SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q


X       QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR 15(d) OF THE  SECURITIES
        EXCHANGE ACT OF 1934 - For the quarterly period ended March 31, 2003

                                       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) has  been  subject  to such  filing
requirements for the past 90 days.
Yes    X       No
    -------       -------

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

Number of shares of common stock outstanding on May 9, 2003:  47,694,784

<PAGE>

                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                                      INDEX




                                                                           Page
                                                                           ----
PART I.        FINANCIAL INFORMATION

  Item 1.      Financial Statements.

               Consolidated Balance Sheets - March 31, 2003
                 and December 31, 2002                                      3-4

               Consolidated Statements of Income - Three months
                 ended March 31, 2003 and 2002                               5

               Consolidated Statements of Comprehensive Income
                 - Three months ended March 31, 2003 and 2002                6

               Consolidated Statement of Shareholders' Equity
                 - Three months ended March 31, 2003                         7

               Consolidated Statements of Cash Flows - Three
                 months ended March 31, 2003 and 2002                       8-9

               Notes to Consolidated Financial Statements                  10-17

  Item 2.      Management's Discussion and Analysis of Financial
                 Condition and Results of Operations                       18-26

  Item 3.      Quantitative and Qualitative Disclosures About
                 Market Risk                                                26

  Item 4.      Controls and Procedures                                     26-27


PART II.       OTHER INFORMATION

  Item 1.      Legal Proceedings                                           28-29

  Item 6.      Exhibits and Reports on Form 8-K                             29

                                      - 2 -
<PAGE>


                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                 (In thousands)

<TABLE>
<CAPTION>

                                                          March 31,   December 31,
              ASSETS                                        2003          2002
                                                         ----------   ------------
<S>                                                      <C>          <C>
Current assets:
    Cash and cash equivalents ........................   $   46,713   $   58,091
    Restricted cash equivalents ......................       47,107       52,089
    Restricted marketable debt securities ............        9,715        9,670
    Accounts and notes receivable ....................      168,613      136,858
    Receivable from affiliates .......................          156          207
    Refundable income taxes ..........................          781        1,782
    Inventories ......................................      195,936      209,882
    Prepaid expenses .................................        5,844        7,207
    Deferred income taxes ............................       10,068       10,511
                                                         ----------   ----------

        Total current assets .........................      484,933      486,297
                                                         ----------   ----------

Other assets:
    Marketable equity securities .....................       51,929       40,901
    Receivable from affiliate ........................       18,000       18,000
    Investment in TiO2 manufacturing joint venture ...      131,259      130,009
    Prepaid pension cost .............................       17,424       17,572
    Restricted marketable debt securities ............        9,600        9,232
    Other ............................................       26,571       30,671
                                                         ----------   ----------

        Total other assets ...........................      254,783      246,385
                                                         ----------   ----------

Property and equipment:
    Land .............................................       30,175       29,072
    Buildings ........................................      155,673      150,406
    Machinery and equipment ..........................      655,720      640,297
    Mining properties ................................       81,813       84,778
    Construction in progress .........................        9,307        8,702
                                                         ----------   ----------
                                                            932,688      913,255
    Less accumulated depreciation and depletion ......      547,746      534,436
                                                         ----------   ----------

        Net property and equipment ...................      384,942      378,819
                                                         ----------   ----------

                                                         $1,124,658   $1,111,501
                                                         ==========   ==========
</TABLE>

                                      -3-
<PAGE>
                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS (CONTINUED)

                                 (In thousands)

<TABLE>
<CAPTION>

    LIABILITIES AND SHAREHOLDERS' EQUITY             March 31,      December 31,
                                                       2003             2002
                                                    -----------     ------------
<S>                                                 <C>             <C>
Current liabilities:
    Current maturities of long-term debt .......    $     1,238     $     1,298
    Accounts payable and accrued liabilities ...        137,049         167,574
    Payable to affiliates ......................         10,131           8,027
    Accrued environmental costs ................         50,439          51,307
    Income taxes ...............................          5,773           6,624
    Deferred income taxes ......................          1,594           3,219
                                                    -----------     -----------

        Total current liabilities ..............        206,224         238,049
                                                    -----------     -----------

Noncurrent liabilities:
    Long-term debt .............................        349,021         324,608
    Deferred income taxes ......................        149,416         143,518
    Accrued environmental costs ................         53,296          47,189
    Accrued pension cost .......................         43,094          43,757
    Accrued postretirement benefits cost .......         25,571          26,477
    Other ......................................         14,829          14,060
                                                    -----------     -----------

        Total noncurrent liabilities ...........        635,227         599,609
                                                    -----------     -----------


Minority interest ..............................          8,551           8,516
                                                    -----------     -----------

Shareholders' equity:
    Common stock ...............................          8,355           8,355
    Additional paid-in capital .................        777,819         777,819
    Retained earnings ..........................        101,445         101,554
    Accumulated other comprehensive loss .......       (176,860)       (186,221)
    Treasury stock .............................       (436,103)       (436,180)
                                                    -----------     -----------

        Total shareholders' equity .............        274,656         265,327
                                                    -----------     -----------

                                                    $ 1,124,658     $ 1,111,501
                                                    ===========     ===========
</TABLE>

Commitments and contingencies (Note 14)


          See accompanying notes to consolidated financial statements.
                                      - 4 -
<PAGE>


                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

                   Three months ended March 31, 2003 and 2002

                      (In thousands, except per share data)

<TABLE>
<CAPTION>

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

<S>                                                          <C>        <C>
Revenues and other income:
    Net sales ............................................   $252,973   $202,357
    Other income, net ....................................      2,667      4,995
                                                             --------   --------

                                                              255,640    207,352
                                                             --------   --------

Costs and expenses:
    Cost of sales ........................................    188,417    156,253
    Selling, general and administrative ..................     44,694     34,845
    Interest .............................................      7,985      6,535
                                                             --------   --------

                                                              241,096    197,633
                                                             --------   --------

        Income before income taxes and minority interest .     14,544      9,719

Income tax expense .......................................      5,090      3,151
                                                             --------   --------

        Income before minority interest ..................      9,454      6,568

Minority interest ........................................         24        184
                                                             --------   --------

    Net income ...........................................   $  9,430   $  6,384
                                                             ========   ========

Basic and diluted net income per share ...................   $    .20   $    .13
                                                             ========   ========

Weighted average shares used in the calculation
  of net income per share:
      Basic ..............................................     47,693     48,870
      Dilutive impact of stock options ...................         51         68
                                                             --------   --------

      Diluted ............................................     47,744     48,938
                                                             ========   ========
</TABLE>

          See accompanying notes to consolidated financial statements.
                                      - 5 -

<PAGE>


                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                   Three months ended March 31, 2003 and 2002

                                 (In thousands)

<TABLE>
<CAPTION>

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

<S>                                                      <C>           <C>
Net income .........................................     $  9,430      $  6,384
                                                         --------      --------

Other comprehensive income (loss), net of tax:
    Marketable securities adjustment:
        Unrealized holding gain (loss) arising
          during the period ........................        7,093        (1,523)
        Less reclassification adjustment for
          realized gain included in net income .....       (1,474)         --
                                                         --------      --------

                                                            5,619        (1,523)

    Currency translation adjustment ................        3,742        (2,609)
                                                         --------      --------

        Total other comprehensive income (loss) ....        9,361        (4,132)
                                                         --------      --------

            Comprehensive income ...................     $ 18,791      $  2,252
                                                         ========      ========
</TABLE>

          See accompanying notes to consolidated financial statements.
                                      - 6 -

<PAGE>
                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

                        Three months ended March 31, 2003

                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                       Accumulated other
                                                                                  comprehensive income (loss)
                                                    Additional              --------------------------------------
                                           Common    paid-in     Retained    Currency       Pension     Marketable
                                           stock     capital     earnings   translation   liabilities   securities
                                         ---------  ----------   ---------  -----------   -----------   ----------

<S>                                      <C>         <C>         <C>          <C>          <C>          <C>
Balance at December 31, 2002 .........   $   8,355   $ 777,819   $ 101,554    $(170,670)   $ (21,447)   $   5,896

Net income ...........................        --          --         9,430         --           --           --
Other comprehensive income, net of tax        --          --          --          3,742         --          5,619
Dividends ............................        --          --        (9,539)        --           --           --
Treasury stock - reissued ............        --          --          --           --           --           --
                                         ---------   ---------   ---------    ---------    ---------    ---------

Balance at March 31, 2003 ............   $   8,355   $ 777,819   $ 101,445    $(166,928)   $ (21,447)   $  11,515
                                         =========   =========   =========    =========    =========    =========
<CAPTION>
                                          Treasury
                                           stock        Total
                                         ----------   ---------
<S>                                      <C>          <C>
Balance at December 31, 2002 .........   $(436,180)   $ 265,327

Net income ...........................        --          9,430
Other comprehensive income, net of tax        --          9,361
Dividends ............................        --         (9,539)
Treasury stock - reissued ............          77           77
                                         ---------    ---------

Balance at March 31, 2003 ............   $(436,103)   $ 274,656
                                         =========    =========
</TABLE>
          See accompanying notes to consolidated financial statements.
                                      - 7 -
<PAGE>
                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                   Three months ended March 31, 2003 and 2002

                                 (In thousands)

<TABLE>
<CAPTION>

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

<S>                                                            <C>         <C>
Cash flows from operating activities:
    Net income .............................................   $  9,430    $  6,384
    Depreciation, depletion and amortization ...............      9,691       7,782
    Deferred income taxes ..................................      1,630         687
    Distributions from (contributions to) TiO2
      manufacturing joint venture ..........................     (1,250)        900
    Other, net .............................................     (3,968)       (578)
                                                               --------    --------

                                                                 15,533      15,175

    Change in assets and liabilities:
        Accounts and notes receivable ......................    (31,545)    (25,282)
        Insurance receivable ...............................      2,247      10,909
        Inventories ........................................     18,702      43,049
        Prepaid expenses ...................................      1,960        (845)
        Accrued environmental costs ........................      8,678       3,384
        Accounts payable and accrued liabilities ...........    (33,174)    (36,161)
        Income taxes .......................................        339        (629)
        Other, net .........................................      3,569       3,196
                                                               --------    --------

            Net cash (used) provided by operating activities    (13,691)     12,796
                                                               --------    --------

Cash flows from investing activities:
    Capital expenditures ...................................     (6,503)     (5,461)
    Collection of loans to affiliates ......................       --           250
    Acquisition of business ................................       --        (9,149)
    Change in restricted cash equivalents and
      restricted marketable debt securities, net ...........      2,050         110
    Other, net .............................................         42          36
                                                               --------    --------

        Net cash used by investing activities ..............     (4,411)    (14,214)
                                                               --------    --------
</TABLE>

                                      - 8 -

<PAGE>
                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                   Three months ended March 31, 2003 and 2002

                                 (In thousands)

<TABLE>
<CAPTION>

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

<S>                                                         <C>          <C>
Cash flows from financing activities:
    Dividends paid ......................................   $  (9,539)   $  (9,764)
    Treasury stock:
        Purchased .......................................        --         (3,271)
        Reissued ........................................          77          140
    Indebtedness:
        Borrowings ......................................      16,106         --
        Principal payments ..............................        (342)     (25,263)
                                                            ---------    ---------

    Net cash provided (used) by financing activities ....       6,302      (38,158)
                                                            ---------    ---------

Cash and cash equivalents:
    Net change from:
        Operating, investing and financing activities ...     (11,800)     (39,576)
        Currency translation ............................         422         (273)
        Acquisition of business .........................        --            196
                                                            ---------    ---------
                                                              (11,378)     (39,653)

    Balance at beginning of period ......................      58,091      116,037
                                                            ---------    ---------

    Balance at end of period ............................   $  46,713    $  76,384
                                                            =========    =========

Supplemental disclosures - cash paid for:
    Interest ............................................   $     674    $   1,976
    Income taxes, net ...................................   $   3,121    $   3,095

    Acquisition of business:
        Cash and cash equivalents .......................   $    --      $     196
        Restricted cash .................................        --          2,685
        Goodwill and other intangible assets ............        --          9,007
        Other noncash assets ............................        --          1,259
        Liabilities .....................................        --         (3,998)
                                                            ---------    ---------

            Cash paid ...................................   $    --      $   9,149
                                                            =========    =========
</TABLE>

          See accompanying notes to consolidated financial statements
                                      - 9 -

<PAGE>

                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Organization and basis of presentation:

        NL  Industries,  Inc.  ("NL")  conducts  its titanium  dioxide  pigments
("TiO2")  operations through its wholly owned subsidiary,  Kronos, Inc. At March
31, 2003, Valhi, Inc.,  ("Valhi") and its subsidiaries held approximately 85% of
NL's  outstanding  common stock,  and Contran  Corporation  ("Contran")  and its
subsidiaries  held  approximately  90%  of  Valhi's  outstanding  common  stock.
Substantially  all of  Contran's  outstanding  voting  stock  is held by  trusts
established for the benefit of certain  children and  grandchildren of Harold C.
Simmons, of which Mr. Simmons is sole trustee.  Mr. Simmons, the Chairman of the
Board of each of  Contran,  Valhi and NL, may be deemed to control  each of such
companies. See Notes 6 and 7.

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

        Certain  information  and  footnote  disclosures  normally  included  in
financial  statements  prepared in accordance with generally accepted accounting
principles  in the  U.S.  ("GAAP")  have  been  condensed  or  omitted.  Certain
prior-year  amounts  have been  reclassified  to  conform  to the  current  year
presentation.  The accompanying consolidated financial statements should be read
in  conjunction  with the  consolidated  financial  statements  included  in the
Company's  Annual Report on Form 10-K for the year ended  December 31, 2002 (the
"2002 Annual Report").

        The  Company  has  elected  the  disclosure  alternative  prescribed  by
Statement of Financial  Accounting  Standards ("SFAS") No. 123,  "Accounting for
Stock-Based   Compensation,"  as  amended  by  SFAS  No.  148,  "Accounting  for
Stock-Based  Compensation - Transition and  Disclosure,"  and to account for its
stock-based  employee  compensation  related to stock options in accordance with
Accounting  Principles  Board  Opinion  ("APBO") No. 25,  "Accounting  for Stock
Issued to  Employees,"  and its various  interpretations.  Under APBO No. 25, no
compensation  cost is generally  recognized for fixed stock options in which the
exercise  price is not less than the market price on the grant date.  During the
fourth quarter of 2002,  following the cash  settlement of certain stock options
held by employees  of the  Company,  the Company  commenced  accounting  for its
remaining stock options using the variable accounting method, which requires the
intrinsic  value of all  unexercised  stock  options  (including  those  with an
exercise  price at least  equal to the market  price on the date of grant) to be
accrued as an expense,  with subsequent  increases  (decreases) in the Company's
market  price  resulting  in  additional   compensation  expense  (income).  Net
compensation  income recognized by the Company in accordance with APBO No. 25 in
the first quarter of 2003 was $.5 million and net  compensation  cost recognized
by the Company in the first quarter of 2002 was nil.

                                      -10-
<PAGE>

        The following  table  illustrates  the effect on net income and earnings
per share if the Company had applied the fair value  recognition  provisions  of
SFAS No. 123 to stock-based employee compensation.
<TABLE>
<CAPTION>
                                                      Three months ended March 31,
                                                      ----------------------------
                                                           2003         2002
                                                        ---------     ---------
                                                       (In thousands, except per
                                                            share amounts)

<S>                                                     <C>           <C>
Net income - as reported ...........................    $   9,430     $   6,384
Deduct:  Stock-based compensation income, net of
  tax, included in reported net income .............         (339)         --
Deduct:  Stock-based compensation cost, net of
  tax, determined under fair value based
  method for all awards ............................         (120)         (271)
                                                        ---------     ---------

Net income - pro forma .............................    $   8,971     $   6,113
                                                        =========     =========
Net income per basic common share:
    As reported ....................................    $     .20     $     .13
    Pro forma ......................................    $     .19     $     .13
Net income per diluted common share:
    As reported ....................................    $     .20     $     .13
    Pro forma ......................................    $     .19     $     .12
</TABLE>

        The Company  adopted  SFAS No.  143,  "Accounting  for Asset  Retirement
Obligations," effective January 1, 2003. Under SFAS No. 143, the fair value of a
liability for an asset retirement obligation covered under the scope of SFAS No.
143 is  recognized  in the period in which the  liability is  incurred,  with an
offsetting increase in the carrying amount of the related long-lived asset. Over
time, the liability is accreted to its future value, and the capitalized cost is
depreciated  over the useful life of the related asset.  Upon  settlement of the
liability,  an entity would either settle the obligation for its recorded amount
or incur a gain or loss upon settlement.

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

                                      -11-
<PAGE>
<TABLE>
<CAPTION>

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

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

        Net impact ......................................................  $ --
                                                                           ====
</TABLE>

        At March 31, 2003, the asset retirement obligation was approximately $.6
million and was included in other noncurrent  liabilities.  Accretion expense on
the asset retirement  obligation  during the first quarter of 2003,  included in
cost of sales,  was not material.  If the Company had adopted SFAS No. 143 as of
January 1, 2002, the asset retirement  obligation would have been  approximately
$.5 million at each of January 1, 2002 and March 31, 2002, and the effect on the
Company's  reported  net income for the three  months ended March 31, 2002 would
not have been material.

Note 2 - Earnings per share:

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

Note 3 - Business segment information:

        The  Company's  operations  are  conducted  by Kronos  in one  operating
business segment - the production and sale of TiO2.
<TABLE>
<CAPTION>

                                                              Three months ended
                                                                   March 31,
                                                            ----------------------
                                                               2003         2002
                                                            ---------    ---------
                                                                (In thousands)

<S>                                                         <C>          <C>
Net sales ...............................................   $ 252,973    $ 202,357
Other income (expense), excluding corporate .............        (893)         783
                                                            ---------    ---------
                                                              252,080      203,140

Cost of sales ...........................................     188,417      156,253
Selling, general and administrative, excluding  corporate      29,379       24,728
                                                            ---------    ---------

        Operating income ................................      34,284       22,159

General corporate income (expense):
    Securities earnings, net ............................       3,182        1,280
    Litigation settlement gains, net and other  income ..         378        2,932
    Corporate expenses ..................................     (15,315)     (10,117)
    Interest expense ....................................      (7,985)      (6,535)
                                                            ---------    ---------

        Income before income taxes and minority interest    $  14,544    $   9,719
                                                            =========    =========
</TABLE>

                                  -12-
<PAGE>

Note 4 - Accounts and notes receivable:
<TABLE>
<CAPTION>
                                                      March 31,     December 31,
                                                         2003           2002
                                                      ---------     ------------
                                                            (In thousands)

<S>                                                   <C>             <C>
Trade receivables ..............................      $ 161,431       $ 124,044
Insurance claims receivable ....................            311           2,558
Recoverable VAT and other receivables ..........          9,561          12,861
Allowance for doubtful accounts ................         (2,690)         (2,605)
                                                      ---------       ---------

                                                      $ 168,613       $ 136,858
                                                      =========       =========
</TABLE>

Note 5 - Inventories:
<TABLE>
<CAPTION>
                                                     March 31,      December 31,
                                                       2003            2002
                                                     --------       ------------
                                                            (In thousands)

<S>                                                  <C>                <C>
Raw materials ............................           $ 34,046           $ 54,077
Work in process ..........................             18,136             15,936
Finished products ........................            112,786            109,203
Supplies .................................             30,968             30,666
                                                     --------           --------

                                                     $195,936           $209,882
                                                     ========           ========
</TABLE>

Note 6 - Marketable equity securities:
<TABLE>
<CAPTION>
                                                             March 31,   December 31,
                                                               2003         2002
                                                             ---------   ------------
                                                                 (In thousands)

<S>                                                          <C>         <C>
Available-for-sale marketable equity securities:
    Valhi ..............................................     $51,801     $ 9,845
    Tremont Group ......................................        --        30,634
    Tremont ............................................        --           243
    Other ..............................................         128         179
                                                             -------     -------

        Aggregate fair value ...........................     $51,929     $40,901
                                                             =======     =======
</TABLE>

        In  February  2003  Valhi  completed  a series  of  merger  transactions
pursuant to which, among other things, Tremont Group, Inc. ("Tremont Group") and
Tremont Corporation  ("Tremont") both became wholly owned subsidiaries of Valhi.
Under these  merger  transactions,  (i) Valhi  issued 3.5 million  shares of its
common stock to the Company in return for the Company's  20% ownership  interest
in Tremont Group and (ii) Valhi issued 3.4 shares of its common stock (plus cash
in lieu of fractional shares) to all Tremont  stockholders (other than Valhi and
Tremont  Group) in exchange for each share of Tremont  common stock held by such
stockholders.  The Company received  approximately 27,770 shares of Valhi common
stock in the  second  transaction.  The number of shares of Valhi  common  stock
issued to the Company in exchange for the Company's  20%  ownership  interest in
Tremont Group was equal to the Company's 20% pro-rata  interest in the shares of
Tremont common stock held by Tremont  Group,  adjusted for the same 3.4 exchange
ratio.  The Valhi common stock owned by the Company is restricted under SEC Rule
144. The Company reported a pre-tax securities transaction gain of approximately

                                      -13-
<PAGE>

$2.3  million  in the first  quarter of 2003 which  represented  the  difference
between the market  value of the shares of Valhi  received and the cost basis of
the Tremont Group and Tremont shares  exchanged.  Following these  transactions,
the Company owns approximately 4.7 million shares of Valhi's  outstanding common
stock  (approximately  4% of  Valhi's  outstanding  shares).  The  Company  will
continue to account for its shares of Valhi common  stock as  available-for-sale
marketable  equity  securities  carried  at fair value  (based on quoted  market
prices).  The shares of Valhi common stock cannot be voted by the Company  under
Delaware  Corporation Law, but the Company does receive  dividends from Valhi on
these shares, when declared. For financial reporting purposes, Valhi reports its
proportional interest in these shares as treasury stock.

Note 7 - Receivable from affiliates:

        In May 2001 a wholly owned  subsidiary of the  Company's  majority-owned
environmental management subsidiary,  NL Environmental Management Services, Inc.
("EMS")  loaned $20.0  million to the Harold C. Simmons  Family Trust No. 2 (the
"Family  Trust"),  one of the trusts  described in Note 1, under a $25.0 million
revolving credit agreement.  The loan was approved by special  committees of the
Company's and EMS's Boards of Directors. The loan bears interest at prime (4.25%
at March 31, 2003),  is due on demand with 60 days notice and is  collateralized
by 13,749 shares, or approximately 35%, of Contran's  outstanding Class A voting
common  stock  and 5,000  shares,  or 100%,  of  Contran's  Series E  Cumulative
preferred  stock,  both of which are owned by the Family Trust. The value of the
collateral  is  dependent,  in part,  on the value of the  Company as  Contran's
interest in the Company,  through its beneficial  ownership of Valhi,  is one of
Contran's  more  substantial  assets.  At March 31, 2003, the  outstanding  loan
balance  was  $18.0  million  and $7.0  million  was  available  for  additional
borrowing by the Family  Trust.  The loan was  classified as noncurrent at March
31, 2003, as the Company does not expect to demand repayment within one year.

Note 8 - Other noncurrent assets:
<TABLE>
<CAPTION>
                                                          March 31,     December 31,
                                                            2003           2002
                                                          ---------     ------------
                                                               (In thousands)

<S>                                                       <C>            <C>
Deferred financing costs, net ....................        $10,338        $10,550
Goodwill .........................................          6,406          6,406
Unrecognized net pension obligations .............          5,561          5,561
Intangible asset, net ............................          2,168          2,230
Restricted cash equivalents ......................           --            1,344
Other ............................................          2,098          4,580
                                                          -------        -------

                                                          $26,571        $30,671
                                                          =======        =======
</TABLE>
                                      -14-
<PAGE>

Note 9 - Accounts payable and accrued liabilities:
<TABLE>
<CAPTION>
                                                     March 31,        December 31,
                                                       2003               2002
                                                     --------         ------------
                                                           (In thousands)

<S>                                                  <C>                <C>
Accounts payable .........................           $ 61,792           $ 97,140
                                                     --------           --------
Accrued liabilities:
    Employee benefits ....................             31,024             34,349
    Interest .............................              7,057                240
    Deferred income ......................               --                  333
    Other ................................             37,176             35,512
                                                     --------           --------

                                                       75,257             70,434
                                                     --------           --------

                                                     $137,049           $167,574
                                                     ========           ========
</TABLE>

Note 10 - Other noncurrent liabilities:
<TABLE>
<CAPTION>

                                                         March 31,       December 31,
                                                           2003             2002
                                                         --------        ------------
                                                              (In thousands)

<S>                                                      <C>             <C>
Insurance claims and expenses ..................         $ 7,876         $ 7,674
Employee benefits ..............................           4,131           4,025
Other ..........................................           2,822           2,361
                                                         -------         -------

                                                         $14,829         $14,060
                                                         =======         =======
</TABLE>

Note 11 - Long-term debt:
<TABLE>
<CAPTION>
                                                          March 31,    December 31,
                                                            2003          2002
                                                          ---------    ------------
                                                              (In thousands)

<C>                                                       <C>           <C>
8.875% Senior Secured Notes, (euro)285 million
  principal amount .................................      $305,691      $296,942
Revolving credit facility ..........................        43,098        27,077
Other ..............................................         1,470         1,887
                                                          --------      --------
                                                           350,259       325,906

Less current maturities ............................         1,238         1,298
                                                          --------      --------

                                                          $349,021      $324,608
                                                          ========      ========
</TABLE>

        In March 2003 the Company  borrowed  (euro)15.0  million  ($16.1 million
when borrowed) under the revolving  credit  facility.  In April 2003 the Company
repaid  NOK 80  million  (approximately  $11  million  when  repaid)  under  the
revolving credit facility.

                                      -15-
<PAGE>
Note 12 - Income taxes:

        The difference between the provision for income tax expense attributable
to income before income taxes and minority interest and the amount that would be
expected using the U.S.  federal  statutory  income tax rate of 35% is presented
below.
<TABLE>
<CAPTION>
                                                             Three months ended
                                                                   March 31,
                                                             ------------------
                                                               2003       2002
                                                             -------    -------
                                                                (In thousands)

<S>                                                          <C>        <C>
Expected tax expense .....................................   $ 5,090    $ 3,402
Non-U.S. tax rates .......................................      (382)      (346)
Incremental tax on income of companies not included
  in NL's consolidated U.S. federal income tax return ....       915        130
Valuation allowance ......................................      (727)       (67)
U.S. state income taxes ..................................        65        (17)
Other, net ...............................................       129         49
                                                             -------    -------

        Income tax expense ...............................   $ 5,090    $ 3,151
                                                             =======    =======
</TABLE>

Note 13 - Other income, net:
<TABLE>
<CAPTION>
                                                           Three months ended
                                                                March 31,
                                                         ----------------------
                                                           2003           2002
                                                         -------        -------
                                                             (In thousands)

<S>                                                      <C>            <C>
Securities earnings:
    Interest and dividends .......................       $   948        $ 1,280
    Securities gains, net (see Note 6) ...........         2,234           --
                                                         -------        -------
                                                           3,182          1,280

Currency transactions, net .......................        (1,098)           598
Noncompete agreement income ......................           333          1,000
Disposition of property and equipment ............           (61)           (46)
Trade interest income ............................           163            222
Litigation settlement gains, net .................          --            1,920
Other, net .......................................           148             21
                                                         -------        -------

                                                         $ 2,667        $ 4,995
                                                         =======        =======
</TABLE>

        The  Company  received a $20 million fee as part of the sale of Rheox in
January 1998 in payment for entering into a five-year covenant not to compete in
the rheological products business. The Company amortized the fee to income using
the straight-line  method over the five-year noncompete period beginning January
30, 1998. The agreement became fully amortized in January 2003.

        In  the  first  quarter  of  2002,  the  Company  recognized  litigation
settlement gains with former insurance  carrier groups of $1.9 million to settle
certain  insurance  coverage  claims related to  environmental  remediation.  No
further material  settlements  relating to litigation  concerning  environmental
remediation coverage are expected.

                                      -16-
<PAGE>

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)
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations,  (ii)  Part II,  Item 1 - "Legal  Proceedings,"  and  (iii) the 2002
Annual Report.

                                      -17-


<PAGE>


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


RESULTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                       Three months ended     %
                                                           March 31,        Change
                                                       ------------------   ------
                                                         2003      2002
                                                        ------    ------
                                                   (In millions, except percentages
                                                            and metric tons)

Net sales and operating income
<S>                                                     <C>       <C>       <C>
    Net sales ....................................      $253.0    $202.4    +25%
    Operating income .............................      $ 34.3    $ 22.2    +55%
    Operating income margin percentage ...........         14%       11%

TiO2 operating statistics
    Percent change in average selling price (in
      billing currencies) ........................                           +6%
    Sales volume (metric tons in thousands) ......         118       112     +5%
    Production volume (metric tons in thousands) .         117       106    +11%
</TABLE>

        Kronos'  operating  income in the first quarter of 2003 increased  $12.1
million or 55% from the first quarter of 2002  primarily  due to higher  average
selling  prices and higher sales and  production  volumes,  partially  offset by
higher  operating  costs,  particularly  energy costs.  Compared with the fourth
quarter of 2002,  operating  income in the first quarter of 2003 increased $14.2
million,  or 71%, primarily due to higher sales and production  volumes,  higher
average selling prices and lower operating costs.

        Kronos' average selling price in billing  currencies (which excludes the
effects of foreign currency translation) during the first quarter of 2003 was 6%
higher than the first quarter of 2002 and was 1% higher than the fourth  quarter
of 2002.  Compared with the fourth  quarter of 2002,  selling  prices in billing
currencies  increased in all major markets. The average selling price in billing
currencies  in March 2003 was  comparable  to the average  selling price for the
first quarter of 2003.  The Company  expects  higher  average  selling prices in
billing  currencies for full-year  2003 compared to full-year  2002. The Company
discloses  percentage  changes in its  average  TiO2  selling  prices in billing
currencies (which excludes the effects of foreign currency translation), so that
such changes can be analyzed  without the impact of changes in foreign  currency
exchange rates, thereby facilitating  period-to-period  comparisons.  Generally,
when the U.S. dollar either strengthens or weakens against other currencies, the
percentage change in average selling prices in billing currencies will be higher
or lower,  respectively,  than such  percentage  changes  would be using  actual
exchange rates prevailing  during the respective  periods.  When translated from
billing  currencies to U.S.  dollars using currency  exchange  rates  prevailing
during the respective periods,  Kronos' first-quarter 2003 average selling price
in U.S.  dollars was 18% higher than in the first  quarter of 2002 and 6% higher
than the fourth quarter of 2002.

        First  quarter  2003 sales  volume of 118,000  metric  tons was a record
first  quarter for Kronos and  increased  5% from the first  quarter of 2002 and
increased 16% from the fourth quarter of 2002. Compared to the fourth quarter of
2002,  sales volume  increased in all major markets with each region up at least
10%.  Kronos  anticipates  its sales  volume for full year 2003 will be slightly
higher than full year 2002.  Finished goods  inventory  levels at the end of the
first quarter  decreased 2% from December 2002 levels and represented  under two
months of sales.

        First  quarter  2003  production  volume of 117,000  metric  tons was an
all-time  quarterly  record for Kronos and was 11% higher than the first quarter
of 2002 and increased 9% from the fourth  quarter of 2002 with  operating  rates
near full capacity in the first quarter of 2003 compared with 96% of capacity in
the first quarter of 2002.  Increased  production volume in the first quarter of

                                      -18-
<PAGE>



2003 compared with fourth quarter 2002 was primarily due to maintenance stops in
the fourth quarter.  Kronos anticipates its production volume for full year 2003
will be higher than full year 2002.

        The Company  currently  expects TiO2 industry demand in 2003 to increase
slightly over 2002 levels. Kronos' TiO2 production volume in 2003 is expected to
approximate  Kronos' 2003 TiO2 sales volume.  In December 2002 and January 2003,
Kronos  announced  additional  price increases in Europe and North America which
averaged  approximately  8% in Europe  and  approximately  7% in North  America.
Kronos is hopeful that it will realize  additional  price  increases  during the
remainder of 2003,  but the extent to which Kronos can realize  price  increases
will depend on market  conditions and global  economic  recovery.  Overall,  the
Company  expects  its TiO2  operating  income in 2003 will be higher  than 2002,
primarily  due to higher  average  TiO2  selling  prices  and  higher  sales and
production volumes. The Company's expectations as to the future prospects of the
Company  and the TiO2  industry  are based upon a number of  factors  beyond the
Company's  control,  including  worldwide  growth  of  gross  domestic  product,
competition in the  marketplace,  unexpected or  earlier-than-expected  capacity
additions and technological  advances.  If actual  developments  differ from the
Company's expectations, the Company's results of operations could be unfavorably
affected.

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

        A  significant   amount  of  Kronos'  sales  and  operating   costs  are
denominated in currencies other than the U.S. dollar.  Fluctuations in the value
of the U.S. dollar relative to other currencies,  primarily a weaker U.S. dollar
compared  to the euro in the  first  quarter  of 2003  versus  the  year-earlier
period,  increased  the dollar value of sales in the first  quarter of 2003 by a
net $26.6 million when compared to the  year-earlier  period.  The effect of the
weaker U.S.  dollar on Kronos'  operating costs that are not denominated in U.S.
dollars  increased  operating costs in the first quarter of 2003 compared to the
year-earlier  period.  In  addition,  sales  to  export  markets  are  typically
denominated in U.S. dollars and a weaker U.S. dollar decreases  margins on these
sales at the Company's non-U.S.  subsidiaries.  The unfavorable margin on export
sales tends to offset the favorable effect of translating local currency profits
to U.S.  dollars  when the  dollar is  weaker.  As a result,  the net  impact of
currency  exchange rate fluctuations was not significant in the first quarter of
2003 when compared to the first quarter of 2002.

                                      -19-
<PAGE>


  General corporate

        The following  table sets forth certain  information  regarding  general
corporate income (expense).
<TABLE>
<CAPTION>
                                           Three months ended
                                                March 31,             Difference
                                         -----------------------      ----------
                                           2003           2002
                                         --------       --------
                                              (In millions)


<S>                                      <C>            <C>            <C>
Securities earnings ............         $   3.1        $   1.3        $  1.8
Corporate income ...............              .4            2.9          (2.5)
Corporate expense ..............           (15.3)         (10.1)         (5.2)
Interest expense ...............            (8.0)          (6.5)         (1.5)
                                         -------        -------        ------


                                         $ (19.8)       $ (12.4)       $ (7.4)
                                         =======        =======        ======
</TABLE>

        Securities  earnings  for the  first  quarter  of 2003  included  a $2.3
million  noncash  securities  transaction  gain  related to the  exchange of the
Company's holdings of Tremont Corporation common stock for shares of Valhi, Inc.
common stock as a result of a series of merger  transactions  Valhi completed in
February 2003. See Note 6 to the Consolidated Financial Statements. In addition,
interest  income was lower in the first  quarter of 2003 as compared  with first
quarter 2002 due to lower levels of available  funds  invested and lower average
yields.  The Company expects interest income to be lower for full-year 2003 than
full-year  2002 due to lower average  yields and lower  average  levels of funds
available for investment.

        Corporate  income for the first  quarter of 2003 and 2002  included  $.3
million and $1.0 million,  respectively, of fee income related to a covenant not
to compete  agreement related to the sale of Rheox in 1998. The agreement became
fully  amortized  in January  2003.  See Note 13 to the  Consolidated  Financial
Statements.  Corporate income for the first quarter of 2002 also included a $1.9
million litigation settlement gain with former insurance carrier groups.

        Corporate  expense for the first quarter of 2003 was $15.3  million,  an
increase of $5.2 million  compared with the first quarter of 2002  primarily due
to higher  environmental  expenses  related to  remediation  of  formerly  owned
business units. Compared to the fourth quarter of 2002, corporate expense in the
first  quarter  of  2003  increased   $5.6  million   primarily  due  to  higher
environmental  expenses  partially  offset  by  lower  legal  and  stock  option
compensation  expenses.  Corporate  expenses  are  expected  to  be  higher  for
full-year  2003 as  compared  to  full-year  2002  due to  higher  environmental
expenses and higher legal expenses  associated  with the defense of lead pigment
litigation, including two trials scheduled for 2003.

        Interest  expense  in the first  quarter  of 2003 was $8.0  million,  an
increase of $1.5 million from the first quarter of 2002  primarily due to higher
levels of outstanding debt and associated currency effects,  partially offset by
lower interest rates. Assuming no significant change in interest rates, interest
expense for full-year  2003 is expected to be higher than  full-year 2002 due to
higher levels of  outstanding  indebtedness,  partially  offset by lower average
interest rates.

                                      -20-
<PAGE>

  Provision for income taxes

        The Company reduced its deferred  income tax valuation  allowance by $.7
million  in the first  quarter of 2003 and $.1  million in the first  quarter of
2002  primarily as a result of  utilization  of certain tax attributes for which
the benefit had not been previously recognized under the  "more-likely-than-not"
recognition criteria.

  Other

        Minority interest in the first quarter of 2002 primarily related to EMS.

  Recently adopted accounting principles

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

LIQUIDITY AND CAPITAL RESOURCES

        The  Company's  consolidated  cash flows from  operating,  investing and
financing  activities  for the three  months  ended  March 31, 2003 and 2002 are
presented below.
<TABLE>
<CAPTION>
                                                             Three months ended
                                                                  March 31,
                                                             ------------------
                                                               2003       2002
                                                              ------     ------
                                                                (In millions)

<S>                                                           <C>        <C>
Net cash provided (used) by:
    Operating activities:
        Before changes in assets and liabilities .........    $ 15.5     $ 15.2
        Changes in assets and liabilities ................     (29.2)      (2.4)
                                                              ------     ------
                                                               (13.7)      12.8
    Investing activities .................................      (4.4)     (14.2)
    Financing activities .................................       6.3      (38.2)
                                                              ------     ------

      Net cash used by operating, investing,
        and financing activities .........................    $(11.8)    $(39.6)
                                                              ======     ======
</TABLE>

  Operating activities

        The TiO2 industry is cyclical and changes in economic  conditions within
the industry  significantly  affect the earnings and operating cash flows of the
Company.  Cash flows from  operations is the primary source of liquidity for the
Company.  Changes in TiO2 pricing,  production volume and customer demand, among
other things, could significantly affect the liquidity of the Company. Cash flow
from operations, before changes in assets and liabilities, increased slightly in
the first three months of 2003 from the comparable  period in 2002 primarily due
to $12.1 million of higher  operating income partially offset by $5.2 million of
higher  corporate  expenses,  $2.5  million of lower  corporate  income and $2.2
million of lower net  distributions  from the  Company's  investment in its TiO2
manufacturing joint venture.  The net cash used to fund changes in the Company's
inventories,   receivables  and  payables  (excluding  the  effect  of  currency
translation) in the first three months of 2003 was significantly higher than the

                                      -21-
<PAGE>

first three months of 2002 with higher  inventory  balances (net of raw material
accruals),  insurance  proceeds collected in first quarter 2002 and decreases in
accounts  payable and  accrued  liabilities  in the first three  months of 2003.
Inventories and accounts payable were affected by certain non-cash  accruals for
certain titanium ore contracts of $4.9 million and $31.6 million at December 31,
2002 and 2001,  respectively.  These  non-cash  accruals  were  reversed  as raw
materials  were received  under the contracts in the amounts of $4.9 million and
$25.8 million in first quarters 2003 and 2002, respectively.

  Investing activities

        The Company's capital expenditures were $6.5 million and $5.5 million in
the first three months of 2003 and 2002,  respectively.  Capital expenditures in
first quarter 2002 included approximately $1.2 million related to reconstruction
of the  Company's  Leverkusen,  Germany  sulfate plant damaged in the March 2001
fire.

        In January  2002,  the  Company  acquired  all of the stock and  limited
liability company units of EWI RE, Inc. and EWI RE, Ltd.  (collectively  "EWI"),
respectively,  for an aggregate of $9.2 million in cash,  including  capitalized
acquisition costs of $.2 million.

  Financing activities

        In March 2003 the Company  borrowed  (euro)15.0  million  ($16.1 million
when borrowed)  under the European  Credit  Facility.  In April 2003 the Company
repaid NOK 80 million (approximately $11 million when repaid) under the European
Credit Facility.

        In the first  quarter  of 2003,  the  Company  paid a regular  quarterly
dividend to shareholders of $.20 per share, aggregating $9.5 million.

        In the first quarters of 2003 and 2002, the Company  repurchased nil and
$3.3 million of treasury stock  pursuant to its share  repurchase  program.  The
Company is authorized to repurchase  approximately 1.3 million additional shares
at May 9, 2003. The shares may be purchased  over an unspecified  period of time
and, depending on market conditions,  applicable legal  requirements,  available
cash and other  factors,  the share  repurchase  program may be suspended at any
time and could be terminated prior to completion.  The repurchased shares are to
be held as treasury shares available for general corporate purposes.

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

        At March 31, 2003, the Company had cash and cash equivalents aggregating
$47 million ($22 million held by non-U.S.  subsidiaries)  and an additional  $66
million of restricted cash equivalents and restricted marketable debt securities
held by the Company,  of which $10 million was classified as a noncurrent asset.
At March  31,  2003,  certain  of the  Company's  subsidiaries  had $83  million
available for borrowing with  approximately $43 million available under non-U.S.
credit facilities (including $41 million under the European Credit Facility) and
approximately $40 million under the U.S. Credit Facility. At March 31, 2003, the
Company had complied with all financial covenants governing its debt agreements.

                                      -22-
<PAGE>


  Income tax contingencies

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

        The  Company's and EMS' 1998 U.S.  federal  income tax returns are being
examined by the U.S.  Internal  Revenue  Service ("IRS") and the Company and EMS
have each granted extensions of the statute of limitations for assessment of tax
with respect to their 1998 and 1999 income tax returns until September 30, 2004.
Based upon the course of the examination,  the Company  anticipated that the IRS
would propose a substantial  tax deficiency,  including  penalties and interest,
related  to a  restructuring  transaction.  In an  effort  to  avoid  protracted
litigation and minimize the hazards of such  litigation,  the Company applied to
take part in an IRS settlement  initiative applicable to transactions similar to
the  restructuring   transaction,   and  in  April  2003  the  Company  received
notification  from  the IRS  that  it had  been  accepted  into  the  settlement
initiative.  Under the  initiative,  no  penalties  will be  assessed  and final
settlement with the IRS is to be reached through  negotiation and, if necessary,
through  a  specified  arbitration  procedure.   The  Company  anticipates  that
settlement  of the matter will likely  occur in 2004,  resulting  in payments of
federal and state tax and  interest  ranging  from $33  million to $45  million.
Additional  payments in later  years may be required as part of the  settlement.
The Company has provided adequate accruals to cover the currently expected range
of settlement outcomes.


        The Company has received  preliminary tax assessments for the years 1991
to 1997 from the Belgian tax authorities  proposing tax deficiencies,  including
related interest,  of approximately  (euro)10.4  million ($11.2 million at March
31, 2003).  The Company has filed protests to the assessments for the years 1991
to 1997.  The Company is in  discussions  with the Belgian tax  authorities  and
believes that a significant  portion of the  assessments  is without  merit.  In
April 2003 the Company received a notification  from the Belgian tax authorities
of their  intent to assess a tax  deficiency  related to 1999.  The  anticipated
assessment,  including  interest,  is expected to approximate  (euro)12  million
($12.9 million at March 31, 2003). The Company believes the proposed  assessment
related to 1999 is without  merit and in April 2003 filed a written  response in
opposition to the notification of intent to assess.

        In 2002,  the Company  received a  notification  from the  Norwegian tax
authorities of their intent to assess tax deficiencies of approximately NOK 12.2
million  ($1.7  million at March 31, 2003)  relating to 1998 through  2000.  The
Company has objected to this proposed  assessment  in a written  response to the
Norwegian tax authorities.

        In the first  quarter of 2003,  the Company  was  notified by the German
Federal  Fiscal Court (the  "Court")  that the Court had ruled in the  Company's
favor  concerning a claim for refund suit in which the Company sought refunds of
prior taxes paid during the periods 1990 through  1997.  The Company  expects to
file amended German tax returns claiming such tax refunds for all years affected
by the  Court's  decision,  which is expected to result in a net refund of taxes
and interest of approximately $30 million. As of March 31, 2003, the Company has
not  reflected  this tax refund in its  consolidated  financial  statements  and
expects to reflect  the refund in its  consolidated  financial  statements  once
certain procedural requirements are satisfied, including a review of the amended
German tax returns by the German tax authorities.

        No  assurance  can be  given  that the  Company's  tax  matters  will be
favorably resolved due to the inherent  uncertainties  involved in court and tax
proceedings.  The Company  believes that it has provided  adequate  accruals for

                                      -23-
<PAGE>

additional taxes and related  interest expense which may ultimately  result from
all such  examinations  and  believes  that  the  ultimate  disposition  of such
examinations  should  not  have a  material  adverse  effect  on  the  Company's
consolidated financial position, results of operations or liquidity.

        At March 31, 2003 the Company had the equivalent of  approximately  $451
million of income tax loss  carryforwards  in Germany with no  expiration  date.
However,  the Company has provided a deferred tax  valuation  allowance  against
substantially  all of these  income tax loss  carryforwards  because the Company
currently  believes  they do not  meet  the  "more-likely-than-not"  recognition
criteria. In 2002, the German federal government proposed certain changes to its
income tax law, including certain changes that would have imposed limitations on
the annual  utilization  of income tax loss  carryforwards.  Such  proposal,  if
enacted,  would have significantly affected the Company's 2003 and future income
tax expense and cash tax payments.  In April 2003 the German federal  government
passed a new tax law which  does not  contain  the  provision  that  would  have
restricted  the  utilization  of  tax  loss  carryforwards.   Furthermore,   the
provisions  contained in the new law are not expected to  materially  impact the
Company's income tax expense or cash tax payments.

        At March 31, 2003, the Company had net deferred tax  liabilities of $141
million. The Company operates in numerous tax jurisdictions, in certain of which
it has temporary  differences that net to deferred tax assets (before  valuation
allowance).  The Company has provided a deferred tax valuation allowance of $188
million at March 31, 2003, principally related to Germany,  partially offsetting
deferred  tax  assets  which the  Company  believes  do not  currently  meet the
"more-likely-than-not" recognition criteria.

  Environmental matters and litigation

        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,   including  sites  for  which  EMS  has
contractually  assumed the  Company's  obligation.  The Company  believes it has
adequate  accruals  ($104  million at March 31, 2003) 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, the
allocations of such costs among PRPs, and the financial viability of other 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 for which
it is possible to estimate costs is  approximately  $145 million.  The Company's
estimates of such  liabilities  have not been  discounted to present  value.  No
assurance can be given that actual costs will not exceed either 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. The imposition of more stringent
standards  or  requirements  under   environmental  laws  or  regulations,   new
developments or changes with respect to site cleanup costs, or the allocation of
such costs  among  PRPs,  or a  determination  that the  Company is  potentially
responsible for the release of hazardous substances at other sites, could result
in  expenditures in excess of amounts  currently  estimated by the Company to be
required  for  such  matters.  Furthermore,  there  can  be  no  assurance  that
additional environmental matters will not arise in the future.

        At March 31, 2003,  the Company had  approximately  $57 million in cash,
cash  equivalents  and restricted  marketable  debt  securities  held by certain
special purpose trusts,  the assets of which can only be used to pay for certain

                                      -24-
<PAGE>

of the  Company's  future  environmental  remediation  and  other  environmental
expenditures.

  Lead pigment litigation

        The Company is also a defendant in a number of legal proceedings seeking
damages for personal  injury and property damage arising out of 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 reasonably be
estimated. In addition, various legislation and administrative regulations have,
from time to time,  been  enacted or  proposed  that seek to (a) 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 (b)  effectively  overturn the precedent set by 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,  and bills which
would revive actions barred by the statute of limitations. 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. The Company
expects that  additional  lead pigment and  lead-based  litigation  may be filed
against the Company in the future asserting  similar or different legal theories
and seeking  similar or  different  types of damages  and  relief.  See Item 1 -
"Legal Proceedings."

  Other

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

  Special note regarding forward-looking statements

        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  represent
management's  beliefs and assumptions based on currently available  information.

                                      -25-
<PAGE>

Forward-looking  statements  can be  identified  by the  use of  words  such  as
"believes,"   "intends,"  "may,"  "will,"  "should,"   "could,"   "anticipates,"
"expects," or comparable  terminology  or by  discussions of strategy or trends.
Although  the  Company  believes  that  the   expectations   reflected  in  such
forward-looking  statements are  reasonable,  it cannot give any assurances that
these  expectations  will prove to be correct.  Such  statements by their nature
involve risks and uncertainties,  including, but not limited to, the cyclicality
of the titanium  dioxide  industry,  global  economic and political  conditions,
global  productive  capacity,  customer  inventory  levels,  changes  in product
pricing, changes in product costing, changes in foreign currency exchange rates,
competitive technology positions,  operating interruptions  (including,  but not
limited to, labor disputes,  leaks,  fires,  explosions,  unscheduled  downtime,
transportation  interruptions,  war  and  terrorist  activities),  the  ultimate
resolution of pending or possible future lead pigment litigation and legislative
developments  related  to the  lead  paint  litigation,  the  outcome  of  other
litigation and tax controversies,  and other risks and uncertainties included in
this Quarterly Report and in the 2002 Annual Report,  and the  uncertainties set
forth  from  time to time in the  Company's  filings  with  the  Securities  and
Exchange  Commission.  Should  one or more of these  risks  materialize  (or the
consequences of such a development worsen), or should the underlying assumptions
prove incorrect, actual results could differ materially from those forecasted or
expected.  The Company  disclaims any intention or obligation to update publicly
or revise such statements whether as a result of new information,  future events
or otherwise.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        For a discussion  of the Company's  market  risks,  refer to the caption
"Quantitative and Qualitative  Disclosures About Market Risk" in the 2002 Annual
Report.  There have been no material  changes to the  information  provided that
would require additional information with respect to the quarter ended March 31,
2003.

ITEM 4.    CONTROLS AND PROCEDURES

        The Company  maintains a system of disclosure  controls and  procedures.
The term "disclosure  controls and procedures," as defined by regulations of the
Securities and Exchange Commission ("SEC"),  means controls and other procedures
that are  designed to ensure that  information  required to be  disclosed in the
reports  that the  Company  files or  submits  to the SEC under  the  Securities
Exchange Act of 1934, as amended (the "Act"), is recorded, processed, summarized
and  reported,  within the time periods  specified in the SEC's rules and forms.
Disclosure  controls and procedures include,  without  limitation,  controls and
procedures  designed to ensure that information  required to be disclosed by the
Company  in the  reports  that it files or  submits  to the SEC under the Act is
accumulated  and  communicated  to  the  Company's  management,   including  its
principal  executive officer and its principal financial officer, as appropriate
to allow timely decisions to be made regarding required  disclosure.  Each of J.
Landis Martin, the Company's Chief Executive  Officer,  and Robert D. Hardy, the
Company's  Chief  Financial  Officer,  have  evaluated the Company's  disclosure
controls and  procedures  as of a date within 90 days of the filing date of this
Form 10-Q. Based upon their evaluation,  these executive officers have concluded
that the Company's  disclosure  controls and  procedures are effective as of the
date of such evaluation.

                                      -26-
<PAGE>


        The  Company  also  maintains a system of  internal  controls.  The term
"internal  controls," as defined by the American  Institute of Certified  Public
Accountants'  Codification of Statement on Auditing  Standards,  AU Section 319,
means controls and other  procedures  designed to provide  reasonable  assurance
regarding the  achievement  of objectives  in the  reliability  of the Company's
financial   reporting,   the  effectiveness  and  efficiency  of  the  Company's
operations and the Company's  compliance with  applicable laws and  regulations.
There have been no significant  changes in the Company's internal controls or in
other factors that could  significantly  affect such controls  subsequent to the
date of their last evaluation,  including any corrective  actions with regard to
significant deficiencies and material weaknesses.

                                      -27-

<PAGE>


                           PART II. OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

           Reference  is made to the 2002  Annual  Report  for  descriptions  of
certain previously reported legal proceedings.

        State of Rhode Island v. Lead Industries  Association,  et al. (Superior
Court of Rhode Island,  No. 99-5226).  In March 2003 the court denied motions by
plaintiffs and defendants for judgment  notwithstanding the previously-described
mistrial  in this case in October  2002.  A hearing to  determine  the scope and
timing of a new trial is scheduled for May 2003.

        City of Milwaukee v. NL Industries, Inc. and Mautz Paint (Circuit Court,
Civil Division,  Milwaukee County,  Wisconsin,  Case No. 01CV0030066).  In April
2003 defendants filed a motion for summary judgment in this previously-described
case. The court has not yet ruled on the motion. The case is scheduled for trial
in October 2003.

        Smith, et al. v. Lead Industries Association,  et al. (Circuit Court for
Baltimore City, Maryland, Case No. 24-C-99-004490). In April, 2003, the court of
appeals   denied   defendants'   motion  to   dismiss   plaintiffs'   appeal  as
interlocutory,  allowing the appeal in this previously-described case to proceed
on behalf of the four plaintiff families.

        Quitman County School  District v. Lead Industries  Association,  et al.
(Circuit Court of Quitman County,  Mississippi,  Case No.  2001-0106).  In April
2003  the  court  denied   defendants'  motion  for  summary  judgment  in  this
previously-described case.

        Russell v. NL Industries, Inc., et al. (Circuit Court of LeFlore County,
Mississippi,  Civil  Action No.  2002-0235-CICI).  In April 2003 the Company was
served with the complaint in this  previously-described  case. The case has been
removed to federal court.

        Jones v. NL Industries,  Inc., et al.  (Circuit Court of LeFlore County,
Mississippi,  Civil  Action No.  2002-0241-CICI).  In April 2003 the Company was
served with the complaint in this  previously-described  case. The case has been
removed to federal court.

        Stewart v. NL Industries, Inc., et al. (Circuit Court of LeFlore County,
Mississippi,  Civil  Action  No.  2002-0266-CICI).   In  March,  2003  plaintiff
requested court approval to dismiss this previously-described case voluntarily.

        The Company expects that  additional  lead pigment and lead-based  paint
litigation may be filed against the Company in the future  asserting  similar or
different  legal theories and seeking  similar or different types of damages and
relief.

        Herd  v.  ASARCO,  et al.  (District  Court  in and for  Ottawa  County,
Oklahoma,  Case No. CJ-2001-443).  Plaintiffs have moved that the claims in this
previously-described  case,  involving  alleged  personal injury  resulting from
defendants' mining waste piles in and around Picher,  Oklahoma,  be consolidated
for trial with four other  similar  cases  (Reeves  v.  ASARCO et al.,  Case No.
CJ-02-8; Carr v. ASARCO et al., Case No. CJ-02-59;  Edens v. ASARCO et al., Case
No. CJ-02-245;  and Koger v. ASARCO et al., Case No.  CJ-02-284).  The Herd case



                                      -28-
<PAGE>

had previously been  consolidated for discovery with those four cases.  Trial in
the Herd case is  scheduled  for August 2003.  Plaintiffs  have moved to dismiss
their negligence claims. Defendants have moved for summary judgment. The Company
understands  that  plaintiffs'  counsel may file claims on behalf of  additional
plaintiffs.

        Pulliam,  et al. v. NL Industries,  Inc., et al, (Superior Court, Marion
County,  Indiana, No.  49F12-0104-CT-001301).  In April 2003 the court dismissed
this previously-described case with prejudice. The time for plaintiffs to appeal
has not yet expired.

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

              (a)     Exhibits

                      99.1  Certification of Chief Executive Officer pursuant to
                      18 U.S.C. Section 1350, as adopted pursuant to Section 906
                      of the Sarbanes-Oxley Act of 2002.

                      99.2  Certification of Chief Financial Officer pursuant to
                      18 U.S.C. Section 1350, as adopted pursuant to Section 906
                      of the Sarbanes-Oxley Act of 2002.

              (b)     Reports on Form 8-K

                      Reports on Form 8-K for the  quarter  ended March 31, 2003
                      through the date of this report:

                      April 30, 2003 - Reported Items 7 and 9.



                                      -29-

<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:  May 9, 2003                                 By /s/ Robert D. Hardy
------------------                                    --------------------------
                                                      Robert D. Hardy
                                                        Principal Financial and
                                                        Accounting Officer
                                      -30-
<PAGE>


                                 CERTIFICATIONS
                                 --------------

I, J. Landis Martin, the Chief Executive Officer of NL Industries, Inc., certify
that:

1)  I have reviewed this quarterly report on Form 10-Q of NL Industries, Inc.

2)  Based on my  knowledge,  this  quarterly  report does not contain any untrue
    statement of a material fact or omit to state a material  fact  necessary to
    make the  statements  made, in light of the  circumstances  under which such
    statements  were made, not misleading  with respect to the period covered by
    this quarterly report;

3)  Based  on my  knowledge,  the  financial  statements,  and  other  financial
    information  included  in  this  quarterly  report,  fairly  present  in all
    material  respects the financial  condition,  results of operations and cash
    flows of the  registrant  as of,  and for,  the  periods  presented  in this
    quarterly report;

4)  The  registrant's  other  certifying  officers  and  I are  responsible  for
    establishing and maintaining  disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

    a)  designed such disclosure controls and procedures to ensure that material
        information  relating  to the  registrant,  including  its  consolidated
        subsidiaries,  is made  known to us by  others  within  those  entities,
        particularly  during the period in which this quarterly  report is being
        prepared;

    b)  evaluated the effectiveness of the registrant's  disclosure controls and
        procedures  as of a date within 90 days prior to the filing date of this
        quarterly report (the "Evaluation Date"); and

    c)  presented  in  this   quarterly   report  our   conclusions   about  the
        effectiveness  of the disclosure  controls and  procedures  based on our
        evaluation as of the Evaluation Date;

5)  The registrant's  other certifying  officers and I have disclosed,  based on
    our most  recent  evaluation,  to the  registrant's  auditors  and the audit
    committee of  registrant's  board of directors  (or persons  performing  the
    equivalent function):

    a)  all  significant  deficiencies  in the design or  operation  of internal
        controls  which  could  adversely  affect  the  registrant's  ability to
        record, process, summarize and report financial data and have identified
        for the  registrant's  auditors  any  material  weaknesses  in  internal
        controls; and

    b)  any fraud,  whether or not material,  that involves  management or other
        employees  who  have a  significant  role in the  registrant's  internal
        controls; and

6)  The  registrant's  other  certifying  officers and I have  indicated in this
    quarterly report whether or not there were  significant  changes in internal
    controls  or in other  factors  that  could  significantly  affect  internal
    controls subsequent to the date of our most recent evaluation, including any
    corrective  actions  with regard to  significant  deficiencies  and material
    weaknesses.




Date:  May 9, 2003


/s/ J. Landis Martin
-----------------------
J. Landis Martin
Chief Executive Officer

                                      -31-
<PAGE>


                                 CERTIFICATIONS

I, Robert D. Hardy, the Chief Financial Officer of NL Industries,  Inc., certify
that:

1)  I have reviewed this quarterly report on Form 10-Q of NL Industries, Inc.

2)  Based on my  knowledge,  this  quarterly  report does not contain any untrue
    statement of a material fact or omit to state a material  fact  necessary to
    make the  statements  made, in light of the  circumstances  under which such
    statements  were made, not misleading  with respect to the period covered by
    this quarterly report;

3)  Based  on my  knowledge,  the  financial  statements,  and  other  financial
    information  included  in  this  quarterly  report,  fairly  present  in all
    material  respects the financial  condition,  results of operations and cash
    flows of the  registrant  as of,  and for,  the  periods  presented  in this
    quarterly report;

4)  The  registrant's  other  certifying  officers  and  I are  responsible  for
    establishing and maintaining  disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

    a)  designed such disclosure controls and procedures to ensure that material
        information  relating  to the  registrant,  including  its  consolidated
        subsidiaries,  is made  known to us by  others  within  those  entities,
        particularly  during the period in which this quarterly  report is being
        prepared;

    b)  evaluated the effectiveness of the registrant's  disclosure controls and
        procedures  as of a date within 90 days prior to the filing date of this
        quarterly report (the "Evaluation Date"); and

    c)  presented  in  this   quarterly   report  our   conclusions   about  the
        effectiveness  of the disclosure  controls and  procedures  based on our
        evaluation as of the Evaluation Date;

5)  The registrant's  other certifying  officers and I have disclosed,  based on
    our most  recent  evaluation,  to the  registrant's  auditors  and the audit
    committee of  registrant's  board of directors  (or persons  performing  the
    equivalent function):

    a)  all  significant  deficiencies  in the design or  operation  of internal
        controls  which  could  adversely  affect  the  registrant's  ability to
        record, process, summarize and report financial data and have identified
        for the  registrant's  auditors  any  material  weaknesses  in  internal
        controls; and

    b)  any fraud,  whether or not material,  that involves  management or other
        employees  who  have a  significant  role in the  registrant's  internal
        controls; and

6)  The  registrant's  other  certifying  officers and I have  indicated in this
    quarterly report whether or not there were  significant  changes in internal
    controls  or in other  factors  that  could  significantly  affect  internal
    controls subsequent to the date of our most recent evaluation, including any
    corrective  actions  with regard to  significant  deficiencies  and material
    weaknesses.




Date:  May 9, 2003


/s/ Robert D. Hardy
-----------------------
Robert D. Hardy
Chief Financial Officer

                                      -32-