Exhibit 99.1



                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549


                                  FORM 11-K


                Annual Report Pursuant to Section 15(d) of the
                       Securities Exchange Act of 1934


|X|   Annual report pursuant to Section 15(d) of the Securities  Exchange Act of
      1934 - for the year ended December 31, 1997

                                      or

|_|   Transition report pursuant to Section 15(d) of the Securities Exchange
      Act of 1934 - for the transition period from       to

                         Commission file number 1-640


      A. Full title of the plan and the address of the plan,  if different  from
that of the issuer named below:

                             NL INDUSTRIES, INC.
                           RETIREMENT SAVINGS PLAN

      B. Name of  issuer of the  securities  held  pursuant  to the plan and the
address of its principal executive office:

                             NL INDUSTRIES, INC.
                      16825 Northchase Drive, Suite 1200
                          Houston, Texas 77060-2544




<PAGE>



                             NL INDUSTRIES, INC.
                           RETIREMENT SAVINGS PLAN

                                    INDEX



                                                                    Page

Signature Page                                                        2

Financial Statements and Supplemental Schedules
 with Report of Independent Accountants                          F-1 to F-18

Exhibit I - Consent of Independent Accountants


                                   - 1 -

<PAGE>



                                   SIGNATURE


      Pursuant  to  the   requirements  of  the  Securities  Act  of  1934,  the
Administrator has duly caused this Annual Report to be signed by the undersigned
thereunto duly authorized.


                              NL INDUSTRIES, INC.
                              RETIREMENT SAVINGS PLAN

                        By:   NL INDUSTRIES, INC.
                              PENSION AND EMPLOYEE
                              BENEFITS COMMITTEE,
                              Administrator of
                              NL Industries, Inc.
                              Retirement Savings Plan


                        By:   /s/ Susan E. Alderton
                              Susan E. Alderton
                              PEBCO Committee Member


June 29, 1998


                                   - 2 -


<PAGE>



                             NL INDUSTRIES, INC.
                           RETIREMENT SAVINGS PLAN



      FINANCIAL STATEMENTS, FUND INFORMATION AND SUPPLEMENTAL SCHEDULES
                    WITH REPORT OF INDEPENDENT ACCOUNTANTS

                              December 31, 1997



<PAGE>



                              NL INDUSTRIES INC.
                           RETIREMENT SAVINGS PLAN


                                     INDEX



                                                                      Page

Report of Independent Accountants                                      F-2

Financial Statements:

 Statements of Net Assets Available for Benefits with
  Fund Information - December 31, 1996 and 1997                    F-3 to F-6

 Statements of Changes in Net Assets Available for
  Benefits with Fund Information - Years ended
  December 31, 1996 and 1997                                       F-7 to F-10

 Notes to Financial Statements                                    F-11 to F-16

Supplemental Schedules:

 Item 27a - Schedule of Assets Held for Investment Purposes
  - December 31, 1997                                                 F-17

 Item 27d - Schedule of Reportable Transactions
  - Year ended December 31, 1997                                      F-18

All other schedules are omitted because they are not applicable or not required.

                                    F-1

<PAGE>






                       REPORT OF INDEPENDENT ACCOUNTANTS


To the Pension and Employee Benefits Committee of
NL Industries, Inc.:

      We have audited the  accompanying  statements of net assets  available for
benefits of the NL Industries,  Inc.  Retirement Savings Plan as of December 31,
1996 and 1997, and the related statements of changes in net assets available for
benefits  for  the  years  then  ended.  These  financial   statements  are  the
responsibility   of  NL's  Pension  and   Employee   Benefits   Committee.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

      We conducted our audits in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  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 NL's
Pension and  Employee  Benefits  Committee,  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 net assets  available  for  benefits  of the NL
Industries,  Inc.  Retirement Savings Plan as of December 31, 1996 and 1997, and
the changes in net assets  available  for  benefits  for the years then ended in
conformity with generally accepted accounting principles.

      Our audits  were  performed  for the  purpose of forming an opinion on the
basic financial  statements  taken as a whole. The  supplemental  schedules,  as
listed on the  accompanying  index,  are presented for the purpose of additional
analysis and are not a required part of the basic  financial  statements but are
supplementary  information  required  by the  Department  of  Labor's  Rules and
Regulations for Reporting and Disclosure  under the Employee  Retirement  Income
Security  Act of 1974.  The fund  information  in the  statements  of net assets
available for benefits and the statements of changes in net assets available for
benefits is presented for purposes of additional analysis rather than to present
the net assets  available  for benefits and changes in net assets  available for
benefits of each fund. The supplemental schedules and fund information have been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, are fairly stated, in all material respects,  in
relation to the basic financial statements taken as a whole.





                                          COOPERS & LYBRAND L.L.P.
Houston, Texas
June 22, 1998

                                    F-2

<PAGE>



                             NL INDUSTRIES, INC.
                           RETIREMENT SAVINGS PLAN

    STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION

                              December 31, 1996

<TABLE>
<CAPTION>


                                                               Fund Information
                                       -------------------------------------------------------
                                                                         AIM                         
                                       MFS Emerging     Templeton    International   AIM Value       
                                       Growth Fund      World Fund    Equity Fund       Fund         
                                       ------------     ----------   -------------   ----------

<S>                                     <C>            <C>            <C>            <C>        
Investments at fair value:
  Common stock ....................     $     --       $     --       $     --       $     --   
  Other securities ................      1,053,576        476,472        405,674        725,427
Employer contributions receivable .         51,737         34,693         23,202         33,185
Cash ..............................           --             --             --             --   
                                        ----------     ----------     ----------     ----------

  Net assets available for benefits     $1,105,313     $  511,165     $  428,876     $  758,612
                                        ==========     ==========     ==========     ==========

<CAPTION>

                                                      Fund Information
                                      -------------------------------------------
                                                                       ML Global
                                       MFS Government    ML Equity     Allocation     
                                      Securities Fund   Index Trust    Fund, Inc.    
                                      ---------------   -----------    ----------    

<S>                                     <C>            <C>            <C>     
Investments at fair value:
  Common stock ....................     $     --       $     --       $     --
  Other securities ................        215,693        346,379        477,894
Employer contributions receivable .         11,014         21,451         25,031
Cash ..............................           --             --             --
                                        ----------     ----------     ----------

  Net assets available for benefits     $  226,707     $  367,830     $  502,925
                                        ==========     ==========     ==========
</TABLE>


                                    F-3


<PAGE>



                             NL INDUSTRIES, INC.
                           RETIREMENT SAVINGS PLAN

              STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
                      WITH FUND INFORMATION (CONTINUED)

                        December 31, 1996 (Continued)

<TABLE>
<CAPTION>


                                                        Fund Information (Continued)
                               --------------------------------------------------------------------------
                               ML Federal      ML Capital      ML Basic       ML Retirement     ML Global      
                               Securities         Fund,          Value        Preservation      Holdings,      
                                 Trust            Inc.           Fund             Trust            Inc.         
                               ----------      ----------     ----------      -------------     ---------      

<S>                            <C>             <C>             <C>             <C>             <C>         
Investments at fair value:
  Common stock ...........     $      --       $      --       $      --       $      --       $      --   
  Other securities .......         645,236       4,531,774       3,057,100      22,758,005         601,585
Employer contributions
 receivable ..............          15,144         110,550         107,977         235,826            --   
Cash .....................            --              --              --              --              --   
                               -----------     -----------     -----------     -----------     -----------

  Net assets available for
   benefits ..............     $   660,380     $ 4,642,324     $ 3,165,077     $22,993,831     $   601,585
                               ===========     ===========     ===========     ===========     ===========


<CAPTION>

                                                  Fund Information (Continued)
                               -----------------------------------------------------------
                                   Common Stock Funds                                    
                               ---------------------------                                 
                                                 Dresser/         Cash                 
                                   NL            Tremont          Fund            Total   
                               -----------     -----------     ---------       -----------  

<S>                            <C>             <C>             <C>             <C>        
Investments at fair value:
  Common stock ...........     $ 2,388,253     $   491,385     $      --       $ 2,879,638
  Other securities .......            --              --              --        35,294,815
Employer contributions
 receivable ..............          46,967            --              --           716,777
Cash .....................            --              --             5,608           5,608
                               -----------     -----------     -----------     -----------

  Net assets available for
   benefits ..............     $ 2,435,220     $   491,385     $     5,608     $38,896,838
                               ===========     ===========     ===========     ===========

</TABLE>


                                    F-4


<PAGE>



                             NL INDUSTRIES, INC.
                           RETIREMENT SAVINGS PLAN

              STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
                     WITH FUND INFORMATION (CONTINUED)

                              December 31, 1997

<TABLE>
<CAPTION>

                                                            Fund Information
                                       --------------------------------------------------------
                                                                         AIM                            
                                       MFS Emerging    Templeton     International    AIM Value         
                                       Growth Fund     World Fund     Equity Fund       Fund            
                                       ------------    ----------    -------------   ----------

<S>                                     <C>            <C>            <C>            <C>        
Investments at fair value:
  Common stock ....................     $     --       $     --       $     --       $     --   
  Other securities ................      1,752,287      1,709,815        358,685      2,339,828
Employer contributions receivable .        124,285         73,966         63,591        109,733
Cash ..............................           --             --             --             --   
                                        ----------     ----------     ----------     ----------

  Net assets available for benefits     $1,876,572     $1,783,781     $  422,276     $2,449,561
                                        ==========     ==========     ==========     ==========

<CAPTION>

                                                     Fund Information
                                      ------------------------------------------
                                                                     ML Global  
                                      MFS Government    ML Equity    Allocation     
                                      Securities Fund  Index Trust   Fund, Inc.     
                                      ---------------  -----------   -----------

<S>                                     <C>            <C>            <C>     
Investments at fair value:
  Common stock ....................     $     --       $     --       $     --
  Other securities ................        412,430      1,471,539        581,012
Employer contributions receivable .         23,007         99,692         49,464
Cash ..............................           --             --             --
                                        ----------     ----------     ----------

  Net assets available for benefits     $  435,437     $1,571,231     $  630,476
                                        ==========     ==========     ==========

</TABLE>


                                    F-5


<PAGE>



                             NL INDUSTRIES, INC.
                           RETIREMENT SAVINGS PLAN

             STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
                   WITH FUND INFORMATION (CONTINUED)

                        December 31, 1997 (Continued)

<TABLE>
<CAPTION>
                                                      Fund Information (Continued)
                               ----------------------------------------------------------------------------

                               ML Federal      ML Capital      ML Basic       ML Retirement       ML Global     
                               Securities         Fund,          Value        Preservation        Holdings,      
                                 Trust            Inc.           Fund             Trust              Inc.        
                               ----------      ----------     ----------      -------------       ---------     

<S>                            <C>             <C>             <C>             <C>             <C>         
Investments at fair value:
  Common stock ...........     $      --       $      --       $      --       $      --       $      --   
  Other securities .......         559,444       5,280,559       4,553,826      18,770,319         572,120
Employer contributions
 receivable ..............          44,877         226,750         233,642         425,833             431
Cash .....................            --              --              --              --              --   
                               -----------     -----------     -----------     -----------     -----------
  Net assets available for
   benefits ..............     $   604,321     $ 5,507,309     $ 4,787,468     $19,196,152     $   572,551
                               ===========     ===========     ===========     ===========     ===========

<CAPTION>

                                              Fund Information (Continued)
                               -----------------------------------------------------------
                                  Common Stock Funds    
                               ---------------------------    
                                                 Dresser/          Cash                  
                                   NL            Tremont           Fund           Total   
                               -----------     -----------     -----------     -----------

<S>                            <C>             <C>             <C>             <C>        
Investments at fair value:
  Common stock ...........     $ 2,922,905     $   641,313     $      --       $ 3,564,218
  Other securities .......            --              --              --        38,361,864
Employer contributions
 receivable ..............         119,072            --              --         1,594,343
Cash .....................            --              --            67,673          67,673
                               -----------     -----------     -----------     -----------
  Net assets available for
   benefits ..............     $ 3,041,977     $   641,313     $    67,673     $43,588,098
                               ===========     ===========     ===========     ===========

</TABLE>


                See accompanying notes to financial statements.
                                    F-6


<PAGE>



                             NL INDUSTRIES, INC.
                           RETIREMENT SAVINGS PLAN

STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS WITH FUND INFORMATION

                         Year ended December 31, 1996

<TABLE>
<CAPTION>
                                                             Fund Information
                                      -------------------------------------------------------------
                                                                           AIM           
                                      MFS Emerging      Templeton      International     AIM Value       
                                      Growth Fund       World Fund      Equity Fund        Fund          
                                      ------------      -----------    -------------    -----------

<S>                                    <C>              <C>             <C>             <C>         
Investment income:
  Dividend income:
    NL Industries, Inc. ..........     $      --        $      --       $      --       $      --   
    Dresser Corporation ..........            --               --              --              --   
    Other ........................          12,370           31,535          10,357          34,248
  Interest income ................            --               --              --              --   
                                       -----------      -----------     -----------     -----------

  Total investment income ........          12,370           31,535          10,357          34,248
                                       -----------      -----------     -----------     -----------

Net appreciation (depreciation) in
 the fair value of investments ...         (20,966)          10,822          20,990          38,049
                                       -----------      -----------     -----------     -----------

Contributions:
  Participants ...................          66,794           41,172          36,106          50,186
  Employer .......................          51,737           34,693          23,202          33,185
                                       -----------      -----------     -----------     -----------

  Total contributions ............         118,531           75,865          59,308          83,371
                                       -----------      -----------     -----------     -----------

  Total income and contributions .         109,935          118,222          90,655         155,668
                                       -----------      -----------     -----------     -----------

Net interfund transfers ..........       1,001,104          393,871         338,741         606,950
                                       -----------      -----------     -----------     -----------

Distributions:
  Benefit payments ...............           5,726              928             520           4,006
  Less forfeitures ...............            --               --              --              --   
                                       -----------      -----------     -----------     -----------

  Total distributions ............           5,726              928             520           4,006
                                       -----------      -----------     -----------     -----------

Net change in net assets available
 for benefits ....................       1,105,313          511,165         428,876         758,612

Net assets available for benefits:
  Beginning of year ..............            --               --              --              --   
                                       -----------      -----------     -----------     -----------

  End of year ....................     $ 1,105,313      $   511,165     $   428,876     $   758,612
                                       ===========      ===========     ===========     ===========
<PAGE>

<CAPTION>

                                                    Fund Information
                                      --------------------------------------------
                                                                       ML Global  
                                     MFS Government    ML Equity       Allocation 
                                     Securities Fund  Index Trust      Fund, Inc. 
                                     ---------------  ------------     -----------


<S>                                    <C>             <C>             <C>      
Investment income:
  Dividend income:
    NL Industries, Inc. ..........     $      --       $      --       $      --
    Dresser Corporation ..........            --              --              --
    Other ........................           7,284            --            39,571
  Interest income ................            --              --              --
                                       -----------     -----------     -----------

  Total investment income ........           7,284            --            39,571
                                       -----------     -----------     -----------

Net appreciation (depreciation) in
 the fair value of investments ...           4,759          37,376          (3,987)
                                       -----------     -----------     -----------

Contributions:
  Participants ...................          22,970          30,581          30,082
  Employer .......................          11,014          21,451          25,031
                                       -----------     -----------     -----------

  Total contributions ............          33,984          52,032          55,113
                                       -----------     -----------     -----------

  Total income and contributions .          46,027          89,408          90,697
                                       -----------     -----------     -----------

Net interfund transfers ..........         181,284         282,463         413,140
                                       -----------     -----------     -----------

Distributions:
  Benefit payments ...............             604           4,041             912
  Less forfeitures ...............            --              --              --
                                       -----------     -----------     -----------

  Total distributions ............             604           4,041             912
                                       -----------     -----------     -----------

Net change in net assets available
 for benefits ....................         226,707         367,830         502,925

Net assets available for benefits:
  Beginning of year ..............            --              --              --
                                       -----------     -----------     -----------

  End of year ....................     $   226,707     $   367,830     $   502,925
                                       ===========     ===========     ===========

</TABLE>

                                    F-7


<PAGE>



                             NL INDUSTRIES, INC.
                           RETIREMENT SAVINGS PLAN

          STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
                     WITH FUND INFORMATION (CONTINUED)

                   Year ended December 31, 1996 (Continued)


<TABLE>
<CAPTION>
                                                                    Fund Information (Continued)
                                       ------------------------------------------------------------------------------------
                                       ML Federal        ML Capital          ML Basic        ML Retirement      ML Global      
                                       Securities           Fund,              Value          Preservation      Holdings,     
                                          Trust             Inc.               Fund              Trust             Inc.        
                                       ------------      ------------      ------------      -------------     ------------

<S>                                    <C>               <C>               <C>               <C>               <C>          
Investment income:
  Dividend income:
    NL Industries, Inc. ..........     $       --        $       --        $       --        $       --        $       --   
    Dresser Corporation ..........             --                --                --                --                --   
    Other ........................           43,822           433,519           207,450              --              36,615
  Interest income ................             --                --                --           1,416,181              --   
                                       ------------      ------------      ------------      ------------      ------------

  Total investment income ........           43,822           433,519           207,450         1,416,181            36,615
                                       ------------      ------------      ------------      ------------      ------------

Net appreciation
 (depreciation) in the
 fair value of investments .......          (13,887)           75,626           235,047              --              51,115
                                       ------------      ------------      ------------      ------------      ------------

Contributions:
  Participants ...................           44,756           265,066           267,891           423,904            44,852
  Employer .......................           15,144           110,550           107,977           235,826              --   
                                       ------------      ------------      ------------      ------------      ------------

  Total contributions ............           59,900           375,616           375,868           659,730            44,852
                                       ------------      ------------      ------------      ------------      ------------

  Total income and
   contributions .................           89,835           884,761           818,365         2,075,911           132,582
                                       ------------      ------------      ------------      ------------      ------------

Net interfund transfers ..........          (52,291)         (280,470)          (46,618)       (1,865,472)         (310,057)
                                       ------------      ------------      ------------      ------------      ------------

Distributions:
  Benefit payments ...............           35,324           287,695            45,697         1,874,490             7,233
  Less forfeitures ...............             --                --                --              (3,957)             --   
                                       ------------      ------------      ------------      ------------      ------------

  Total distributions ............           35,324           287,695            45,697         1,870,533             7,233
                                       ------------      ------------      ------------      ------------      ------------

Net change in net assets
 available for benefits ..........            2,220           316,596           726,050        (1,660,094)         (184,708)

Net assets available for benefits:
  Beginning of year ..............          658,160         4,325,728         2,439,027        24,653,925           786,293
                                       ------------      ------------      ------------      ------------      ------------

  End of year ....................     $    660,380      $  4,642,324      $  3,165,077      $ 22,993,831      $    601,585
                                       ============      ============      ============      ============      ============

<PAGE>

<CAPTION>
                                                                    Fund Information (Continued)
                                       -----------------------------------------------------------------
                                             Common Stock Funds                                    
                                       ------------------------------                                 
                                                           Dresser/            Cash               
                                             NL            Tremont             Fund             Total  
                                       ------------      ------------      ------------     ------------
<S>                                    <C>               <C>               <C>              <C>         
Investment income:
  Dividend income:
    NL Industries, Inc. ..........     $     68,389      $       --        $       --       $     68,389
    Dresser Corporation ..........             --               8,595              --              8,595
    Other ........................             --                --                --            856,771
  Interest income ................             --                --               1,579        1,417,760
                                       ------------      ------------      ------------     ------------

  Total investment income ........           68,389             8,595             1,579        2,351,515
                                       ------------      ------------      ------------     ------------

Net appreciation
 (depreciation) in the
 fair value of investments .......         (180,690)          142,421              --            396,675
                                       ------------      ------------      ------------     ------------

Contributions:
  Participants ...................          138,757              --                --          1,463,117
  Employer .......................           46,967              --                --            716,777
                                       ------------      ------------      ------------     ------------

  Total contributions ............          185,724              --                --          2,179,894
                                       ------------      ------------      ------------     ------------

  Total income and
   contributions .................           73,423           151,016             1,579        4,928,084
                                       ------------      ------------      ------------     ------------

Net interfund transfers ..........         (621,540)          (41,105)             --               --
                                       ------------      ------------      ------------     ------------

Distributions:
  Benefit payments ...............           78,802            10,545              --          2,356,523
  Less forfeitures ...............             --                --                --             (3,957)
                                       ------------      ------------      ------------     ------------

  Total distributions ............           78,802            10,545              --          2,352,566
                                       ------------      ------------      ------------     ------------

Net change in net assets
 available for benefits ..........         (626,919)           99,366             1,579        2,575,518

Net assets available for benefits:
  Beginning of year ..............        3,062,139           392,019             4,029       36,321,320
                                       ------------      ------------      ------------     ------------

  End of year ....................     $  2,435,220      $    491,385      $      5,608     $ 38,896,838
                                       ============      ============      ============     ============

</TABLE>


                                    F-8


<PAGE>



                             NL INDUSTRIES, INC.
                           RETIREMENT SAVINGS PLAN

       STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
                  WITH FUND INFORMATION (CONTINUED)

                         Year ended December 31, 1997


<TABLE>
<CAPTION>
                                                        Fund Information
                                      --------------------------------------------------------------
                                                                            AIM                             
                                      MFS Emerging       Templeton       International     AIM Value        
                                      Growth Fund        World Fund       Equity Fund        Fund           
                                      ------------       ----------     --------------    ----------        

<S>                                    <C>              <C>              <C>              <C>         
Investment income:
  Dividend income:
    Dresser Corporation ..........     $      --        $      --        $      --        $      --   
    Other ........................          16,432          194,010             --            236,781
  Interest income ................            --               --               --               --   
                                       -----------      -----------      -----------      -----------

  Total investment income ........          16,432          194,010             --            236,781
                                       -----------      -----------      -----------      -----------

Net appreciation (depreciation) in
 the fair value of investments ...         233,438          (31,852)          22,165           (8,813)
                                       -----------      -----------      -----------      -----------

Contributions:
  Participants ...................         169,064           89,722           70,688           91,659
  Employer .......................         124,450           74,021           63,646          109,788
                                       -----------      -----------      -----------      -----------

  Total contributions ............         293,514          163,743          134,334          201,447
                                       -----------      -----------      -----------      -----------

  Total income and contributions .         543,384          325,901          156,499          429,415
                                       -----------      -----------      -----------      -----------

Net interfund transfers ..........         260,066          974,423         (120,241)       1,296,437
                                       -----------      -----------      -----------      -----------

Distributions:
  Benefit payments ...............          32,384           27,722           42,872           34,962
  Less forfeitures ...............            (193)             (14)             (14)             (59)
                                       -----------      -----------      -----------      -----------

  Total distributions ............          32,191           27,708           42,858           34,903
                                       -----------      -----------      -----------      -----------

Net change in net assets available
 for benefits ....................         771,259        1,272,616           (6,600)       1,690,949

Net assets available for benefits:
  Beginning of year ..............       1,105,313          511,165          428,876          758,612
                                       -----------      -----------      -----------      -----------

  End of year ....................     $ 1,876,572      $ 1,783,781      $   422,276      $ 2,449,561
                                       ===========      ===========      ===========      ===========

<PAGE>

<CAPTION>
                                                        Fund Information
                                      ----------------------------------------------
                                                                         ML Global  
                                      MFS Government    ML Equity        Allocation  
                                      Securities Fund   Index Trust      Fund, Inc.  
                                      ---------------   -----------      -----------  

<S>                                    <C>              <C>              <C>      
Investment income:
  Dividend income:
    Dresser Corporation ..........     $      --        $      --        $      --
    Other ........................          16,123             --             74,407
  Interest income ................            --               --               --
                                       -----------      -----------      -----------

  Total investment income ........          16,123             --             74,407
                                       -----------      -----------      -----------

Net appreciation (depreciation) in
 the fair value of investments ...           7,213          271,995          (20,570)
                                       -----------      -----------      -----------

Contributions:
  Participants ...................          42,494          119,406           58,203
  Employer .......................          23,171           99,802           49,627
                                       -----------      -----------      -----------

  Total contributions ............          65,665          219,208          107,830
                                       -----------      -----------      -----------

  Total income and contributions .          89,001          491,203          161,667
                                       -----------      -----------      -----------

Net interfund transfers ..........         132,763          740,130           27,597
                                       -----------      -----------      -----------

Distributions:
  Benefit payments ...............          13,044           28,066           61,842
  Less forfeitures ...............             (10)            (134)            (129)
                                       -----------      -----------      -----------

  Total distributions ............          13,034           27,932           61,713
                                       -----------      -----------      -----------

Net change in net assets available
 for benefits ....................         208,730        1,203,401          127,551

Net assets available for benefits:
  Beginning of year ..............         226,707          367,830          502,925
                                       -----------      -----------      -----------

  End of year ....................     $   435,437      $ 1,571,231      $   630,476
                                       ===========      ===========      ===========

</TABLE>

                                    F-9


<PAGE>



                             NL INDUSTRIES, INC.
                           RETIREMENT SAVINGS PLAN

        STATEMENTS OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS
                 WITH FUND INFORMATION (CONTINUED)

                   Year ended December 31, 1997 (Continued)

<TABLE>
<CAPTION>
                                                                    Fund Information (Continued)
                                       ------------------------------------------------------------------------------------
                                        ML Federal         ML Capital        ML Basic        ML Retirement       ML Global       
                                        Securities            Fund,           Value          Preservation        Holdings,       
                                          Trust               Inc.             Fund             Trust              Inc.          
                                       ------------      ------------      ------------      ------------      ------------

<S>                                    <C>               <C>               <C>               <C>               <C>          
Investment income:
  Dividend income:
    Dresser Corporation ..........     $       --        $       --        $       --        $       --        $       --   
    Other ........................           57,617           446,830           332,407              --              67,211
  Interest income ................             --                --                --           1,295,411              --   
                                       ------------      ------------      ------------      ------------      ------------

  Total investment income ........           57,617           446,830           332,407         1,295,411            67,211
                                       ------------      ------------      ------------      ------------      ------------

Net appreciation
 (depreciation) in the
 fair value of investments .......           21,707           515,983           625,862              --             (28,063)
                                       ------------      ------------      ------------      ------------      ------------

Contributions:
  Participants ...................           45,653           191,718           191,096           321,954              --   
  Employer .......................           45,039           229,886           236,587           426,045              --   
                                       ------------      ------------      ------------      ------------      ------------

  Total contributions ............           90,692           421,604           427,683           747,999              --   
                                       ------------      ------------      ------------      ------------      ------------

  Total income and
   contributions .................          170,016         1,384,417         1,385,952         2,043,410            39,148
                                       ------------      ------------      ------------      ------------      ------------

Net interfund transfers ..........         (215,293)         (216,751)          342,202        (3,048,845)          (64,341)
                                       ------------      ------------      ------------      ------------      ------------

Distributions:
  Benefit payments ...............           11,049           303,714           106,654         2,793,481             3,841
  Less forfeitures ...............             (267)           (1,033)             (891)           (1,237)             --   
                                       ------------      ------------      ------------      ------------      ------------

  Total distributions ............           10,782           302,681           105,763         2,792,244             3,841
                                       ------------      ------------      ------------      ------------      ------------

Net change in net assets
 available for benefits ..........          (56,059)          864,985         1,622,391        (3,797,679)          (29,034)

Net assets available for benefits:
  Beginning of year ..............          660,380         4,642,324         3,165,077        22,993,831           601,585
                                       ------------      ------------      ------------      ------------      ------------

  End of year ....................     $    604,321      $  5,507,309      $  4,787,468      $ 19,196,152      $    572,551
                                       ============      ============      ============      ============      ============


<PAGE>

<CAPTION>
                                                      Fund Information (Continued)
                                       ----------------------------------------------------------------
                                              Common Stock Funds                                    
                                       ------------------------------                                
                                                            Dresser/           Cash                   
                                            NL              Tremont            Fund             Total  
                                       ------------      ------------      ------------     ------------

<S>                                    <C>               <C>               <C>              <C>         
Investment income:
  Dividend income:
    Dresser Corporation ..........     $       --        $      8,817      $       --       $      8,817
    Other ........................             --                --               3,213        1,445,031
  Interest income ................             --                --                --          1,295,411
                                       ------------      ------------      ------------     ------------

  Total investment income ........             --               8,817             3,213        2,749,259
                                       ------------      ------------      ------------     ------------

Net appreciation
 (depreciation) in the
 fair value of investments .......          626,051           176,448              --          2,411,564
                                       ------------      ------------      ------------     ------------

Contributions:
  Participants ...................           91,379              --                --          1,483,036
  Employer .......................          119,073              --                --          1,601,135
                                       ------------      ------------      ------------     ------------

  Total contributions ............          210,452              --                --          3,084,171
                                       ------------      ------------      ------------     ------------

  Total income and
   contributions .................          836,503           185,265             3,213        8,244,994
                                       ------------      ------------      ------------     ------------

Net interfund transfers ..........         (164,438)           (2,561)           58,852             --
                                       ------------      ------------      ------------     ------------

Distributions:
  Benefit payments ...............           65,395            32,776              --          3,557,802
  Less forfeitures ...............              (87)             --                --             (4,068)
                                       ------------      ------------      ------------     ------------

  Total distributions ............           65,308            32,776              --          3,553,734
                                       ------------      ------------      ------------     ------------

Net change in net assets
 available for benefits ..........          606,757           149,928            62,065        4,691,260

Net assets available for benefits:
  Beginning of year ..............        2,435,220           491,385             5,608       38,896,838
                                       ------------      ------------      ------------     ------------

  End of year ....................     $  3,041,977      $    641,313      $     67,673     $ 43,588,098
                                       ============      ============      ============     ============
</TABLE>


                See accompanying notes to financial statements.
                                    F-10


<PAGE>



                             NL INDUSTRIES, INC.
                           RETIREMENT SAVINGS PLAN

                        NOTES TO FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies:

      The financial  statements of the NL Industries,  Inc.  Retirement  Savings
Plan (the "Plan")  have been  prepared in  accordance  with  generally  accepted
accounting principles.  The following is a summary of the significant accounting
policies followed by the Plan.

Investments

      Investments  are recorded at fair value based upon the quoted market price
reported on the last trading day of the period for those securities  listed on a
national securities  exchange.  Listed securities for which no sale was reported
on that  date are  valued  at the mean  between  the last  reported  bid and ask
prices.  Short-term investments are stated at fair value.

      Purchases and sales of  investments  are reflected on a trade-date  basis.
Gains or  losses on sales of  securities  are based on  average  cost.  The Plan
presents in the statements of changes in net assets  available for plan benefits
the net appreciation  (depreciation)  in the fair value of its investments which
consists  of the  realized  gains  or  losses  and the  unrealized  appreciation
(depreciation) on those investments.

Contributions

      Contributions from employees are recorded in the period the employer makes
payroll deductions from Plan participants.  Employer contributions,  if any, are
accrued at the end of each year and are received in the subsequent year.

Investment income

      Income  from  investments  is  recorded  as  earned on an  accrual  basis.
Dividend income is recorded at the ex-dividend date.

Termination of Plan

      Although it has not expressed any intent to do so, NL Industries, Inc. has
the right under the Plan to discontinue  contributions and to terminate the Plan
at any time subject to penalties  set forth in the  Employee  Retirement  Income
Security  Act of  1974  ("ERISA").  In the  event  of such a  discontinuance  or
termination  of the Plan,  the net assets of the Plan would be  allocated to the
Plan  participants as prescribed by the Plan document,  ERISA,  and the Internal
Revenue Code.


                                    F-11

<PAGE>



Note 2 - Plan description:

      The Plan's  principal  objective  is to provide  eligible  employees of NL
Industries,  Inc. and its Subsidiaries  (the "Company") with a convenient way to
save on a regular  and  long-term  basis.  The  majority of the  Company's  U.S.
employees are eligible to  voluntarily  participate in the Plan after six months
of  employment.  At  December  31,  1997  there  were  288  active  participants
(participants  currently  employed by the Company)  and 728 total  participants.
Active  participants may make basic  contributions of between 0% and 8% of their
eligible  compensation.  Basic  contributions  may consist of a  combination  of
pre-tax and after-tax earnings.  Generally,  pre-tax  contributions are excluded
from  the  employee's  taxable  income  until  they  are  distributed.  Eligible
employees  that have elected to make the maximum  basic  contribution  of 8% may
also make a supplemental pre-tax or after-tax  contribution of between 1% and 4%
of their eligible compensation.

      In accordance with the Tax Reform Act of 1986, participants are limited in
the  amount of salary  reduction  contributions  which they may make to the Plan
under Section  402(g) of the Internal  Revenue Code ($9,500  annual  maximum for
1997).  Highly compensated  participants may be required to adjust the amount of
their contributions in order to permit the Plan to satisfy the nondiscrimination
requirements of Sections 401(k) and 401(m) of the Internal Revenue Code.

      The Company contributes a discretionary amount of matching  contributions,
determined  annually,  based upon the  attainment  of certain  operating  income
target levels approved by the Management, Development and Compensation Committee
of the Board of Directors of the Company. The employer match applies only to the
employee's basic contributions.

      On March 31, 1996 the defined  benefit plan for  salaried  employees of NL
Industries, Inc. was amended and the pension benefits frozen for the majority of
the Company's  U.S.  employees.  Effective  April 1, 1996 every  employee who is
eligible to participate in the Plan will receive an annual contribution to their
investment  account  of  3% of  their  eligible  compensation,  subject  to  IRS
limitations on eligible  compensation,  which currently is $160,000. The Company
will make this contribution for each eligible employee regardless of whether the
employee elects to otherwise  participate in the Plan.  This  contribution is in
addition to the Company's discretionary matching contribution described above.

      Employer  contributions  are  fully  vested  upon  death,  retirement,  or
disability, as provided in the Plan. A participant with less than three years of
service is 0% vested in employer contributions, 50% vested following three years
of service,  75% vested  following four years of service and fully vested in all
employer contributions following five years of service.  Forfeitures of employer
contributions may occur if a participant terminates employment prior to the full
vesting period or if a participant  or  beneficiary,  to whom a distribution  is
payable,  cannot  be  located  within  five  years  of the  date on  which  such
distribution became payable.  Amounts forfeited are used in the following order:
(i) to restore the  accounts  of  reemployed  participants,  (ii) to restore the
accounts of participants or beneficiaries who apply for forfeited benefits,  and
(iii) to reduce employer contributions.

                                    F-12

<PAGE>



      Merrill  Lynch Trust Company  ("Merrill  Lynch" or "ML") serves as trustee
for the Plan.

      Employees  may elect to have their own  contributions  invested  in one or
more funds, whose investment objectives are as follows:


                                                                    Number of
                                                                 participants at
                                                                   December 31,
                                                                ----------------
                                                                1996        1997
                                                                ----        ----

Merrill Lynch Retirement Preservation Trust - managed           368        350
with the objective of providing preservation of capital,
liquidity and current income through investments
primarily in Guaranteed Investment Contracts.

Merrill Lynch Basic Value Fund, Inc. - Class A Shares -         163        184
managed with the objective of seeking capital
appreciation and, secondarily, income.

Merrill Lynch Federal Securities Trust - Class D Shares -        82         97
managed with the objective of seeking a high current
return through investments in U.S. government and
government agency securities.

Merrill Lynch Capital Fund, Inc. - Class A Shares -             184        200
managed with the objective of seeking the highest total
investment return consistent with prudent risk, investing
in equity, debt and convertible securities.

Merrill Lynch Global Holdings, Inc. - Class A Shares -           59         52
managed with the objective of seeking the highest total
investment return consistent with prudent risk through 
world-wide  investment in an internationally diversified 
portfolio of securities.

NL Stock Fund - invested in NL common stock.                    500        478

MFS Emerging Growth Fund - Class A Shares - managed with        104        121
the objective of providing long-term growth of capital by
investing primarily in common stocks of small and medium-
sized companies that are early in their life cycle but
which have the potential to become major enterprises.

Templeton World Fund - Class I Shares - managed with the         78         98
objective of seeking long-term capital growth by
investing in securities of companies or governments
located throughout the world.  The fund's portfolio is
invested in securities of both U.S. and foreign issuers.


                                    F-13

<PAGE>



                                                                    Number of
                                                                 participants at
                                                                   December 31,
                                                                ----------------
                                                                1996        1997
                                                                ----        ----

AIM International Equity Fund - Class A Shares - managed         70         73
with the objective of seeking long-term return of capital
by investing in a diversified portfolio of international
equity securities.

AIM Value Fund - Class A Shares - managed with the               90        111
objective of achieving long-term growth of capital by
investing primarily in equity securities judged to be
undervalued relative to appraisals of the current or
projected earnings of the companies issuing the
securities, or relative to current market values of
assets owned by the companies issuing the securities or
relative to the equity market generally.  Income is a
secondary objective.

MFS Government Securities Fund - Class A Shares - managed        49         49
with the objective of providing current income and
preservation of principal by investing in Government
Securities and by investing in obligations that are fully
collateralized or otherwise fully secured by Government
Securities.

Merrill Lynch Equity Index Trust - managed with the              67         87
objective of approximating the total return of the
Standard & Poor's 500 Composite Stock Index.  This index
is a means to measure the performance of a broad base of
large U.S. corporations.

Merrill Lynch Global Allocation Fund, Inc. - Class A             75         78
Shares - managed with the objective of seeking a high
total  investment   return,   consistent  with  the 
prudent  risk,   through  a fully-managed investment 
policy utilizing United States and foreign equity, debt
and money market securities the combination of which 
will be varied from time to time both with  respect  
to types of  securities  and  markets  in  response  to
changing market and economic trends.

      In addition to the funds  listed  above,  the  Dresser/Tremont  Stock Fund
holds  investments  in  Dresser  Industries  for  47  participants  and  Tremont
Corporation  common stock for 40  participants.  Contributions or transfers into
the  Dresser/Tremont  Stock  Fund are no  longer  allowed.  On March  31,  1996,
investments  in the  Merrill  Lynch  Global  Holdings  fund were frozen and only
transfers  out of this fund are  permitted.  Prior to March 31,  1996,  employee
contributions  to  the  fund  were  permitted;  however,  no  employer  matching
contributions were made in 1996 to this fund.


                                    F-14

<PAGE>



      Prior  to the  investment  in  securities  of a type  consistent  with the
objectives of any fund,  cash may be  temporarily  invested in  securities  with
maturities of less than one year issued or guaranteed by the U.S.  government or
any agency or instrumentality thereof or deposited in a bank savings account.

      Interfund  transfers may be made daily,  except that only one transfer per
participant  per  quarter  may  affect  amounts in the NL Stock  Fund.  Only one
transfer  is  permitted  out of the  Dresser/Tremont  Stock Fund which must be a
transfer of the total value of the participant's account in that fund.

      Distributions  to  employees  may  occur  during  active  service  or upon
termination and under prescribed circumstances. Distributions may be in the form
of lump sums, installments, annuities, or combinations thereof, or distributions
of employer securities.

      The Company bears the responsibility of all administrative expenses of the
Plan.

Note 3 - Investments:

      The historical  cost and fair value of each of the investments at December
31, 1996 and 1997 were as follows:
<TABLE>
<CAPTION>

                                                         1996                            1997
                                              ---------------------------     ---------------------------
                                               Historical                       Historical
Fund description                                 cost         Fair value          cost         Fair value
----------------                              -----------     -----------     -----------     -----------

<S>                                           <C>             <C>             <C>             <C>        
Merrill Lynch Retirement Preservation
 Trust ..................................     $22,758,005     $22,758,005     $18,770,319     $18,770,319

Merrill Lynch Basic Value Fund, Inc. -
 Class A Shares .........................       2,564,065       3,057,100       3,490,890       4,553,826

Merrill Lynch Federal Securities Trust -
 Class D Shares .........................         648,231         645,236         552,463         559,444

Merrill Lynch Capital Fund, Inc. -
 Class A Shares .........................       4,043,712       4,531,774       4,381,559       5,280,559

Merrill Lynch Global Holdings, Inc. -
 Class A Shares .........................         550,799         601,585         555,820         572,120

MFS Emerging Growth Fund - Class A Shares       1,059,235       1,053,576       1,534,538       1,752,287

Templeton World Fund - Class I Shares ...         465,233         476,472       1,740,237       1,709,815

AIM International Equity Fund - Class A
 Shares .................................         386,506         405,674         332,296         358,685

AIM Value Fund - Class A Shares .........         686,839         725,427       2,314,305       2,339,828

MFS Government Securities Fund - Class A
 Shares .................................         210,926         215,693         400,192         412,430

Merrill Lynch Equity Index Trust ........         309,021         346,379       1,179,269       1,471,539

Merrill Lynch Global Allocation Fund,
 Inc. - Class A Shares ..................         481,896         477,894         605,829         581,012

NL Stock Fund ...........................       2,790,711       2,388,253       2,768,830       2,922,905

Dresser/Tremont Stock Fund:
  Dresser Common Stock ..................         138,847         392,719         130,237         510,016
  Tremont Common Stock ..................          22,601          98,666          20,693         131,297
                                              -----------     -----------     -----------     -----------

                                              $37,116,627     $38,174,453     $38,777,477     $41,926,082
                                              ===========     ===========     ===========     ===========
</TABLE>


                                    F-15

<PAGE>



      At June 22,  1998,  the  market  value of the  shares of NL,  Dresser  and
Tremont stock held at December 31, 1997 was  $3,901,674,  $522,927 and $135,524,
respectively.

Concentration of credit risk

      During  the  first  quarter  of 1996,  the  Plan's  assets  were  invested
principally  with investment  funds managed by Merrill Lynch and common stock of
NL,  Dresser  and  Tremont.  Beginning  April 1, 1996 seven new funds were added
including  two that are managed by Merrill  Lynch.  Each of the other five funds
are  managed by either i)  Massachusetts  Financial  Services  ("MFS"),  ii) AIM
Advisors, Inc., or iii) Templeton Global Advisors Limited. At December 31, 1997,
76% of the Plan's investments were managed by Merrill Lynch.


Note 4 - Related party transactions:

      The NL Stock Fund and the Dresser/Tremont  Stock Fund invest in the common
stock of NL and Tremont.  The activity of these  securities  for the years ended
December 31, 1996 and 1997 was as follows:
<TABLE>
<CAPTION>

                                                        Sales and
                                                      distributions,    Realized
                                          Purchases      at cost          gain
                                          ---------   --------------    --------

<S>                                       <C>            <C>            <C>     
Year ended December 31, 1996:
  NL common stock .................       $554,224       $749,643       $201,758
  Tremont common stock ............           --            3,215          8,893

Year ended December 31, 1997:
  NL common stock .................        407,357        429,237         70,581
  Tremont common stock ............           --            1,908          7,101

</TABLE>

Note 5 - Tax status:

      The Plan, as amended,  is designed to  constitute a qualified  trust under
Sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as amended (the
"Code");  as such the Plan is  exempt  from  federal  income  tax,  and  amounts
contributed  by the  Company  will  not be taxed to the  participant  until  the
participant receives a distribution from the Plan.

      The Plan has  received  a  favorable  determination  as of March 5,  1998,
indicating it is a "Qualified  Plan" under the  requirements  of Sections 401(a)
and 401(k) of the Code and is qualified for favorable tax treatment.

Note 6 - Subsequent Event:

      The specialty chemical business of Rheox, Inc., a wholly-owned  subsidiary
of the  Company,  was sold to Elementis  plc for $465  million in January  1998,
including $20 million  attributable to a five-year  agreement by the Company not
to compete in the rheological products business. At December 31, 1997 68% of the
active participants in the Plan were Rheox employees.

                                    F-16

<PAGE>



                            SUPPLEMENTAL SCHEDULES


<PAGE>



                 NL INDUSTRIES, INC. RETIREMENT SAVINGS PLAN

          ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES

                              December 31, 1997

                    Employer Identification No. 13-5267260

                                 Plan No. 003


<TABLE>
<CAPTION>


                                                        Cost       Fair value
                                                     -----------   -----------

   <S>                                               <C>           <C>        
   Merrill Lynch Retirement Preservation Trust       $18,770,319   $18,770,319

   Merrill Lynch Basic Value Fund, Inc. -
    Class A shares                                     3,490,890     4,553,826

   Merrill Lynch Federal Securities Trust -
    Class D Shares                                       552,463       559,444

   Merrill Lynch Capital Fund, Inc. -
    Class A shares                                     4,381,559     5,280,559

   Merrill Lynch Global Holdings, Inc. -
    Class A shares                                       555,820       572,120

   MFS Emerging Growth Fund - Class A Shares           1,534,538     1,752,287

   Templeton World Fund - Class I Shares               1,740,237     1,709,815

   AIM International Equity Fund - Class A Shares        332,296       358,685

   AIM Value Fund - Class A Shares                     2,314,305     2,339,828

   MFS Government Securities Fund - Class A Shares       400,192       412,430

   Merrill Lynch Equity Index Trust                    1,179,269     1,471,539

   Merrill Lynch Global Allocation Fund, Inc.-
    Class A Shares                                       605,829       581,012

*  NL Stock Fund - Common Stock                        2,768,830     2,922,905

   Dresser/Tremont Stock Fund - Common Stock:
     Dresser Industries                                  130,237       510,016
*    Tremont Corporation                                  20,693       131,297
                                                     -----------   -----------

                                                     $38,777,477   $41,926,082
                                                     ===========   ===========
</TABLE>

Note: Cost is determined based on historical cost.  Gains and losses on sales of
      investments are calculated based on average cost.

*  Investment in a "Party-in-interest" entity, as defined by ERISA.

                                    F-17

<PAGE>


                             NL INDUSTRIES, INC.

                           RETIREMENT SAVINGS PLAN

                ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS

                         Year ended December 31, 1997

                    Employer Identification No. 13-5267260

                                 Plan No. 003
<TABLE>
<CAPTION>


                                                                                                            Fair value
                                                                                                            of asset on
                                     Number of       Purchase          Selling            Cost of           transaction     Net gain
Description of Asset               Transactions       price             price              asset               date          (loss)
--------------------               ------------      --------          -------            -------           -----------     --------

<S>                                     <C>         <C>                <C>                <C>                <C>               <C>
Merrill Lynch Retirement
 Preservation Trust:
  Purchases ............                129         $2,172,387         $     --           $2,172,387         $2,172,387        $--
  Sales ................                108               --            6,160,073          6,160,073          6,160,073         --


</TABLE>







                                    F-18

<PAGE>


                                                                     EXHIBIT I




                      CONSENT OF INDEPENDENT ACCOUNTANTS



We consent to the incorporation by reference in the:

  (i)    Registration Statement No. 2-98713 on Form S-8 and related Prospectus
         with respect to the 1985 Long Term Performance Incentive Plan of NL
         Industries, Inc.;

  (ii)   Registration  Statement No. 33-25913 on Form S-8 and related Prospectus
         with respect to the Savings Plan for Employees of NL Industries, Inc.;

  (iii)  Registration Statement No. 33-29287 on Form S-8 and related Prospectus,
         as amended,  with respect to the 1989 Long Term  Performance  Incentive
         Plan of NL Industries, Inc.; and

  (iv)   Registration  Statement No. 33-48145 on Form S-8 and related Prospectus
         with respect to the 1992 Non-Employee  Director Stock Option Plan of NL
         Industries, Inc.

of our report which is dated June 22, 1998,  on our audits of the  statements of
net assets available for benefits of the NL Industries,  Inc. Retirement Savings
Plan as of December 31, 1996 and 1997 and the related  statements  of changes in
net assets  available  for  benefits  for the years then ended,  which report is
included in this Annual Report on Form 11-K.







                                    Coopers & Lybrand L.L.P.





Houston, Texas
June 22, 1998




<PAGE>