			%	$		%	$
New investors							$

Total		100	%	$	100	%	$

	March 31, 2005		December 31, 2004		December 31, 2003
	(millions of dollars)
Current ratio⁽¹⁾		1.7:1		1.7:1		1.8:1
Cash and cash equivalents	$	69.7	$	23.8	$	59.3
Working capital⁽²⁾		258.4		237.8		292.3
Total assets		1,597.6		1,596.4		1,809.6

Location of Site		Stage of Investigation/Remediation	Total Expenditures Through 2004		Remaining Reserve Balance at December 31, 2004		Total
			(millions of dollars)
EPA Superfund sites on NPL
	West Chicago, Illinois⁽¹⁾ Vicinity areas	Remediation of thorium tailings at Residential Areas and Reed-Keppler Park is substantially complete. An agreement in principle for cleanup of thorium tailings at Kress Creek and Sewage Treatment Plant has been reached with relevant agencies; court approval received in April 2005.	$	118	$	88	$	206
	Milwaukee, Wisconsin	Completed soil cleanup at former wood-treatment facility and began cleanup of offsite tributary creek. Groundwater remediation and cleanup of tributary creek is continuing.		39		7		46
	Lakeview, Oregon	Consolidation and capping of contaminated soils and neutralization of acidic waters from former uranium mining is ongoing.		8		8		16
	Soda Springs, Idaho	All former impoundments of calcine tailings have been closed as required by a record of decision (ROD). The ROD also requires continuation of groundwater monitoring. Closure of an additional ten-acre pond, not a part the ROD, will be completed within two years.		3		3		6
	Other sites	Sites where the company has been named a PRP, including landfills, wood-treating sites, a mine site and an oil recycling refinery. These sites are in various stages of investigation/remediation.		15		—		15

				183		106		289

Sites under consent order, license or agreement, not on EPA Superfund NPL
	West Chicago, Illinois⁽¹⁾ Former manufacturing facility	Excavation, removal and disposal of contaminated soils at former thorium mill is substantially complete. The site will be used for moving material from the Kress Creek and Sewage Treatment Plan remediation sites. Surface restoration and groundwater monitoring and remediation are expected to continue for approximately ten years.		444		14		458

Sites under consent order, license or agreement, not on EPA Superfund NPL (continued)
	Cushing, Oklahoma	Excavation, removal and disposal of thorium and uranium residuals was substantially completed in 2004. Investigation of and remediation addressing hydrocarbon contamination is continuing.		141		21		162
	Henderson, Nevada	Groundwater treatment to address ammonium perchlorate contamination is being conducted under consent decree with Nevada Department of Environmental Protection.		119		11		130
	Ambrosia Lake, New Mexico	Uranium mill tailings and selected pond sediments consolidated and capped onsite. A request to end groundwater treatment and a decommissioning plan for impacted soils are under review by the Nuclear Regulatory Commission.		23		8		31
	Crescent, Oklahoma	Buildings and soil decommissioning complete. Evaluating available technologies to address limited on-site radionuclide contamination of groundwater.		46		7		53
	Sauget, Illinois	Soil remediation of wood-treatment related contamination is ongoing. Conducting groundwater monitoring and evaluating options to remediate sediment and surface water.		7		4		11
	Hattiesburg, Mississippi	Completed remediation of process areas at former wood-treatment facility and completed most of off-site remediation. Off-site remediation to be completed when access to certain properties is granted.		12		3		15
	Cleveland, Oklahoma	Facility is dismantled and certain interim remedial measures to address air, soil, surface water and groundwater contamination are complete. Design of on-site containment cell is under way.		17		4		21
	Calhoun, Louisiana	Soil and groundwater remediation of petroleum hydrocarbons at a former gas condensate stripping facility is ongoing.		21		6		27
	Other sites	Sites related to wood-treatment, chemical production, landfills, mining, and oil and gas refining, distribution and marketing. These sites are in various stages of investigation/remediation.		161		32		193

				991		110		1,101

		Total	$	1,174	$	216	$	1,390

2004 Global TiO₂ Demand by Geography		2004 Global TiO₂ Demand by End-Use Market

2004 Net Sales by Geography		2004 Sales Volume by End-Use Market

Facility		Capacity		Process
Hamilton, Mississippi		225,000		Chloride
Savannah, Georgia		110,000		Chloride
Kwinana, Western Australia		110,000	⁽¹⁾	Chloride
Botlek, Netherlands		72,000		Chloride
Uerdingen, Germany		107,000		Sulfate

	Total	624,000

			Number of Securities Underlying Unexercised Options at December 31, 2004
					Value of Unexercised In-the-Money Options at December 31, 2004⁽¹⁾
Name	Shares Acquired on Exercise	Value Realized
Name	Shares Acquired on Exercise	Value Realized	Exercisable	Unexercisable	Exercisable		Unexercisable
Thomas W. Adams	—	—	12,980	11,582	$	40,697	$	102,754
Mary Mikkelson	—	—	—	—		—		—

				Owner's Net Investment			Accumulated Other Comprehensive Income			Total Business Equity
				(Millions of dollars)
Balance at December 31, 2001				$	1,117.8		$	(45.9	)	$	1,071.9
	Comprehensive Income (Loss):
		Net loss			(97.3	)		—			(97.3	)
		Other comprehensive income			—			53.6			53.6

			Comprehensive loss								(43.7	)
	Net transfers from Kerr-McGee				34.7			—			34.7

Balance at December 31, 2002					1,055.2			7.7			1,062.9
	Comprehensive Income (Loss):
		Net loss			(92.7	)		—			(92.7	)
		Other comprehensive income			—			56.8			56.8

			Comprehensive loss								(35.9	)
	Net transfers to Kerr-McGee				(15.3	)		—			(15.3	)

Balance at December 31, 2003					947.2			64.5			1,011.7
	Comprehensive Income (Loss):
		Net loss			(127.6	)		—			(127.6	)
		Other comprehensive income			—			6.8			6.8

			Comprehensive loss								(120.8	)
	Net transfers to Kerr-McGee				(0.5	)		—			(0.5	)

Balance at December 31, 2004				$	819.1		$	71.3		$	890.4

		2004			2003			2002
		(Millions of dollars)
Net loss as reported		$	(127.6	)	$	(92.7	)	$	(97.3	)
	Add: stock-based employee compensation expense included in reported net loss, net of taxes		1.5			0.8			—
	Deduct: stock-based employee compensation expense determined using a fair-value method, net of taxes		(3.6	)		(3.4	)		(3.1	)

Pro forma net loss		$	(129.7	)	$	(95.3	)	$	(100.4	)

	2004			2003			2002
Risk-free interest rate		3.5	%		3.6	%		4.8	%
Expected dividend yield		3.6	%		3.3	%		3.4	%
Expected volatility		22.6	%		32.7	%		36.0	%
Expected life (years)		5.8			5.8			5.8
Weighted-average fair value of options granted	$	8.63		$	11.09		$	16.97

	2004		2003		2002
	(Millions of dollars)
General corporate expenses	$	27.4	$	25.3	$	20.7
Employee benefits and incentives		28.8		35.9		7.6
Interest expense, net		12.1		10.1		12.9

	2004			2003			2002
	(Millions of dollars)
Foreign currency translation adjustments	$	20.0		$	50.8		$	42.7
Unrealized gain on cash flow hedges, net of taxes of $(0.8), $(4.7) and $(3.0)		0.6			13.8			7.0
Reclassification of realized (gain) loss on cash flow hedges to net loss, net of taxes of $2.8, $3.1 and $(1.7)		(7.7	)		(7.2	)		3.9
Minimum pension liability adjustments, net of taxes of $3.6, $0.1 and nil		(6.1	)		(0.6	)		—

	$	6.8		$	56.8		$	53.6

	2004			2003
	(Millions of dollars)
Foreign currency translation adjustments	$	79.2		$	59.2
Unrealized gain (loss) on cash flow hedges		(1.2	)		5.9
Minimum pension liability adjustments		(6.7	)		(0.6	)

	$	71.3		$	64.5

		2004			2003			2002
		(Millions of dollars)
Income tax payments		$	8.0		$	10.4		$	5.9
Less refunds received			(0.2	)		(0.5	)		(10.1	)

	Net income tax payments (refunds)	$	7.8		$	9.9		$	(4.2	)

		2004			2003			2002
		(Millions of dollars)
Stock-based compensation⁽¹⁾		$	2.5		$	1.2		$	—
Pension and postretirement cost (benefit)⁽¹⁾			15.5			24.0			(8.5	)
Litigation provision			0.2			1.3			69.1
Loss on retirements of property and equipment			9.7			5.9			4.6
Equity in net (earnings) losses of equity method investees			(2.4	)		(0.8	)		(0.5	)
All other⁽²⁾			5.3			(2.6	)		2.0

	Total	$	30.8		$	29.0		$	66.7

		2004			2003			2002
		(Millions of dollars)
Environmental expenditures		$	(85.2	)	$	(97.9	)	$	(121.1	)
Reimbursements of environmental expenditures			50.5			14.8			—
Cash abandonment expenditures			(3.2	)		—			—
Employer contributions to pension and postretirement plans			(1.9	)		(0.8	)		(1.0	)
All other⁽¹⁾			(2.4	)		(7.9	)		1.6

	Total	$	(42.2	)	$	(91.8	)	$	(120.5	)

		2004			2003
		(Millions of dollars)
Accounts receivable
	Accounts receivable—trade	$	153.4		$	106.9
	Receivable from the U.S. Department of Energy (Note 21)⁽¹⁾		66.0			44.5
	Receivable from insurers (Note 21)⁽¹⁾		6.0			—
	Other		7.8			8.4

			233.2			159.8
	Allowance for doubtful accounts		(11.0	)		(9.0	)

Total		$	222.2		$	150.8

		2004		2003
		(Millions of dollars)
Raw materials		$	79.5	$	104.1
Work in progress			13.4		10.2
Finished goods			135.6		184.6
Materials and supplies			56.6		53.7

	Total	$	285.1	$	352.6

		2004			2003
		(Millions of dollars)
Land		$	58.9		$	57.5
Buildings			161.1			148.2
Machinery and equipment			1,756.6			1,718.5
Other			96.3			96.7

	Total		2,072.9			2,020.9
Less accumulated depreciation			(1,189.4	)		(1,058.8	)

	Net	$	883.5		$	962.1

		2004		2003
		(Millions of dollars)
Receivable from the U.S. Department of Energy (Note 21)		$	12.8	$	64.6
Investments in equity method investees			16.8		14.9
Receivables from insurers and suppliers (Note 21)			9.0		24.5
Prepaid pension cost			—		8.0
Other			9.7		14.6

	Total	$	48.3	$	126.6

		Carrying Value
		(Millions of dollars)
Balance at December 31, 2002		$	9.1
	Change due to foreign currency translation		1.8

Balance at December 31, 2003			10.9
	Change due to foreign currency translation		0.9

Balance at December 31, 2004		$	11.8

		Carrying Value
		(Millions of dollars)
Intellectual Property
Balance at December 31, 2002		$	52.3
	Change due to foreign currency translation		3.2

Balance at December 31, 2003			55.5
	Impairment associated with the Savannah sulfate plant shutdown⁽¹⁾		(7.4	)
	Change due to foreign currency translation		5.0

Balance at December 31, 2004		$	53.1

		2004		2003
		(Millions of dollars)
Employee-related costs and benefits		$	45.9	$	46.9
Reserves for environmental remediation and restoration—current portion			85.0		83.7
Other⁽¹⁾			34.8		33.4

	Total	$	165.7	$	164.0

		2004		2003
		(Millions of dollars)
Income taxes payable		$	45.3	$	30.8
Asset retirement obligations			24.3		17.3
Workers' compensation and general liability insurance			16.1		14.0
Pension obligations			12.9		11.0
Other			13.7		14.1

	Total	$	112.3	$	87.2