SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-Q


|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
 ACT OF 1934 - For the quarter ended June 30, 1998

                                      OR

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

                         Commission file number 1-640


                              NL INDUSTRIES, INC.
--------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)



          New Jersey                                             13-5267260
-------------------------------                             --------------------
(State or other jurisdiction of                               (IRS Employer
incorporation or organization)                              Identification No.)



16825 Northchase Drive, Suite 1200, Houston, Texas              77060-2544
--------------------------------------------------          --------------------
     (Address of principal executive offices)                   (Zip Code)



Registrant's telephone number, including area code:           (281)  423-3300
                                                            --------------------


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




Number of shares of common stock outstanding on August 6, 1998:  51,370,314


<PAGE>



                     NL INDUSTRIES, INC. AND SUBSIDIARIES

                                     INDEX




                                                                         Page
PART I.     FINANCIAL INFORMATION

  Item 1.   Financial Statements.

            Consolidated Balance Sheets - December 31, 1997
             and June 30, 1998                                            3-4

            Consolidated Statements of Income - Three
             months and six months ended June 30, 1997 and 1998           5-6

            Consolidated Statements of Comprehensive Income
             - Three months and six months ended June 30, 1997
             and 1998                                                      7

            Consolidated Statement of Shareholders' Equity
             - Six months ended June 30, 1998                              8

            Consolidated Statements of Cash Flows - Six
             months ended June 30, 1997 and 1998                         9-10

            Notes to Consolidated Financial Statements                   11-17

  Item 2.   Management's Discussion and Analysis of Financial
             Condition and Results of Operations                         18-23


PART II.    OTHER INFORMATION

  Item 1.   Legal Proceedings                                             23

  Item 4.   Submission of Matters to a Vote of Security Holders           24

  Item 6.   Exhibits and Reports on Form 8-K                              24


                                   - 2 -

<PAGE>



                     NL INDUSTRIES, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

                                (In thousands)


<TABLE>
<CAPTION>


                                                      December 31,     June 30,
              ASSETS                                      1997           1998
                                                      ------------    ----------

<S>                                                    <C>            <C>       
Current assets:
  Cash and cash equivalents, including
   restricted cash of $9,751 and $5,858 ..........     $  106,145     $  355,320
  Accounts and notes receivable ..................        148,676        165,210
  Refundable income taxes ........................          1,941          6,370
  Inventories ....................................        192,780        169,377
  Prepaid expenses ...............................          3,348          5,402
  Deferred income taxes ..........................          1,642          1,561
                                                       ----------     ----------

      Total current assets .......................        454,532        703,240
                                                       ----------     ----------


Other assets:
  Marketable securities ..........................         17,270         18,652
  Investment in joint ventures ...................        172,721        171,202
  Prepaid pension cost ...........................         23,848         23,787
  Other ..........................................         18,592         13,202
                                                       ----------     ----------

      Total other assets .........................        232,431        226,843
                                                       ----------     ----------

Property and equipment:
  Land ...........................................         19,479         18,589
  Buildings ......................................        150,090        137,293
  Machinery and equipment ........................        616,309        556,267
  Mining properties ..............................         88,617         81,528
  Construction in progress .......................          2,577          5,231
                                                       ----------     ----------
                                                          877,072        798,908
  Less accumulated depreciation and depletion ....        465,843        430,110
                                                       ----------     ----------

      Net property and equipment .................        411,229        368,798
                                                       ----------     ----------

                                                       $1,098,192     $1,298,881
                                                       ==========     ==========

</TABLE>

                                   - 3 -

<PAGE>



                     NL INDUSTRIES, INC. AND SUBSIDIARIES

                    CONSOLIDATED BALANCE SHEETS (CONTINUED)

                                (In thousands)

<TABLE>
<CAPTION>



                                                     December 31,     June 30,
    LIABILITIES AND SHAREHOLDERS' EQUITY                 1997           1998
                                                     ------------   -----------

<S>                                                 <C>             <C>        
Current liabilities:
  Notes payable ................................    $    13,968     $    33,680
  Current maturities of long-term debt .........         77,374         191,610
  Accounts payable and accrued liabilities .....        161,730         167,097
  Payable to affiliates ........................         11,512          11,128
  Income taxes .................................         10,910          25,662
  Deferred income taxes ........................            891             607
                                                    -----------     -----------

      Total current liabilities ................        276,385         429,784
                                                    -----------     -----------

Noncurrent liabilities:
  Long-term debt ...............................        666,779         338,868
  Deferred income taxes ........................        132,797         184,275
  Accrued pension cost .........................         44,389          41,206
  Accrued postretirement benefits cost .........         50,951          44,757
  Other ........................................        148,903         148,631
                                                    -----------     -----------

      Total noncurrent liabilities .............      1,043,819         757,737
                                                    -----------     -----------

Minority interest ..............................            257             589

Shareholders' equity:
  Common stock .................................          8,355           8,355
  Additional paid-in capital ...................        759,281         770,492
  Accumulated deficit ..........................       (495,421)       (172,218)
  Accumulated other comprehensive loss .........       (129,513)       (131,686)
  Treasury stock ...............................       (364,971)       (364,172)
                                                    -----------     -----------

      Total shareholders' equity (deficit) .....       (222,269)        110,771
                                                    -----------     -----------

                                                    $ 1,098,192     $ 1,298,881
                                                    ===========     ===========
</TABLE>

Commitments and contingencies (Note 14)



         See accompanying notes to consolidated financial statements.
                                   - 4 -


<PAGE>



                     NL INDUSTRIES, INC. AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF INCOME

                     (In thousands, except per share data)


<TABLE>
<CAPTION>

                                   Three months ended       Six months ended
                                  --------------------    --------------------
                                        June 30,                June 30,
                                    1997        1998        1997        1998
                                  --------    --------    --------    --------

<S>                               <C>         <C>         <C>         <C>     
Revenues and other income:
  Net sales                       $214,354    $241,645    $418,743    $464,274
  Other, net                         6,339       7,288       8,762      13,269
                                  --------    --------    --------    --------

                                   220,693     248,933     427,505     477,543
                                  --------    --------    --------    --------

Costs and expenses:
  Cost of sales                    172,679     167,329     339,854     324,244
  Selling, general and
   administrative                   35,568      33,629      99,601      66,268
  Interest                          16,540      15,452      32,715      31,851
                                  --------    --------    --------    --------

                                   224,787     216,410     472,170     422,363
                                  --------    --------    --------    --------

     Income (loss) from
      continuing operations
      before income taxes and
      minority interest             (4,094)     32,523     (44,665)     55,180

Income tax expense (benefit)          (702)      9,105      (1,106)     15,447
                                  --------    --------    --------    --------

     Income (loss) from
      continuing operations
      before minority
      interest                      (3,392)     23,418     (43,559)     39,733

Minority interest                       36           4          49          19
                                  --------    --------    --------    --------

     Income (loss) from
      continuing operations         (3,428)     23,414     (43,608)     39,714

Discontinued operations              5,683         336      10,142     287,396
Extraordinary item - early
 extinguishment of debt, net
 of tax benefit of $12 and
 $1,275, respectively                 -            (21)       -         (2,366)
                                  --------    --------    --------    --------

      Net income (loss)           $  2,255    $ 23,729    $(33,466)   $324,744
                                  ========    ========    ========    ========

</TABLE>




                                   - 5 -

<PAGE>



                     NL INDUSTRIES, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)

                    (In thousands, except per share data)


<TABLE>
<CAPTION>

                                         Three months ended         Six months ended
                                             June 30,                   June 30,
                                    -------------------------   ------------------------
                                         1997         1998         1997         1998
                                     ----------    ----------   ----------    ----------

<S>                                  <C>           <C>          <C>           <C>       
Basic earnings per share:
  Continuing operations ..........   $     (.07)   $      .46   $     (.85)   $      .77
  Discontinued operations ........          .11          --            .20          5.61
  Extraordinary item .............         --            --           --            (.05)
                                     ----------    ----------   ----------    ----------

    Net income (loss) ............   $      .04    $      .46   $     (.65)   $     6.33
                                     ==========    ==========   ==========    ==========


Diluted earnings per share:
  Continuing operations ..........   $     (.07)   $      .45   $     (.85)   $      .77
  Discontinued operations ........          .11           .01          .20          5.53
  Extraordinary item .............         --            --           --            (.05)
                                     ----------    ----------   ----------    ----------

    Net income (loss) ............   $      .04    $      .46   $     (.65)   $     6.25
                                     ==========    ==========   ==========    ==========

Shares used in the calculation of
 earnings per share:
  Basic ..........................       51,144        51,341       51,142        51,311
  Dilutive impact of stock options         --             689         --             636
                                     ----------    ----------   ----------    ----------

  Diluted ........................       51,144        52,030       51,142        51,947
                                     ==========    ==========   ==========    ==========

</TABLE>


         See accompanying notes to consolidated financial statements.
                                   - 6 -


<PAGE>



                     NL INDUSTRIES, INC. AND SUBSIDIARIES

               CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                                (In thousands)


<TABLE>
<CAPTION>


                                  Three months ended        Six months ended
                                       June 30,                 June 30,
                                ----------------------    ----------------------
                                   1997        1998         1997         1998
                                ---------    ---------    ---------    ---------

<S>                             <C>          <C>          <C>          <C>      
Net income (loss) ...........   $   2,255    $  23,729    $ (33,466)   $ 324,744
                                ---------    ---------    ---------    ---------

Other comprehensive income
 (loss), net of tax:
  Marketable securities
   adjustment ...............         941          407        1,967          899
  Currency translation
   adjustment ...............      (8,255)      (3,472)      (7,505)      (3,072)
                                ---------    ---------    ---------    ---------

    Total other comprehensive
     income (loss) ..........      (7,314)      (3,065)      (5,538)      (2,173)
                                ---------    ---------    ---------    ---------

  Comprehensive income (loss)   $  (5,059)   $  20,664    $ (39,004)   $ 322,571
                                =========    =========    =========    =========

</TABLE>



         See accompanying notes to consolidated financial statements.
                                   - 7 -


<PAGE>



                     NL INDUSTRIES, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

                        Six months ended June 30, 1998

                                (In thousands)


<TABLE>
<CAPTION>
                                                                                  Accumulated other
                                                                                    comprehensive
                                                                                    income (loss) 
                                                      Additional              ----------------------- 
                                           Common      paid-in   Accumulated   Currency    Marketable   Treasury
                                            stock      capital     deficit    translation  securities    stock        Total
                                         ---------   ----------- -----------  -----------  ----------  ---------    ---------

<S>                                      <C>         <C>         <C>          <C>          <C>         <C>          <C>       
Balance at December 31, 1997 .........   $   8,355   $ 759,281   $(495,421)   $(133,810)   $   4,297   $(364,971)   $(222,269)

Net income ...........................        --          --       324,744         --           --          --        324,744

Other comprehensive income (loss), net        --          --          --         (3,072)         899        --         (2,173)

Dividends ............................        --          --        (1,541)        --           --          --         (1,541)

Cash received upon settlement of
 shareholder derivative lawsuit, net
 of $3,198 in legal fees and expenses         --        11,211        --           --           --          --         11,211

Treasury stock reissued ..............        --          --          --           --           --           799          799
                                         ---------   ---------   ---------    ---------    ---------   ---------    ---------

Balance at June 30, 1998 .............   $   8,355   $ 770,492   $(172,218)   $(136,882)   $   5,196   $(364,172)   $ 110,771
                                         =========   =========   =========    =========    =========   =========    =========

</TABLE>




         See accompanying notes to consolidated financial statements.
                                   - 8 -


<PAGE>



                     NL INDUSTRIES, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                    Six months ended June 30, 1997 and 1998

                                (In thousands)


<TABLE>
<CAPTION>

                                                           1997          1998
                                                        ---------     ---------
<S>                                                     <C>           <C>      
Cash flows from operating activities:
  Net income (loss) ................................    $ (33,466)    $ 324,744
  Depreciation, depletion and amortization .........       17,496        16,989
  Noncash interest expense .........................       11,210        11,919
  Deferred income taxes ............................         (803)        1,496
  Change in accounting for environmental
   remediation costs ...............................       30,000          --
  Discontinued operations:
    Net gain from sale of Rheox ....................         --        (286,071)
    Income from operations of Rheox ................      (10,142)       (1,325)
  Other, net .......................................       (7,287)       (5,948)
                                                        ---------     ---------

                                                            7,008        61,804

  Change in assets and liabilities:
    Accounts and notes receivable ..................      (34,137)      (39,273)
    Inventories ....................................       30,284         2,019
    Prepaid expenses ...............................       (1,899)       (2,563)
    Accounts payable and accrued liabilities .......       (4,142)        2,807
    Income taxes ...................................        7,230        (7,186)
    Other, net .....................................       (4,867)       20,547
  Rheox, net .......................................       14,843       (20,791)
                                                        ---------     ---------

      Net cash provided by operating activities ....       14,320        17,364
                                                        ---------     ---------

Cash flows from investing activities:
  Proceeds from sale of Rheox ......................         --         435,080
  Capital expenditures .............................      (15,589)       (8,210)
  Collection of note receivable ....................         --           6,875
  Investment in joint venture, net .................        3,507          (371)
  Proceeds from disposition of property
   and equipment ...................................        2,906           179
  Rheox, net .......................................         (733)          (26)
                                                        ---------     ---------

      Net cash provided (used) by investing
       activities ..................................       (9,909)      433,527
                                                        ---------     ---------
</TABLE>


                                   - 9 -


<PAGE>



                     NL INDUSTRIES, INC. AND SUBSIDIARIES

               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                    Six months ended June 30, 1997 and 1998

                                (In thousands)



<TABLE>
<CAPTION>

                                                            1997        1998
                                                         ---------    ---------

<S>                                                      <C>          <C>      
Cash flows from financing activities:
  Indebtedness:
    Borrowings .......................................   $    --      $  30,491
    Principal payments ...............................    (163,599)    (116,672)
    Deferred financing costs .........................      (2,343)        --
  Settlement of shareholder derivative lawsuit, net ..        --         11,211
  Dividends ..........................................        --         (1,541)
  Rheox, net .........................................     123,678     (117,500)
  Other, net .........................................         240          797
                                                         ---------    ---------

      Net cash used by financing activities ..........     (42,024)    (193,214)
                                                         ---------    ---------

Cash and cash equivalents:
  Net change from:
    Operating, investing and financing activities ....     (37,613)     257,677
    Currency translation .............................      (1,923)        (872)
    Sale of Rheox ....................................        --         (7,630)
  Balance at beginning of period .....................     114,115      106,145
                                                         ---------    ---------

  Balance at end of period ...........................   $  74,579    $ 355,320
                                                         =========    =========


Supplemental disclosures - cash paid (received) for:
  Interest, net of amounts capitalized ...............   $  27,049    $  20,850
  Income taxes, net ..................................      (2,739)      39,019

</TABLE>


         See accompanying notes to consolidated financial statements.
                                   - 10 -


<PAGE>



                     NL INDUSTRIES, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 1 - Organization and basis of presentation:

      NL  Industries,  Inc.  conducts its  titanium  dioxide  pigments  ("TiO2")
operations through its wholly-owned subsidiary, Kronos, Inc. In January 1998 the
specialty  chemicals business of Rheox,  Inc., a wholly-owned  subsidiary of NL,
was sold. At June 30, 1998 Valhi, Inc. and Tremont Corporation,  each affiliates
of Contran Corporation,  held approximately 58% and 18%,  respectively,  of NL's
outstanding  common stock, and together may be deemed to control NL. At June 30,
1998 Contran and its subsidiaries held approximately 92% of Valhi's  outstanding
common  stock,  and Valhi and other  entities  related to Harold C. Simmons held
approximately 53% of Tremont's outstanding common stock.

      The  consolidated  balance sheet of NL Industries,  Inc. and  Subsidiaries
(collectively,  the  "Company") at December 31, 1997 has been condensed from the
Company's  audited   consolidated   financial   statements  at  that  date.  The
consolidated  balance sheet at June 30, 1998 and the consolidated  statements of
income,  comprehensive  income,  shareholders'  equity  and cash  flows  for the
interim  periods ended June 30, 1997 and 1998 have been prepared by the Company,
without audit. In the opinion of management, all adjustments, consisting only of
normal  recurring  adjustments,  necessary  to present  fairly the  consolidated
financial  position,  results of operations  and cash flows have been made.  The
results of operations for the interim periods are not necessarily  indicative of
the operating results for a full year or of future operations.

      Certain  information  and  footnote   disclosures   normally  included  in
financial  statements  prepared in accordance with generally accepted accounting
principles have been condensed or omitted.  Certain prior-year amounts have been
reclassified to conform to the current year  presentation,  including  reporting
the Company's  specialty  chemicals  business as a discontinued  operation.  The
accompanying  consolidated  financial  statements  should be read in conjunction
with the  consolidated  financial  statements  included in the Company's  Annual
Report on Form 10-K for the year  ended  December  31,  1997 (the  "1997  Annual
Report").

      The  Company  will  adopt  Statement  of  Financial  Accounting  Standards
("SFAS") No. 133, Accounting for Derivative  Instruments and Hedging Activities,
no later than the first  quarter of 2000.  SFAS No. 133  establishes  accounting
standards for derivative  instruments,  including certain derivative instruments
embedded in other contracts, and for hedging activities. Under SFAS No. 133, all
derivatives  will be recognized as either assets or liabilities  and measured at
fair value.  The accounting for changes in fair value of derivatives will depend
upon the intended use of the derivative.  The Company is currently studying this
newly-issued  accounting  rule, and the impact of adopting SFAS No. 133, if any,
has not yet been  determined  but will be dependent upon the extent to which the
Company is a party to derivative  contracts or hedging activities at the time of
adoption.  At  June  30,  1998  the  Company  is not a party  to any  derivative
contracts.

                                   - 11 -

<PAGE>



Note 2 - Earnings per share:

      Basic  earnings  per  share are based on the  weighted  average  number of
common shares  outstanding  during each period.  Diluted  earnings per share are
based on the weighted average common shares  outstanding and the dilutive impact
of outstanding stock options.

Note 3 - Business segment information:

      The  Company's  continuing  operations  are  conducted  by  Kronos  in one
business segment - TiO2.

<TABLE>
<CAPTION>

                                       Three months ended         Six months ended
                                              June 30,                June 30,
                                      ----------------------    ----------------------
                                         1997         1998         1997         1998
                                      ---------    ---------    ---------    ---------
                                                        (In thousands)

<S>                                   <C>          <C>          <C>          <C>      
Net sales .........................   $ 214,354    $ 241,645    $ 418,743    $ 464,274
Other income, excluding
 corporate ........................       5,519        1,335        7,170        2,683
                                      ---------    ---------    ---------    ---------
                                        219,873      242,980      425,913      466,957

Cost of sales .....................     172,679      167,329      339,854      324,244
Selling, general and
 administrative, excluding
 corporate ........................      30,379       28,926       60,555       56,589
                                      ---------    ---------    ---------    ---------

Operating income ..................      16,815       46,725       25,504       86,124

General corporate income (expense):
  Securities earnings, net ........         528        4,554        1,227        8,402
  Expenses, net ...................      (4,897)      (3,304)     (38,681)      (7,495)
  Interest expense ................     (16,540)     (15,452)     (32,715)     (31,851)
                                      ---------    ---------    ---------    ---------

                                      $  (4,094)   $  32,523    $ (44,665)   $  55,180
                                      =========    =========    =========    =========
</TABLE>

      Corporate expenses, net decreased in the first half of 1998 due to the $30
million  noncash  charge  taken in the  first  quarter  of 1997  related  to the
adoption of a new method of  accounting  for certain  environmental  remediation
costs.

Note 4 - Inventories:

<TABLE>
<CAPTION>
                                                       December 31,     June 30,
                                                          1997            1998
                                                       ------------     --------
                                                            (In thousands)

<S>                                                    <C>              <C>     
Raw materials ................................         $ 45,844         $ 38,919
Work in process ..............................            8,018            7,233
Finished products ............................          107,427           90,433
Supplies .....................................           31,491           32,792
                                                       --------         --------

                                                       $192,780         $169,377
                                                       ========         ========
</TABLE>

                                   - 12 -

<PAGE>

Note 5 - Marketable securities:

<TABLE>
<CAPTION>
                                                       December 31,     June 30,
                                                           1997          1998
                                                       ------------    ---------
                                                             (In thousands)
<S>                                                      <C>           <C>     
Available-for-sale securities - noncurrent
 marketable equity securities:
  Unrealized gains .................................     $  6,939      $  8,362
  Unrealized losses ................................         (328)         (369)
  Cost .............................................       10,659        10,659
                                                         --------      --------

      Aggregate market .............................     $ 17,270      $ 18,652
                                                         ========      ========
</TABLE>
Note 6 - Investment in joint ventures:

<TABLE>
<CAPTION>
                                                       December 31,     June 30,
                                                           1997          1998
                                                       ------------    ---------
                                                            (In thousands)
<S>                                                     <C>             <C>     
TiO2 manufacturing joint venture ...............        $170,830        $171,202
Other ..........................................           1,891            --
                                                        --------        --------

                                                        $172,721        $171,202
                                                        ========        ========
</TABLE>
Note 7 - Other noncurrent assets:

<TABLE>
<CAPTION>
                                                       December 31,     June 30,
                                                           1997          1998
                                                       ------------    ---------
                                                              (In thousands)
<S>                                                        <C>         <C>    
Deferred financing costs, net                              $ 9,973     $ 6,913
Intangible assets, net                                       4,228       2,960
Other                                                        4,391       3,329
                                                           -------     -------

                                                           $18,592     $13,202
                                                           =======     =======
</TABLE>
Note 8 - Accounts payable and accrued liabilities:

<TABLE>
<CAPTION>

                                                     December 31,       June 30,
                                                         1997            1998
                                                     ------------       --------
                                                             (In thousands)

<S>                                                  <C>                <C>     
Accounts payable .........................           $ 64,698           $ 52,171
                                                     --------           --------
Accrued liabilities:
  Employee benefits ......................             40,110             32,380
  Environmental costs ....................              9,000             23,000
  Interest ...............................              6,966              6,733
  Other ..................................             40,956             52,813
                                                     --------           --------

                                                       97,032            114,926
                                                     --------           --------

                                                     $161,730           $167,097
                                                     ========           ========
</TABLE>

                                   - 13 -

<PAGE>



Note 9 - Other noncurrent liabilities:

<TABLE>
<CAPTION>
                                                        December 31,    June 30,
                                                            1997          1998
                                                        ------------    --------
                                                              (In thousands)

<S>                                                       <C>           <C>     
Environmental costs ................................      $125,502      $110,440
Insurance claims and expenses ......................        11,436        11,364
Employee benefits ..................................        10,835         9,563
Deferred income ....................................          --          14,333
Other ..............................................         1,130         2,931
                                                          --------      --------

                                                          $148,903      $148,631
                                                          ========      ========
</TABLE>
Note 10 - Notes payable and long-term debt:

<TABLE>
<CAPTION>
                                                       December 31,     June 30,
                                                           1997          1998
                                                       ------------     --------
                                                              (In thousands)

<S>                                                       <C>           <C>     
Notes payable - Kronos (DM 25,000 and DM
 60,500, respectively) .............................      $ 13,968      $ 33,680
                                                          ========      ========

Long-term debt:
  NL Industries:
    11.75% Senior Secured Notes ....................      $250,000      $244,000
    13% Senior Secured Discount Notes ..............       169,857       168,995
                                                          --------      --------

                                                           419,857       412,995
                                                          --------      --------
  Kronos:
    DM bank credit facility (DM 288,322 and
     DM 207,322, respectively) .....................       161,085       115,416
    Joint venture term loan ........................        42,429          --
    Other ..........................................         3,282         2,067
                                                          --------      --------

                                                           206,796       117,483
                                                          --------      --------

  Rheox - bank term loan ...........................       117,500          --
                                                          --------      --------

                                                           744,153       530,478

Less current maturities ............................        77,374       191,610
                                                          --------      --------

                                                          $666,779      $338,868
                                                          ========      ========
</TABLE>
      The Company  currently  intends to redeem the 13% Senior Secured  Discount
Notes on  October  15,  1998 at the  redemption  price of 106% of the  principal
amount,  in  accordance  with the terms of the Discount  Notes  indenture.  As a
result,  the Discount Notes have been classified as a current  liability at June
30, 1998.


                                   - 14 -

<PAGE>



Note 11 - Income taxes:

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

<TABLE>
<CAPTION>
                                                             Six months ended
                                                                 June 30,
                                                           --------------------
                                                             1997        1998
                                                           --------    --------
                                                               (In thousands)

<S>                                                        <C>         <C>     
Expected tax expense (benefit) .........................   $(15,633)   $ 19,313
Non-U.S. tax rates .....................................       (440)        (70)
Incremental tax on income of companies not included
 in NL's consolidated U.S. federal income tax return ...      1,440       1,519
Change in valuation allowance ..........................     12,775      (5,256)
U.S. state income taxes ................................         75         200
Other, net .............................................        677        (259)
                                                           --------    --------

      Income tax expense (benefit) .....................   $ (1,106)   $ 15,447
                                                           ========    ========
</TABLE>
Note 12 - Other income, net:

<TABLE>
<CAPTION>
                                     Three months ended       Six months ended
                                          June 30,                 June 30,
                                     -------------------    --------------------
                                       1997       1998        1997        1998
                                     --------   --------    --------    --------
                                                (In thousands)

<S>                                  <C>        <C>         <C>         <C>     
Corporate interest and dividend
 income ..........................   $    351   $  4,554    $    948    $  8,402
Noncompete agreement income ......       --        1,000        --         1,667
Currency transaction gains, net ..      2,302      1,134       3,065       1,717
Trade interest income ............        646        456       1,288       1,037
Gain (loss) from disposition of
 property and equipment ..........      2,794       (278)      2,763        (302)
Other, net .......................        246        422         698         748
                                     --------   --------    --------    --------

                                     $  6,339   $  7,288    $  8,762    $ 13,269
                                     ========   ========    ========    ========
</TABLE>
Note 13 - Discontinued operations:

      The Company sold the net assets of its Rheox specialty  chemicals business
for $465 million cash (before fees and  expenses) in the first  quarter of 1998,
including $20 million  attributable to a five-year  agreement by the Company not
to compete in the  rheological  products  business.  The Company  recognized  an
after-tax  gain of  approximately  $286  million  on the  sale of this  business
segment.  A portion of the  after-tax  proceeds of about $380  million have been
used to reduce outstanding indebtedness by approximately $177 million.


                                   - 15 -

<PAGE>



      Condensed income statement data related to discontinued operations for the
interim  periods ended June 30, 1997 and 1998 are as follows.  Interest  expense
has been  allocated  to  discontinued  operations  based on the  amount  of debt
specifically attributed to Rheox's operations.

<TABLE>
<CAPTION>
                                                             Six months ended
                                                                June 30,
                                                          ----------------------
                                                            1997          1998
                                                          --------      --------
                                                              (In thousands)

<S>                                                       <C>           <C>     
Operations:
  Net sales .........................................     $ 73,527      $ 12,630
                                                          ========      ========

  Operating income ..................................     $ 22,098      $  2,900
  Interest and other expenses .......................        5,822           797
                                                          --------      --------

      Income before income taxes and minority
       interest .....................................       16,276         2,103

  Income tax expense ................................        6,155           778
  Minority interest .................................          (21)         --
                                                          --------      --------

                                                            10,142         1,325

Gain from sale of Rheox, net of tax expense of
 $86,222                                                      -          286,071
                                                           -------      --------

                                                           $10,142      $287,396
                                                          ========      ========
</TABLE>
      Condensed  cash  flow  data  for  Rheox  (excluding   dividends  paid  to,
contributions received from and intercompany loans with NL) is presented below:

<TABLE>
<CAPTION>
                                                             Six months ended
                                                                June 30,
                                                          ----------------------
                                                            1997          1998
                                                          --------      --------
                                                              (In thousands)

<S>                                                    <C>            <C>       
Cash flows from:
  Operating activities ...........................     $  14,843      $ (20,791)
  Investing activities - capital expenditures
   and other .....................................          (733)           (26)
  Financing activities - indebtedness, net .......       123,678       (117,500)
                                                       ---------      ---------

                                                       $ 137,788      $(138,317)
                                                       =========      ========= 
</TABLE>
Note 14 - Commitments and contingencies:

      For  descriptions  of  certain  legal  proceedings,  income  tax and other
commitments and contingencies  related to the Company,  reference is made to (i)
Note 15, (ii)  Management's  Discussion and Analysis of Financial  Condition and
Results of  Operations,  (iii) Part II,  Item 1 -"Legal  Proceedings,"  (iv) the
Company's  Quarterly  Report on Form 10-Q for the quarter  ended March 31, 1998,
and (v) the 1997 Annual Report.


                                   - 16 -

<PAGE>



Note 15 - Subsequent event:

      In July 1998 the Company reached an agreement (the "Tioxide  Purchase") to
(i) acquire the North American TiO2 operations of Imperial  Chemical  Industries
plc's ("ICI")  subsidiary,  Tioxide Group  Limited,  and a Tioxide TiO2 plant in
England, and (ii) cancel certain rights to chloride-process  technology licensed
to Tioxide by the Company in connection with the formation of Louisiana  Pigment
Company ("LPC") in 1993. The aggregate amount to be paid to ICI is approximately
$365  million,  including a $30 million fee for the  cancellation  of technology
rights and approximately $50 million in working capital. The purchase is subject
to regulatory clearances,  completion of the purchase by E.I. du Pont de Nemours
& Co. of ICI's  non-North  American TiO2 business (the "DuPont  Purchase"),  and
other conditions customary to transactions of this type.

      The operations to be acquired  include  Tioxide's  50%-interest  in LPC, a
manufacturing  joint  venture  of  the  Company  and  Tioxide  that  operates  a
chloride-process  TiO2 plant in Louisiana with capacity of approximately 120,000
metric tons per annum ("mtpa"); Tioxide's 75,000 mtpa sulfate-process TiO2 plant
in Grimsby, England; Tioxide's 52,000 mtpa finishing plant in Tracy, Quebec; and
Tioxide's North American marketing and distribution business.

      Upon  completion  of the DuPont  Purchase  and the Tioxide  Purchase,  the
Company  expects to become  the  world's  third  largest  manufacturer  of TiO2,
increasing its productive capacity by approximately 135,000 mtpa.

      The Company expects the Tioxide Purchase to close by the end of 1998.


                                   - 17 -

<PAGE>



MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION AND RESULTS OF
OPERATIONS
--------------------------------------------------------------------------------
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
                                 Three months ended      %       Six months ended       %
                                      June 30,         Change       June 30,          Change
                                 -------------------   -------  ------------------    ------
                                   1997       1998                1997       1998
                                 --------   --------            --------   --------
                                     (In millions)                  (In millions)

<S>                              <C>        <C>        <C>      <C>        <C>        <C>
Net sales ..................     $  214.4   $  241.6   +13%     $  418.8   $  464.3   +11%

Operating income ...........     $   16.8   $   46.7   +178%    $   25.5   $   86.1   +238%

Percent changes in TiO2:
  Sales volume .............                           N/C                            +1%
  Average selling prices
   (in billing currencies) .                           +18%                           +18%
</TABLE>

      Kronos'  operating  income in the  second  quarter  and first half of 1998
increased  from the  comparable  periods in 1997 due to higher  average  selling
prices and improved  production  volume.  Kronos  expects its  second-half  1998
operating  income will  continue to outpace  1997  operating  income,  primarily
because of higher average TiO2 selling prices for 1998 compared to 1997.

      Average TiO2 selling prices for the second quarter of 1998 were 18% higher
than the second  quarter of 1997 and 3% higher  than the first  quarter of 1998.
Selling  prices at the end of the second quarter were 1% higher than the average
for the quarter.

      Kronos' second quarter sales volume approximated the record second quarter
of 1997 with higher  sales  volume in Europe  offsetting  lower sales  volume in
Asia.  Sales  volume  in the first  six  months  of 1998 was 1% higher  than the
year-earlier period. Kronos anticipates its TiO2 sales volume for full-year 1998
will approximate volumes for calendar year 1997.

      Kronos' cost of sales as a percentage of net sales decreased in the second
quarter and first half of 1998 primarily due to higher average  selling  prices.
Kronos' selling,  general and  administrative  expenses  decreased in the second
quarter  and first half of 1998 due to  favorable  effects  of foreign  currency
translation.

      A significant amount of sales are denominated in currencies other than the
U.S. dollar,  and fluctuations in the value of the U.S. dollar relative to other
currencies  decreased the dollar value of sales for the second quarter and first
half of 1998  by $7  million  and $22  million,  respectively,  compared  to the
comparable 1997 periods.


                                   - 18 -

<PAGE>



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

<TABLE>
<CAPTION>

                            Three months ended                Six months ended
                            ------------------               ------------------
                                 June 30,                         June 30,
                              1997       1998   Difference     1997       1998   Difference
                            -------    -------  ----------   -------    -------  ----------
                                                    (In millions)

<S>                         <C>        <C>        <C>        <C>        <C>        <C>    
Securities earnings ...     $    .5    $   4.6    $   4.1    $   1.2    $   8.4    $   7.2
Corporate expenses, net        (4.9)      (3.3)       1.6      (38.7)      (7.5)      31.2
Interest expense ......       (16.5)     (15.5)       1.0      (32.7)     (31.9)        .8
                            -------    -------    -------    -------    -------    -------

                            $ (20.9)   $ (14.2)   $   6.7    $ (70.2)   $ (31.0)   $  39.2
                            =======    =======    =======    =======    =======    =======
</TABLE>

      Securities earnings increased due to higher average balances available for
investment. Corporate expenses, net in the first half of 1998 was lower than the
comparable  period in 1997 due to the $30 million  noncash  charge  taken in the
first  quarter  of 1997  related  to the  Company's  adoption  of SOP No.  96-1,
"Environmental  Remediation  Liabilities."  This  charge is included in selling,
general and administrative expense in the Company's  consolidated  statements of
income.  Upon completion of the Tioxide Purchase,  the Company expects to charge
to  corporate  expenses  a $30  million  fee for  the  cancellation  of  certain
chloride-process technology rights licensed to Tioxide by the Company in 1993.

      The Company sold the net assets of its Rheox specialty  chemicals business
in the first quarter of 1998 and, as a result of the sale,  Rheox's  results are
reported as discontinued operations.

LIQUIDITY AND CAPITAL RESOURCES

      The  Company's  consolidated  cash flows  from  operating,  investing  and
financing  activities  for the six  months  ended  June  30,  1997  and 1998 are
presented below.

<TABLE>
<CAPTION>
                                                                Six months ended
                                                                    June 30,
                                                                 1997      1998
                                                               -------   --------
                                                                  (In millions)
<S>                                                            <C>       <C>     
Net cash provided (used) by:
  Operating activities ....................................    $  14.3   $   17.4
  Investing activities ....................................       (9.9)     433.5
  Financing activities ....................................      (42.0)    (193.2)
                                                               -------   --------
      Net cash provided (used) by operating, investing
       and financing activities ...........................    $ (37.6)  $  257.7
                                                               =======   ========
</TABLE>


      The TiO2  industry is cyclical and changes in economic  conditions  within
the industry  significantly  impact the earnings and operating cash flows of the
Company. Cash flow from operations, before changes in assets and liabilities, in
the 1998  period  improved  from the  comparable  period  in 1997 due to  higher
operating income. Changes in the Company's inventories, receivables and payables
(excluding the effect of currency  translation) used cash in both the first half
of 1997  and  1998;  however,  the  cash  used  in the  first  half of 1997  was
significantly  less  than  the  first  half of 1998  due to cash  provided  from
reductions in inventory levels in the 1997 period.


                                   - 19 -

<PAGE>



      The  sale of the  Company's  specialty  chemicals  business  in the  first
quarter of 1998 resulted in net proceeds of $380 million  after  current  income
taxes and other  expenses.  The  Company  used a portion of the net  proceeds to
repay certain  indebtedness,  as described  below, and plans to use a portion of
the net proceeds to redeem the 13% Senior Secured  Discount Notes on October 15,
1998 at the redemption price of 106% of the principal amount, in accordance with
the terms of the Discount Notes indenture.

      With a portion of the net  proceeds,  the Company (i) prepaid $118 million
of the Rheox credit  facility,  (ii) prepaid $42 million of Kronos' share of the
LPC joint venture term loan, (iii) made $15 million of open-market  purchases of
the Company's 13% Senior  Secured  Discount Notes at prices ranging from $101.25
to $104.56 per $100 of their principal  amounts,  including $4 million purchased
in July 1998,  and (iv) purchased $6 million of the Senior Secured Notes and $61
thousand of the Senior Secured  Discount Notes at a price of $100 and $96.03 per
$100 of their  principal  amounts,  respectively,  pursuant to a pro rata tender
offer to Note holders in June 1998.

      The Company  prepaid DM 81 million  ($44 million when paid) of its DM term
loan in the first quarter of 1998. A portion of the funds for such prepayment of
the DM term loan was provided by a first-quarter DM 35 million ($19 million when
borrowed)  increase in  outstanding  borrowings  under the Company's  short-term
non-U.S. credit facilities. In the second quarter of 1998, the Company repaid DM
20 million ($11 million when paid) of the DM revolving credit facility.

      In order to complete the Tioxide Purchase,  the Company expects to arrange
approximately $250 million in bank financing.

      At June 30,  1998 the Company  had cash and cash  equivalents  aggregating
$355  million (10% held by non-U.S.  subsidiaries),  including  restricted  cash
equivalents of $6 million. The Company's  subsidiaries had $75 million available
for borrowing at June 30, 1998 under existing non-U.S. credit facilities.

      In the  second  quarter  of 1998  the  Company  paid a  regular  quarterly
dividend of $.03 per share to  shareholders  aggregating  $1.5 million.  In July
1998 the Company's Board of Directors  declared a regular quarterly  dividend of
$.03 per share to  shareholders of record as of September 16, 1998 to be paid on
September 30, 1998. In June 1998, as a result of the settlement of a shareholder
derivative lawsuit on behalf of the Company,  Valhi transferred $14.4 million in
cash to the Company,  and the Company agreed to pay plaintiffs'  attorneys' fees
and expenses of $3.2 million.

      Certain  of the  Company's  tax  returns  in  various  U.S.  and  non-U.S.
jurisdictions  are being  examined  and tax  authorities  have  proposed  or may
propose tax deficiencies.  The Company  previously reached an agreement with the
German tax authorities and paid certain tax  deficiencies of approximately DM 44
million ($28 million when paid), including interest,  which resolved significant
tax  contingencies  for years  through 1990.  During 1997 the Company  reached a
tentative  agreement  with the German tax  authorities  regarding the years 1991
through  1994,  and expects to pay DM 9 million  ($5  million at June 30,  1998)
during the second half of 1998 in settlement of certain tax issues. Certain

                                   - 20 -

<PAGE>



other significant German tax contingencies remain outstanding for the years 1990
through  1996  and  will  continue  to  be  litigated.  With  respect  to  these
contingencies,   the  Company  has  received  certain  revised  tax  assessments
aggregating DM 119 million ($66 million at June 30, 1998),  including non-income
tax related items and interest,  for years through 1996. The Company  expects to
receive tax assessments for an additional DM 20 million ($11 million at June 30,
1998),  including non-income tax related items and interest,  for the years 1991
through  1994.  No  payments of tax or  interest  deficiencies  related to these
assessments are expected until the litigation is resolved.

      During  1997  a  German  tax  court  proceeding   involving  a  tax  issue
substantially  the same as that involved in the Company's  primary remaining tax
contingency  was decided in favor of the  taxpayer.  The German tax  authorities
have appealed that decision to the German  Supreme Court;  the Company  believes
that the decision by the German Supreme Court will be rendered  within two years
and will become a legal precedent which will likely determine the outcome of the
Company's  primary dispute with the German tax authorities,  which  assessments,
including  non-income tax related items and interest,  aggregate DM 121 million.
Although the Company believes that it will ultimately  prevail,  the Company has
granted a DM 94 million ($52  million at June 30,  1998) lien on its  Nordenham,
Germany  TiO2 plant in favor of the City of  Leverkusen,  and a DM 5 million ($3
million at June 30, 1998) lien in favor of the German federal tax authorities.

      During 1997 the Company  received a tax assessment  from the Norwegian tax
authorities proposing tax deficiencies of NOK 51 million ($7 million at June 30,
1998) relating to 1994. The Company has appealed this  assessment and expects to
litigate  this issue.  Although  the Company  believes  that it will  ultimately
prevail,  the  Company  has  granted  a lien  for  the  full  amount  of the tax
assessment on its  Fredrikstad,  Norway TiO2 plant in favor of the Norwegian tax
authorities.

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

      The Company has been named as a defendant,  potentially  responsible party
("PRP"), or both, in a number of legal proceedings associated with environmental
matters,  including  waste  disposal  sites,  mining  locations  and  facilities
currently or previously owned, operated or used by the Company, certain of which
are on the U.S.  Environmental  Protection  Agency's (the "U.S.  EPA") Superfund
National  Priorities  List or similar  state lists.  On a quarterly  basis,  the
Company  evaluates  the  potential  range of its liability at sites where it has
been named as a PRP or defendant.  The Company believes it has adequate accruals
($133 million at June 30, 1998) for reasonably  estimable costs of such matters,
but the  Company's  ultimate  liability  may be affected by a number of factors,
including changes in remedial alternatives and costs and the allocations of such
costs among PRPs.  It is not possible to estimate the range of costs for certain
sites.  The upper end of the range of reasonably  possible  costs to the Company
for sites

                                   - 21 -

<PAGE>



for which it is possible to estimate costs is  approximately  $165 million.  The
Company's  estimates of such  liabilities  have not been  discounted  to present
value, and the Company has not recognized any potential insurance recoveries. No
assurance can be given that actual costs will not exceed accrued  amounts or the
upper end of the range for sites  for which  estimates  have been  made,  and no
assurance  can be given that costs will not be incurred with respect to sites as
to which no estimate presently can be made.  Further,  there can be no assurance
that additional environmental matters will not arise in the future.

      The Company is also a defendant in a number of legal  proceedings  seeking
damages for personal  injury and property  damage  arising from the sale of lead
pigments and lead-based paints.  There is no assurance that the Company will not
incur  future  liability in respect of this  pending  litigation  in view of the
inherent  uncertainties  involved  in court  and jury  rulings  in  pending  and
possible  future cases.  However,  based on, among other things,  the results of
such litigation to date, the Company  believes that the pending lead pigment and
paint  litigation is without merit.  The Company has not accrued any amounts for
such pending litigation. Liability that may result, if any, cannot be reasonably
estimated. In addition, various legislation and administrative regulations have,
from  time to time,  been  enacted  or  proposed  that  seek to  impose  various
obligations on present and former  manufacturers  of lead pigment and lead-based
paint with respect to asserted health  concerns  associated with the use of such
products and to effectively  overturn  court  decisions in which the Company and
other  pigment  manufacturers  have been  successful.  Examples of such proposed
legislation  include bills which would permit civil liability for damages on the
basis of market  share,  rather  than  requiring  plaintiffs  to prove  that the
defendant's  product caused the alleged damage.  The Company currently  believes
the disposition of all claims and disputes,  individually  and in the aggregate,
should  not  have  a  material  adverse  effect  on the  Company's  consolidated
financial  position,  results  of  operations  or  liquidity.  There  can  be no
assurance that additional matters of these types will not arise in the future.

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


                                   - 22 -

<PAGE>



      The statements  contained in this Report on Form 10-Q ("Quarterly Report")
which are not historical facts, including,  but not limited to, statements found
under the captions "Results of Operations" and "Liquidity and Capital Resources"
above,  are  forward-looking  statements  that  involve  a number  of risks  and
uncertainties.  The  actual  results  of the  future  events  described  in such
forward-looking statements in this Quarterly Report could differ materially from
those stated in such  forward-looking  statements.  Among the factors that could
cause  actual  results  to differ  materially  are the  risks and  uncertainties
discussed in this  Quarterly  Report and in the 1997 Annual  Report,  including,
without  limitation,  the portions of such reports under the captions referenced
above, and the  uncertainties set forth from time to time in the Company's other
public reports and filings and public statements.

                          PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         Reference is made to the 1997 Annual Report and the Company's Quarterly
Report on Form 10-Q for the quarter  ended March 31,  1998 for  descriptions  of
certain previously-reported legal proceedings.

         Brenner, et al. v. American Cyanamid, et al. (No. 12596-93).  In June
1998 defendants moved for partial summary judgment dismissing plaintiffs' market
share and alternative liability claims.

         Parker v. NL Industries, et al. (No. 97085060 CC915).  In July 1998 the
Court granted the Company's motion for summary judgment on all remaining claims.
Plaintiffs have appealed.

         Granite City Site.  The Company has been informed that the U.S. EPA has
reached an agreement in principle with the other PRPs settling their liabilities
with respect to the site for approximately 50% of the site costs. The Company is
negotiating with the U.S. EPA to settle its liability.

         Pedricktown  Site.  In June  1998 the  Company  entered  into a consent
decree with the U.S. EPA and other PRPs to perform the remedial  action phase at
operable  unit one. In addition,  the Company  reached an agreement in principle
with certain PRPs with respect to the Company's  liability at the site to settle
this matter within previously-accrued amounts.

         State of Illinois v. NL Industries,  et al. (No. 88-CH-11618).  In June
1998 the  Illinois  appellate  court  affirmed  the  ruling of the  trial  court
dismissing  the case.  The State has petitioned the Supreme Court of Illinois to
review the case.

         United States v. Peter Gull and NL Industries,  Inc. (No. 91-4098).  In
June 1998 the Company concluded the previously-reported  agreement settling this
matter within previously-accrued amounts.


                                   - 23 -

<PAGE>



         Seinfeld v. Simmons, et al. (No. C-336-96). In May 1998 the previously-
reported  settlement  was approved by the Court.  In June 1998,  pursuant to the
settlement,  Valhi  transferred $14.4 million to the Company and the Company has
agreed to reimburse plaintiffs' attorneys $3.2 million for fees and expenses.

         DeLeon v. Exide Corp. and NL Industries,  Inc. (No.  DV98-02669-B).  In
May 1998 the Company answered the complaint, denying liability.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         The Company held its Annual Meeting of Shareholders on May 8, 1998. All
the  nominees for  director  were  elected  with the voting  results for each as
follows:

<TABLE>
<CAPTION>

           Director                                 Shares For   Shares Withheld
----------------------------                        ----------   ---------------

<S>                                                 <C>                <C>    
Joseph S. Compofelice                               49,246,697         368,524
J. Landis Martin                                    49,242,703         372,518
Kenneth R. Peak                                     49,248,164         367,057
Glenn R. Simmons                                    49,238,257         367,964
Harold C. Simmons                                   49,238,740         376,481
Lawrence A. Wigdor                                  49,249,362         365,859
Admiral Elmo R. Zumwalt, Jr.                        49,236,213         379,008
</TABLE>

         The Company's  shareholders  also approved the Company's  proposed 1998
Long-Term Incentive Plan with the voting results as follows:


             Shares For               Shares Against            Shares Abstained
             ----------               --------------            ----------------

             44,032,247                  2,812,268                  191,584

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a) Exhibits

             27.1 - Financial Data Schedule for the six-month  period ended June
             30, 1998.

         (b) Reports on Form 8-K

             Reports on Form 8-K for the quarter ended June 30, 1998 and through
             the date of this report:

               May 20,  1998 - reported  Items 5 and 7. 
               June 18, 1998 - reported  Items 5 and 7.  
               July 2, 1998 -  reported  Items 5 and 7. 
               July 17, 1998 - reported  Items 5 and 7. 
               July 24, 1998 - reported  Items 5 and 7.

                                   - 24 -

<PAGE>



                                  SIGNATURES


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





                                                  NL INDUSTRIES, INC.
                                                      (Registrant)



Date:  August 6, 1998                     By   /s/ Susan E. Alderton
---------------------                          ---------------------
                                               Susan E. Alderton
                                                Vice President and
                                                Chief Financial Officer



Date:  August 6, 1998                     By   /s/ Dennis G. Newkirk
---------------------                          ---------------------
                                               Dennis G. Newkirk
                                                Vice President and Controller
                                                (Principal Accounting Officer)

                                   - 25 -