SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q


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

                                       OR

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

                          Commission file number 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.)



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



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

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

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

Number of shares of common stock outstanding on July 25, 2003:  47,700,784

<PAGE>


                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                                      INDEX


                                                                        Page
                                                                        ----
PART I.     FINANCIAL INFORMATION

  Item 1.   Financial Statements.

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

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

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

            Consolidated Statement of Shareholders' Equity
              - Six months ended June 30, 2003                             7

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

            Notes to Consolidated Financial Statements                    10

  Item 2.   Management's Discussion and Analysis of Financial
              Condition and Results of Operations                         22

  Item 3.   Quantitative and Qualitative Disclosures About Market Risk    28

  Item 4.   Controls and Procedures                                       29


PART II.    OTHER INFORMATION

  Item 1.   Legal Proceedings                                             30

  Item 4.   Submission of Matters to a Vote of Security Holders           32

  Item 6.   Exhibits and Reports on Form 8-K                              32


                                       -2-
<PAGE>


                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                 (In thousands)

<TABLE>
<CAPTION>

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


<S>                                                      <C>          <C>
Current assets:
    Cash and cash equivalents ........................   $   54,360   $   58,091
    Restricted cash equivalents ......................       25,349       52,089
    Restricted marketable debt securities ............       10,676        9,670
    Accounts and notes receivable ....................      182,196      136,858
    Receivable from affiliates .......................          148          207
    Refundable income taxes ..........................       25,607        1,782
    Inventories ......................................      199,760      209,882
    Prepaid expenses .................................        4,518        7,207
    Deferred income taxes ............................       10,929       10,511
                                                         ----------   ----------

        Total current assets .........................      513,543      486,297
                                                         ----------   ----------

Other assets:
    Marketable equity securities .....................       45,431       40,901
    Receivable from affiliate ........................       16,000       18,000
    Investment in TiO2 manufacturing joint venture ...      129,209      130,009
    Prepaid pension cost .............................       17,209       17,572
    Restricted marketable debt securities ............        3,099        9,232
    Other ............................................       27,320       30,671
                                                         ----------   ----------

        Total other assets ...........................      238,268      246,385
                                                         ----------   ----------

Property and equipment:
    Land .............................................       31,908       29,072
    Buildings ........................................      165,655      150,406
    Machinery and equipment ..........................      694,995      640,297
    Mining properties ................................       82,596       84,778
    Construction in progress .........................       14,600        8,702
                                                         ----------   ----------
                                                            989,754      913,255
    Less accumulated depreciation and depletion ......      585,060      534,436
                                                         ----------   ----------

        Net property and equipment ...................      404,694      378,819
                                                         ----------   ----------

                                                         $1,156,505   $1,111,501
                                                         ==========   ==========
</TABLE>

                                      -3-
<PAGE>


                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS (CONTINUED)

                                 (In thousands)
<TABLE>
<CAPTION>


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

<S>                                                  <C>            <C>
Current liabilities:
    Current maturities of long-term debt .........   $       781    $     1,298
    Accounts payable and accrued liabilities .....       150,549        167,574
    Payable to affiliates ........................        10,817          8,027
    Accrued environmental costs ..................        21,198         51,307
    Income taxes .................................         6,170          6,624
    Deferred income taxes ........................         1,711          3,219
                                                     -----------    -----------

        Total current liabilities ................       191,226        238,049
                                                     -----------    -----------


Noncurrent liabilities:
    Long-term debt ...............................       360,444        324,608
    Deferred income taxes ........................       146,324        143,518
    Accrued environmental costs ..................        66,636         47,189
    Accrued pension cost .........................        45,835         43,757
    Accrued postretirement benefits cost .........        24,922         26,477
    Other ........................................        13,954         14,060
                                                     -----------    -----------

        Total noncurrent liabilities .............       658,115        599,609
                                                     -----------    -----------


Minority interest ................................         8,713          8,516
                                                     -----------    -----------


Shareholders' equity:
    Common stock .................................         8,355          8,355
    Additional paid-in capital ...................       777,819        777,819
    Retained earnings ............................       120,740        101,554
    Accumulated other comprehensive loss .........      (172,458)      (186,221)
    Treasury stock ...............................      (436,005)      (436,180)
                                                     -----------    -----------

        Total shareholders' equity ...............       298,451        265,327
                                                     -----------    -----------

                                                     $ 1,156,505    $ 1,111,501
                                                     ===========    ===========
</TABLE>

Commitments and contingencies (Notes 12 and 14)


          See accompanying notes to consolidated financial statements.
                                       -4-

<PAGE>


                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

                      (In thousands, except per share data)

<TABLE>
<CAPTION>

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

<S>                                   <C>         <C>          <C>         <C>
Revenues and other income:
    Net sales .....................   $ 266,631   $ 226,909    $ 519,604   $ 429,266
    Other income, net .............         340       7,906        3,007      12,901
                                      ---------   ---------    ---------   ---------

                                        266,971     234,815      522,611     442,167
                                      ---------   ---------    ---------   ---------

Costs and expenses:
    Cost of sales .................     197,649     176,247      386,066     332,500
    Selling, general and
      administrative ..............      54,177      32,389       98,871      67,234
    Interest ......................       8,367       8,078       16,352      14,613
                                      ---------   ---------    ---------   ---------

                                        260,193     216,714      501,289     414,347
                                      ---------   ---------    ---------   ---------

        Income before income taxes
          and minority interest ...       6,778      18,101       21,322      27,820

Income tax benefit (expense) ......      22,191      (3,867)      17,101      (7,018)
                                      ---------   ---------    ---------   ---------

        Income before minority
          interest ................      28,969      14,234       38,423      20,802

Minority interest .................         134         186          158         370
                                      ---------   ---------    ---------   ---------

        Net income ................   $  28,835   $  14,048    $  38,265   $  20,432
                                      =========   =========    =========   =========

Basic and diluted net income per
  share ...........................   $     .60   $     .29    $     .80   $     .42
                                      =========   =========    =========   =========

Weighted average shares used in the
  calculation of net income per share:
      Basic .......................      47,698      48,827       47,696      48,848
      Dilutive impact of stock
        options ...................          57         126           54          98
                                      ---------   ---------    ---------   ---------

      Diluted .....................      47,755      48,953       47,750      48,946
                                      =========   =========    =========   =========
</TABLE>

          See accompanying notes to consolidated financial statements.
                                      -5-
<PAGE>


                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                                 (In thousands)

<TABLE>
<CAPTION>

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



<S>                                      <C>         <C>        <C>         <C>
Net income ...........................   $ 28,835    $ 14,048   $ 38,265    $ 20,432
                                         --------    --------   --------    --------

Other comprehensive income (loss),
  net of tax:
    Marketable securities adjustment:
        Unrealized holding (loss) gain
          arising during the period ..     (4,424)      4,652      2,669       3,129
        Less reclassification
          adjustment for realized gain
          included in net income .....       --          --       (1,474)       --
                                         --------    --------   --------    --------

                                           (4,424)      4,652      1,195       3,129

    Currency translation adjustment ..      8,826      38,965     12,568      36,356
                                         --------    --------   --------    --------

        Total other comprehensive
          income .....................      4,402      43,617     13,763      39,485
                                         --------    --------   --------    --------

            Comprehensive income .....   $ 33,237    $ 57,665   $ 52,028    $ 59,917
                                         ========    ========   ========    ========

</TABLE>

          See accompanying notes to consolidated financial statements.
                                      -6-
<PAGE>


                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

                         Six months ended June 30, 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 ...........................         --           --         38,265          --            --           --
Other comprehensive income, net of tax         --           --           --          12,568          --          1,195
Dividends ............................         --           --        (19,079)         --            --           --
Treasury stock - reissued ............         --           --           --            --            --           --
                                          ---------    ---------    ---------     ---------     ---------    ---------

Balance at June 30, 2003 .............    $   8,355    $ 777,819    $ 120,740     $(158,102)    $ (21,447)   $   7,091
                                          =========    =========    =========     =========     =========    =========
<CAPTION>
                                           Treasury
                                            stock         Total
                                          ---------     ---------

<S>                                       <C>           <C>
Balance at December 31, 2002 .........    $(436,180)    $ 265,327

Net income ...........................         --          38,265
Other comprehensive income, net of tax         --          13,763
Dividends ............................         --         (19,079)
Treasury stock - reissued ............          175           175
                                          ---------     ---------

Balance at June 30, 2003 .............    $(436,005)    $ 298,451
                                          =========     =========
</TABLE>

          See accompanying notes to consolidated financial statements.
                                      -7-
<PAGE>

                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                     Six months ended June 30, 2003 and 2002

                                 (In thousands)

<TABLE>
<CAPTION>

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

<S>                                                        <C>         <C>
Cash flows from operating activities:
    Net income .........................................   $ 38,265    $ 20,432
    Depreciation, depletion and amortization ...........     19,681      15,820
    Deferred income taxes ..............................     (3,006)      2,400
    Distributions from TiO2 manufacturing joint
      venture, net .....................................        800       2,250
    Net (gains) losses from securities transactions ....     (2,452)         12
    Other, net .........................................     (3,522)     (3,572)
                                                           --------    --------

                                                             49,766      37,342

    Change in assets and liabilities:
        Accounts and notes receivable ..................    (37,409)    (29,665)
        Insurance receivable ...........................      2,122      11,053
        Inventories ....................................     25,301      68,227
        Prepaid expenses ...............................      3,036        (796)
        Accounts payable and accrued liabilities .......    (29,526)    (58,638)
        Income taxes ...................................    (24,008)     (2,878)
        Accrued environmental costs ....................     25,990       8,913
        Other, net .....................................      3,378       2,943
                                                           --------    --------

            Net cash provided by operating activities ..     18,650      36,501
                                                           --------    --------

Cash flows from investing activities:
    Capital expenditures ...............................    (13,850)    (12,076)
    Collection of loans to affiliates ..................      2,000         500
    Acquisition of business ............................       --        (9,149)
    Change in restricted cash equivalents and restricted
      marketable debt securities, net ..................        658         595
    Other, net .........................................      1,538         830
                                                           --------    --------

        Net cash used by investing activities ..........     (9,654)    (19,300)
                                                           --------    --------

</TABLE>

                                       -8-
<PAGE>

                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                     Six months ended June 30, 2003 and 2002

                                 (In thousands)

<TABLE>
<CAPTION>

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

<S>                                                      <C>          <C>
Cash flows from financing activities:
    Dividends paid ...................................   $ (19,079)   $ (19,530)
    Treasury stock:
        Purchased ....................................        --         (3,271)
        Reissued .....................................         175          262
    Indebtedness:
        Borrowings ...................................      16,106      319,275
        Principal payments ...........................     (11,615)    (247,688)
        Deferred financing costs .....................        --         (9,342)
    Other, net .......................................        --            (11)
                                                         ---------    ---------

    Net cash (used) provided by financing activities .     (14,413)      39,695
                                                         ---------    ---------

Cash and cash equivalents:
    Net change from:
        Operating, investing and financing activities       (5,417)      56,896
        Currency translation .........................       1,686        3,053
        Acquisition of business ......................        --            196
                                                         ---------    ---------
                                                            (3,731)      60,145

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

    Balance at end of period .........................   $  54,360    $ 176,182
                                                         =========    =========


Supplemental disclosures - cash paid for:
    Interest .........................................   $  16,347    $  18,599
    Income taxes, net ................................       7,627        7,496

    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 June
30, 2003, Valhi, Inc.,  ("Valhi") and its subsidiaries held approximately 85% of
NL's  outstanding  common stock,  and Contran  Corporation  ("Contran")  and its
subsidiaries  held  approximately  90%  of  Valhi's  outstanding  common  stock.
Substantially  all of  Contran's  outstanding  voting  stock  is held by  trusts
established for the benefit of certain  children and  grandchildren of Harold C.
Simmons, of which Mr. Simmons is sole trustee.  Mr. Simmons, the Chairman of the
Board and Chief Executive Officer of NL and the Chairman of the Board of each of
Contran and Valhi, 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 June 30, 2003 and the consolidated  statements of
income,  comprehensive  income,  shareholders'  equity  and cash  flows  for the
interim  periods  ended June 30, 2003 and 2002 have been prepared by the Company
without audit. In the opinion of management all adjustments,  consisting only of
normal  recurring  adjustments,  necessary  to present  fairly the  consolidated
financial  position,  results of operations  and cash flows have been made.  The
results of operations for the interim periods are not necessarily  indicative of
the operating results for a full year or of future operations.

        Certain  information  and  footnote  disclosures  normally  included  in
financial  statements  prepared in accordance with generally accepted accounting
principles  in the  U.S.  ("GAAP")  have  been  condensed  or  omitted.  Certain
prior-year  amounts  have been  reclassified  to  conform  to the  current  year
presentation.  The accompanying consolidated financial statements should be read
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 expense recognized by the Company in accordance with APBO No. 25 in
the  three  and six  months  ended  June  30,  2003  was $.5  million  and  nil,


                                      -10-
<PAGE>


respectively, and net compensation expense (income) recognized by the Company in
the three and six months ended June 30, 2002 was nil for both periods.

        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           Six months ended
                                                    June 30,                    June 30,
                                            ------------------------    ------------------------
                                             2003          2002            2003          2002
                                            ----------    ----------    ----------    ----------
                                                  (In thousands, except per share amounts)

<S>                                         <C>           <C>           <C>           <C>
Net income - as reported ................   $   28,835    $   14,048    $   38,265    $   20,432
Add:  Stock-based compensation cost, 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 ...........         (121)         (271)         (241)         (542)
                                            ----------    ----------    ----------    ----------

Net income - pro forma ..................   $   29,053    $   13,777    $   38,024    $   19,890
                                            ==========    ==========    ==========    ==========
Net income per basic common share:
    As reported .........................   $      .60    $      .29    $      .80    $      .42
    Pro forma ...........................   $      .61    $      .28    $      .80    $      .41
Net income per diluted common share:
    As reported .........................   $      .60    $      .29    $      .80    $      .42
    Pro forma ...........................   $      .61    $      .28    $      .80    $      .41
</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 June 30, 2003, the asset retirement  obligation was approximately $.7
million and was included in other noncurrent  liabilities.  Accretion expense on
the asset retirement obligation during the first six months of 2003, included in
cost of sales, was nil. If the Company had adopted SFAS No. 143 as of January 1,
2002, the asset retirement  obligation would have been approximately $.5 million
at  January  1, 2002 and $.6  million  at June 30,  2002,  and the effect on the
Company's  reported  net income for the six months ended June 30, 2002 would not
have been material.

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.


                                      -12-
<PAGE>


Note 3 - Business segment information:

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

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

<S>                                       <C>          <C>          <C>          <C>
Net sales .............................   $ 266,631    $ 226,909    $ 519,604    $ 429,266
Other expense, excluding corporate ....      (2,519)      (1,099)      (3,412)        (316)
                                          ---------    ---------    ---------    ---------
                                            264,112      225,810      516,192      428,950

Cost of sales .........................     197,649      176,247      386,066      332,500
Selling, general and administrative,
  excluding corporate .................      30,975       24,898       60,354       49,626
                                          ---------    ---------    ---------    ---------

        Operating income ..............      35,488       24,665       69,772       46,824

General corporate income (expense):
    Securities earnings, net ..........       1,056        1,268        4,238        2,548
    Other income and litigation
      settlement gains, net ...........       1,803        1,466        2,181        4,398
    Currency transaction gains ........        --          6,271         --          6,271
    Corporate expenses ................     (23,202)      (7,491)     (38,517)     (17,608)
    Interest expense ..................      (8,367)      (8,078)     (16,352)     (14,613)
                                          ---------    ---------    ---------    ---------

        Income before income taxes and
          minority interest ...........   $   6,778    $  18,101    $  21,322    $  27,820
                                          =========    =========    =========    =========
</TABLE>

Note 4 - Accounts and notes receivable:
<TABLE>
<CAPTION>

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

<S>                                                   <C>             <C>
Trade receivables ..............................      $ 174,914       $ 124,044
Insurance claims receivable ....................            436           2,558
Recoverable VAT and other receivables ..........          9,437          12,861
Allowance for doubtful accounts ................         (2,591)         (2,605)
                                                      ---------       ---------

                                                      $ 182,196       $ 136,858
                                                      =========       =========
</TABLE>

                                      -13-
<PAGE>

Note 5 - Inventories:
<TABLE>
<CAPTION>

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

<S>                                                  <C>                <C>
Raw materials ............................           $ 34,641           $ 54,077
Work in process ..........................             16,980             15,936
Finished products ........................            114,731            109,203
Supplies .................................             33,408             30,666
                                                     --------           --------

                                                     $199,760           $209,882
                                                     ========           ========

</TABLE>

Note 6 - Marketable equity securities:
<TABLE>
<CAPTION>

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

<S>                                                          <C>         <C>
Available-for-sale marketable equity securities:
    Valhi ..............................................     $45,302     $ 9,845
    Tremont Group ......................................        --        30,634
    Tremont ............................................        --           243
    Other ..............................................         129         179
                                                             -------     -------

        Aggregate fair value ...........................     $45,431     $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  subject  to  the
restrictions  on resale  pursuant  to certain  provisions  of SEC Rule 144.  The
Company reported a pre-tax  securities  transaction  gain of approximately  $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 owned  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 and paid. For financial  reporting  purposes,  Valhi
reports its proportional interest in these shares as treasury stock.

                                      -14-
<PAGE>

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 (4.0%
at June 30, 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 June 30, 2003,  the  outstanding  loan
balance  was  $16.0  million  and $9.0  million  was  available  for  additional
borrowing by the Family Trust. The loan was classified as noncurrent at June 30,
2003, as the Company does not expect to demand repayment within one year.

Note 8 - Other noncurrent assets:
<TABLE>
<CAPTION>

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

<S>                                                       <C>            <C>
Deferred financing costs, net ....................        $10,446        $10,550
Goodwill .........................................          6,406          6,406
Unrecognized net pension obligations .............          6,439          5,561
Intangible asset, net ............................          2,075          2,230
Restricted cash equivalents ......................           --            1,344
Other ............................................          1,954          4,580
                                                          -------        -------

                                                          $27,320        $30,671
                                                          =======        =======
</TABLE>

Note 9 - Accounts payable and accrued liabilities:
<TABLE>
<CAPTION>

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

<S>                                                      <C>            <C>
Accounts payable .................................       $ 76,365       $ 97,140
                                                         --------       --------
Accrued liabilities:
    Employee benefits ............................         32,513         34,349
    Interest .....................................            243            240
    Deferred income ..............................           --              333
    Other ........................................         41,428         35,512
                                                         --------       --------

                                                           74,184         70,434
                                                         --------       --------

                                                         $150,549       $167,574
                                                         ========       ========
</TABLE>
                                      -15-
<PAGE>

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

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

<S>                                                      <C>             <C>
Insurance claims and expenses ..................         $ 6,621         $ 7,674
Employee benefits ..............................           4,399           4,025
Other ..........................................           2,934           2,361
                                                         -------         -------

                                                         $13,954         $14,060
                                                         =======         =======
</TABLE>

Note 11 - Long-term debt:
<TABLE>
<CAPTION>
                                                           June 30,   December 31,
                                                             2003        2002
                                                           --------   ------------
                                                               (In thousands)

<S>                                                        <C>          <C>
8.875% Senior Secured Notes,(euro)285 million
  principal amount ...................................     $325,784     $296,942
Revolving credit facility ............................       34,293       27,077
Other ................................................        1,148        1,887
                                                           --------     --------
                                                            361,225      325,906

Less current maturities ..............................          781        1,298
                                                           --------     --------

                                                           $360,444     $324,608
                                                           ========     ========
</TABLE>

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

Note 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>

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

<S>                                                        <C>         <C>
Expected tax expense ...................................   $  7,463    $  9,737
Non-U.S. tax rates .....................................       (385)       (708)
Incremental tax on income of companies not included
  in NL's consolidated U.S. federal income tax return ..         71         202
Refund of prior-year German taxes ......................    (24,564)       --
Valuation allowance ....................................       (386)     (3,027)
U.S. state income taxes ................................        407          61
Other, net .............................................        293         753
                                                           --------    --------

        Income tax (benefit) expense ...................   $(17,101)   $  7,018
                                                           ========    ========
</TABLE>
                                      -16-
<PAGE>

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

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

        In the first quarter of 2003,  Kronos was notified by the German Federal
Fiscal Court (the "Court") that the Court had ruled in Kronos' favor  concerning
a claim for refund  suit in which  Kronos  sought  refunds  of prior  taxes paid
during the periods 1990 through 1997.  Kronos has filed certain  amended  German
tax returns and expects to file additional  amended German tax returns  claiming
such refunds for all years affected by the Court's  decision,  which is expected
to result in an  estimated  refund of taxes and  interest of  approximately  $40
million. Receipt of the German tax refunds is subject to satisfaction of various
procedural requirements, including a review and acceptance of the amended German
tax  returns  by  the  German  tax  authorities.  Certain  of  these  procedural
requirements  were  satisfied  in the second  quarter of 2003 with  respect to a
portion  of the  refund  claim,  and in July  2003 the  German  tax  authorities
refunded Kronos a portion of the total anticipated  refund. The portion received
in July was  (euro)21.5  million  ($24.6  million  using June 30, 2003  exchange
rates).  Kronos has reflected this tax refund in its second quarter 2003 results
of  operations.  The Company  expects to receive the remaining  refunds over the
next six to nine months,  a portion of which may result in an additional  income
tax benefit.

                                      -17-
<PAGE>

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

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

        At June 30, 2003,  the Company had net deferred tax  liabilities of $137
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 $197
million at June 30, 2003,  principally related to Germany,  partially offsetting
deferred  tax  assets  which the  Company  believes  do not  currently  meet the
"more-likely-than-not" recognition criteria.

Note 13 - Other income, net:
<TABLE>
<CAPTION>

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

<S>                                     <C>         <C>         <C>         <C>
Securities earnings:
    Interest and dividends ..........   $    838    $  1,280    $  1,786    $  2,560
    Securities gains (losses), net
      (see Note 6) ..................        218         (12)      2,452         (12)
                                        --------    --------    --------    --------
                                           1,056       1,268       4,238       2,548

Currency transactions, net ..........     (2,743)      4,222      (3,841)      4,820
Noncompete agreement income .........       --         1,000         333       2,000
Disposition of property and equipment      1,116         643       1,055         597
Trade interest income ...............        198         333         361         555
Litigation settlement gains, net ....        650         435         650       2,355
Other, net ..........................         63           5         211          26
                                        --------    --------    --------    --------

                                        $    340    $  7,906    $  3,007    $ 12,901
                                        ========    ========    ========    ========
</TABLE>

        Included in currency  transactions,  net, in the second  quarter of 2002
was a  foreign  currency  transaction  gain  of  $6.3  million  related  to  the
extinguishment of certain intercompany  indebtedness with Kronos  International,
Inc. ("KII").

                                      -18-
<PAGE>

        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 all periods presented,  the Company recognized  litigation settlement
gains with former insurance carrier groups to settle certain insurance  coverage
claims related to environmental remediation. No material settlements relating to
litigation  concerning  environmental  remediation  coverage  are expected to be
received.

Note 14 - Commitments and contingencies:

  Environmental matters and litigation

        Some of the Company's current and former  facilities,  including several
divested secondary lead smelters and former mining locations, are the subject of
civil litigation,  administrative  proceedings or  investigations  arising under
federal and state  environmental  laws.  Additionally,  in connection  with past
disposal  practices,  the  Company  has  been  named as a  defendant,  potential
responsible party ("PRP") or both,  pursuant to the Comprehensive  Environmental
Response, Compensation and Liability Act, as amended by the Superfund Amendments
and Reauthorization  Act ("CERCLA"),  and similar state laws in approximately 70
governmental  and private actions  associated with waste disposal sites,  mining
locations, and facilities currently or previously owned, operated or used by the
Company or its subsidiaries, or their predecessors,  certain of which are on the
U.S.  Environmental  Protection  Agency's Superfund National  Priorities List or
similar state lists. These proceedings seek cleanup costs,  damages for personal
injury or  property  damage  and/or  damages  for injury to  natural  resources.
Certain of these proceedings  involve claims for substantial  amounts.  Although
the Company may be jointly and severally liable for such costs, in most cases it
is only one of a number of PRPs who may also be jointly and severally liable.

        The  imposition  of  more  stringent  standards  or  requirements  under
environmental  laws or regulations,  new developments or changes respecting site
cleanup costs or allocation of such costs among PRPs, solvency of other 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.  No
assurance can be given that actual costs will not exceed accrued  amounts or the
upper end of the range  for  sites  for  which  estimates  have been made and no
assurance  can be given that costs will not be incurred with respect to sites as
to which no estimate presently can be made.  Further,  there can be no assurance
that additional environmental matters will not arise in the future.

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


                                      -19-
<PAGE>

requirements of environmental laws and enforcement  policies  thereunder,  could
adversely   affect   the   Company's   production,   handling,   use,   storage,
transportation,  sale or disposal of such  substances  as well as the  Company's
consolidated financial position, results of operations or liquidity.

        At June 30, 2003, the Company had accrued  approximately $88 million for
those environmental matters which are reasonably  estimable.  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  which it is  possible to
estimate costs is approximately  $125 million.  The Company's  estimates of such
liabilities  have not been discounted to present value,  and the Company has not
recognized  any  potential  insurance  recoveries  other  than  the  settlements
discussed in Note 13.

        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.

        At  June  30,  2003,  the  Company  had  approximately  $24  million  in
restricted  cash,  restricted cash  equivalents  and restricted  marketable debt
securities held by certain  trusts,  the assets of which can only be used to pay
for  certain  of  the  Company's  future  environmental  remediation  and  other
environmental expenditures.  Restricted cash decreased approximately $28 million
in the second quarter of 2003 primarily due to a $30.8 million  payment  related
to the final settlement of the  previously-reported  Granite City, Illinois lead
smelter  site.  The  Company  may have to pay up to an  additional  $.7  million
related to this site upon completion of an EPA audit of certain  response costs.
No further material expenditures are expected to be made for this site.

  Lead pigment litigation

        Since 1987 the Company,  other former manufacturers of lead pigments for
use in paint and lead-based paint, and the Lead Industries Association have been
named as defendants in various legal  proceedings  seeking  damages for personal
injury and property  damage  allegedly  caused by the use of lead-based  paints.
Certain of these  actions have been filed by or on behalf of states,  large U.S.
cities or their public housing authorities,  school districts and certain others
have been asserted as class actions. These legal proceedings seek recovery under
a variety of theories,  including public and private nuisance, negligent product
design,    failure   to   warn,   strict   liability,    breach   of   warranty,
conspiracy/concert  of action,  enterprise  liability,  market share  liability,
intentional tort, and fraud and misrepresentation.

        The  plaintiffs  in  these  actions  generally  seek  to  impose  on the
defendants  responsibility for lead paint abatement and asserted health concerns
associated  with the use of lead-based  paints,  including  damages for personal
injury,  contribution  and/or  indemnification  for  medical  expenses,  medical
monitoring  expenses  and costs for  educational  programs.  Most of these legal
proceedings  are in  various  pre-trial  stages;  some are on  appeal  following
dismissal or summary judgment rulings in favor of the defendants.

        The Company  believes that these actions are without  merit,  intends to
continue to deny all  allegations  of wrongdoing and liability and to defend all
actions vigorously. The Company has not accrued any amounts for the pending lead
pigment  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


                                      -20-
<PAGE>

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. Considering
the Company's  previous  involvement  in the lead pigment and  lead-based  paint
businesses,  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 .

  Other litigation

        The  Company  has been named as a  defendant  in various  lawsuits  in a
variety of jurisdictions, alleging personal injuries as a result of occupational
exposure to asbestos, silica and/or mixed dust in connection with formerly owned
operations.  Approximately 380 of these cases involving a total of approximately
30,825  plaintiffs and their spouses remain  pending,  including the Rhines case
described below. The Company has not accrued any amounts for this litigation. In
addition, from time to time, the Company has received notices regarding asbestos
or silica claims  purporting to be brought  against former  subsidiaries  of the
Company,  including  notices  provided  to  insurers  with which the Company has
entered  into  settlements   extinguishing  certain  insurance  policies.  These
insurers may seek indemnification from the Company.

        Rhines, et al. v. A.O. Smith, et al. (Circuit Court of Covington County,
Mississippi,  Civil Action No. 2002-191C).  In June 2003, the Company was served
with a  complaint  in  this  case  brought  on  behalf  of  approximately  3,593
plaintiffs against approximately 265 defendants,  alleging injury as a result of
exposure to asbestos.

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

        The  Company  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.

        For  descriptions  of certain  other legal  proceedings,  environmental,
income tax and other  commitments  and  contingencies  related  to the  Company,
reference is made to (i) the 2002 Annual  Report,  (ii) the Company's  Quarterly
Report on Form 10-Q for the quarter ended March 31, 2003, and (iii) Note 12.

                                      -21-
<PAGE>


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

RESULTS OF OPERATIONS
<TABLE>
<CAPTION>

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

<S>                             <C>       <C>      <C>     <C>       <C>              <C>
Net sales and operating
  income
    Net sales ...............   $266.6    $226.9   +17%    $519.6    $429.3           +21%
    Operating income ........   $ 35.5    $ 24.7   +44%    $ 69.8    $ 46.8           +49%
    Operating income margin
      percentage ............     13%       11%              13%       11%

TiO2 operating statistics
    Percent change in
      average selling price
      (in billing currencies)                       +7%                                +6%
    Sales volume (metric tons in
      thousands) ............    121.0     122.6    -1%     239.5     235.0            +2%
    Production volume
      (metric tons in
      thousands) ............    119.5     113.0    +6%     236.7     218.9            +8%
</TABLE>

        Kronos'  operating  income in the second quarter of 2003 increased $10.8
million or 44% from the second  quarter of 2002  primarily due to higher average
selling  prices  and  higher  production  volume,  partially  offset  by  higher
operating costs,  particularly energy costs.  Compared with the first quarter of
2003,  operating income in the second quarter of 2003 increased $1.2 million, or
3%.

        Operating  income  in the  first  half of 2003  increased  49% to  $69.8
million,  compared with $46.8 million in the first half of 2002 due to 6% higher
average  selling  prices in billing  currencies  (which  excludes the effects of
foreign currency  translation),  2% higher sales volume and 8% higher production
volume, partially offset by higher operating costs, particularly energy costs.

        Kronos'  average selling price in billing  currencies  during the second
quarter of 2003 was 7% higher than the second  quarter of 2002 with the greatest
improvement being realized in the European and export markets. Compared with the
first  quarter of 2003,  selling  prices in billing  currencies  were flat.  The
average  selling price in billing  currencies in June 2003 was comparable to the
average selling price in billing  currencies for the second quarter of 2003. The
Company  expects  higher  average  selling  prices  in  billing  currencies  for
full-year  2003 compared to full-year  2002.  The Company  discloses  percentage
changes in its average TiO2 selling  prices in billing  currencies  so that such
changes  can be  analyzed  without  the impact of  changes  in foreign  currency
exchange rates, thereby facilitating  period-to-period  comparisons.  Generally,
when the U.S.  dollar  strengthens  or weakens  against  other  currencies,  the
percentage change in average selling prices in billing currencies will be higher
or lower,  respectively,  than such  percentage  changes  would be using  actual
exchange rates prevailing  during the respective  periods.  When translated from
billing  currencies to U.S.  dollars using currency  exchange  rates  prevailing
during the respective periods, Kronos' second-quarter 2003 average selling price
in U.S.  dollars was 19% higher than in the second quarter of 2002 and 2% higher

                                      -22-
<PAGE>

than the first  quarter of 2003.  The average  selling  price  expressed in U.S.
dollars in June 2003 was 3% higher than the average selling price for the second
quarter of 2003.  Average selling prices expressed in U.S. dollars increased 18%
in the first half of 2003 compared with the first half of 2002.

        Second  quarter  2003 sales volume of 121,000  metric tons  decreased 1%
from the record  second  quarter of 2002 and increased 2% from the first quarter
of 2003.  Sales  volume in the first  half of 2003 was a Kronos  record  239,500
metric tons.  Kronos expects sales volume in the second half of 2003 to be lower
than the first half of 2003.  Kronos'  sales volume for full year 2003 should be
slightly higher than full year 2002.

        Second quarter 2003 production volume of 119,500 metric tons represented
an  all-time  quarterly  record  for  Kronos  and was 6% higher  than the second
quarter of 2002 and was 2% higher than the first quarter of 2003 with  operating
rates at near full capacity in all periods presented.  Production volume for the
first half of 2003 was 236,700  metric tons and  represented  an all-time  first
half record. Kronos anticipates its production volume for full year 2003 will be
higher than full year 2002.  Finished goods  inventory  levels at the end of the
second  quarter  decreased 2% from March 2003 levels and  represented  under two
months of sales.

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

        Compared to the year-earlier  periods,  cost of sales as a percentage of
net sales  decreased in the second  quarter and first half of 2003 primarily due
to higher  average  selling prices in billing  currencies and higher  production
volume,  partially  offset by higher  energy  costs.  Excluding  the  effects of
foreign  currency  translation,  which  increased the Company's  expenses in the
second  quarter and first half of 2003  compared to  year-earlier  periods,  the
Company's selling,  general and  administrative  expenses,  excluding  corporate
expenses, in the second quarter and first half of 2003 were slightly higher than
the second quarter and first half 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 and Canadian dollar in the second quarter and first half of
2003 versus the year-earlier  periods,  increased the dollar value of sales by a
net  $27.7  million  and  $54.4  million,  respectively,  when  compared  to the
year-earlier periods.  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 effect of the weaker U.S. dollar on Kronos'
operating costs that are not  denominated in U.S.  dollars  increased  operating
costs in the second quarter and first half of 2003 compared to the  year-earlier
periods.  In addition,  Kronos  revalued  certain export trade  receivables  and
certain  monetary assets held by its subsidiaries  whose functional  currency is
not the U.S.  dollar and based on the weaker U.S.  dollar reported a revaluation


                                      -23-
<PAGE>

loss in the second  quarter and first half of 2003. As a result,  the net impact
of currency exchange rate fluctuations decreased operating income by $.6 million
and $2.4  million,  respectively,  in the second  quarter and first half of 2003
when compared to the year-earlier periods.

  General corporate

        The following  table sets forth certain  information  regarding  general
corporate income (expense).
<TABLE>
<CAPTION>

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


<S>                         <C>        <C>        <C>        <C>        <C>        <C>
Securities earnings ...     $  1.0     $ 1.3      $  (.3)    $  4.3     $  2.6     $  1.7

Other income and
  litigation settlement
  gains, net ..........        1.8       1.4          .4        2.2        4.4       (2.2)
Currency transaction
  gains ...............       --         6.3        (6.3)     --           6.3       (6.3)
Corporate expense .....      (23.1)     (7.5)      (15.6)     (38.6)     (17.7)     (20.9)
Interest expense ......       (8.4)     (8.1)        (.3)     (16.4)     (14.6)      (1.8)
                            ------     ------     ------     ------     ------     ------

                            $(28.7)    $(6.6)     $(22.1)    $(48.5)    $(19.0)    $(29.5)
                            ======     ======     ======     ======     ======     ======
</TABLE>

        Securities  earnings  for the first  half of 2003 were  higher  than the
first  half  of  2002  primarily  due  to  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 second  quarter and the first half of 2003 as  compared to the year  earlier
periods  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.

        Other  corporate  income  for the  first  half of 2002  included  a $1.9
million litigation settlement gain with former insurance carrier groups and $2.0
million in fee income related to a covenant not to compete agreement involving a
formerly owned  business unit which became fully  amortized in January 2003. See
Note  13  to  the  Consolidated   Financial  Statements.   No  further  material
settlements relating to litigation concerning environmental remediation coverage
are expected.

        Foreign currency transaction gains in the second quarter of 2002 related
to  the  extinguishment  of  certain   intercompany   indebtedness  with  Kronos
International,   Inc.  ("KII").  See  Note  13  to  the  Consolidated  Financial
Statements.

        Corporate  expense  for  the  second  quarter  and  first  half  of 2003
increased  $15.6  million  and  $20.9  million,  respectively,  from  comparable
prior-year  periods  primarily due to higher  environmental  expenses related to
remediation of formerly owned business units and higher legal expenses. Compared
to the first quarter of 2003,  corporate  expense in the second  quarter of 2003
increased $7.8 million primarily due to higher environmental expenses. Corporate
expenses are expected to be higher for  full-year  2003 as compared to full-year

                                      -24-
<PAGE>


2002 due to higher  environmental  expenses and slightly  higher legal  expenses
associated with the defense of lead pigment litigation.

        Interest  expense in the second quarter and first half of 2003 increased
$.3 million and $1.8 million from the comparable  prior-year periods,  primarily
due to higher  levels  of  outstanding  debt and  associated  currency  effects,
partially offset by lower interest rates. Interest expense in the second quarter
of 2002  included  $2.0  million  related  to the  early  extinguishment  of the
Company's  11.75%  Senior  Secured  Notes.  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.

  Provision for income taxes

        The Company reduced its deferred  income tax valuation  allowance by $.4
million  in the first  half of 2003 and $3.0  million  in the first half 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 all  presented  periods  primarily  related to NL
Environmental Services, Inc.

  Recently adopted accounting principles

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

LIQUIDITY AND CAPITAL RESOURCES

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

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

<S>                                                            <C>          <C>
Net cash provided (used) by:
    Operating activities:
        Before changes in assets and liabilities .........     $  49.8      $  37.3
        Changes in assets and liabilities ................       (31.1)         (.8)
                                                               -------      -------
                                                                  18.7         36.5
    Investing activities .................................        (9.7)       (19.3)
    Financing activities .................................       (14.4)        39.7
                                                               -------      -------

      Net cash used by operating, investing, and
        financing activities .............................     $  (5.4)     $  56.9
                                                               =======      =======
</TABLE>
                                      -25-
<PAGE>

  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 in the
first six months of 2003 from the  comparable  period in 2002  primarily  due to
$22.9 million of higher operating income, $18.7 million of higher current income
tax  benefits,  net  (see  Note 12 to the  Consolidated  Financial  Statements),
partially offset by $20.9 million of higher corporate  expenses.  Cash flow from
operations,  before changes in assets and liabilities, in the first half of 2002
included  a $6.3  million  foreign  currency  transaction  gain  related  to the
extinguishment of certain intercompany indebtedness with KII.

        Changes to the Company's assets and liabilities, excluding the effect of
currency translation,  in the first half of 2003 compared with the first half of
2002, were negatively  affected  primarily by $21.1 million of higher refundable
income taxes and $8.9 million of lower insurance  proceeds  collected.  Further,
the net cash used to fund  changes in the  Company's  inventories,  accounts and
notes  receivable,   accounts  payable  and  accrued  liabilities,  and  accrued
environmental costs (excluding the effect of currency  translation) in the first
six months of 2003 was  comparable to the first six months of 2002.  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 purchases of
raw materials  were  received  under the contracts in the first half of 2003 and
2002, respectively.

  Investing activities

        The Company's capital  expenditures were $13.9 million and $12.1 million
in the first half of 2003 and 2002, respectively.  Capital expenditures in first
half of 2002 included  approximately  $2.2 million related to  reconstruction of
the Company's Leverkusen, Germany sulfate plant damaged in the March 2001 fire.

        In May 2003 the  Harold  C.  Simmons  Family  Trust  No. 2 (the  "Family
Trust") repaid $2 million  principal amount on the revolving  credit  agreement.
See Note 7 to the Consolidated Financial Statements.

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

        In March 2002, the Company redeemed $25 million  principal amount of its
11.75% Senior  Secured Notes using  available cash on hand, and in June 2002 the
Company  redeemed the  remaining  $169 million  principal  amount of such 11.75%


                                      -26-
<PAGE>

Senior Secured Notes using a portion of the proceeds from the June 2002 issuance
of the (euro)285 million principal amount of the KII 8.875% Senior Secured Notes
($280 million when issued).  Also in June 2002, KII's operating  subsidiaries in
Germany,  Belgium and Norway  entered  into a new  three-year  (euro)80  million
secured  revolving  credit facility and borrowed  (euro)13 million ($13 million)
and NOK 200 million ($26 million) which,  along with available cash, was used to
repay and terminate KII's short term notes payable ($53.2 million when repaid).

        Deferred  financing  costs of $9.3  million  for the KII  8.875%  Senior
Secured Notes and the European credit facility are being amortized over the life
of the respective  agreements and are included in other noncurrent  assets as of
June 30, 2002.

        In the second  quarter of 2003,  the  Company  paid a regular  quarterly
dividend to shareholders of $.20 per share, aggregating $9.5 million.  Dividends
paid during the first half of 2003 totaled $.40 per share, or $19.1 million.

        In the first half of 2003 and the second  quarter of 2002,  the  Company
made no  repurchases  of common  stock.  During the first  quarter of 2002,  the
Company purchased  approximately  228,000 shares of its common stock in the open
market at an  aggregate  cost of  approximately  $3.3  million.  The  Company is
authorized to repurchase approximately 1.3 million additional shares at July 25,
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 June 30, 2003, the Company had cash and cash equivalents  aggregating
$55 million ($18 million held by non-U.S.  subsidiaries)  and an additional  $38
million of restricted cash equivalents and restricted marketable debt securities
held by the Company,  of which $3 million was classified as a noncurrent  asset.
Restricted  cash  decreased  approximately  $28 million in the second quarter of
2003 primarily due to a $30.8 million payment related to the final settlement of
the  previously-reported  Granite City,  Illinois lead smelter site. The Company
may have to pay up to an  additional  $.7  million  related  to this  site  upon
completion  of an EPA audit of  certain  response  costs.  No  further  material
expenditures are expected to be made for this site. At June 30, 2003, certain of
the  Company's  subsidiaries  had $102  million  available  for  borrowing  with
approximately $57 million available under non-U.S.  credit facilities (including
$55 million under the European Credit  Facility) and  approximately  $45 million
under the U.S. Credit Facility.  At June 30, 2003, the Company had complied with
all financial covenants governing its debt agreements.

  Income tax contingencies

        See Note 12 to the Consolidated Financial Statements.

  Lead pigment litigation, environmental matters and other litigation

        See Note 14 to the Consolidated  Financial  Statements and Part II, Item
1. "Legal Proceedings."


                                      -27-
<PAGE>

  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.
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  pigment  litigation,  the  outcome  of other
litigation and tax controversies,  and other risks and uncertainties included in
this Quarterly Report and in the 2002 Annual Report,  and the  uncertainties set
forth  from  time to time in the  Company's  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 June 30,
2003.


                                      -28-
<PAGE>

ITEM 4.    CONTROLS AND PROCEDURES

        The Company  maintains a system of disclosure  controls and  procedures.
The term "disclosure  controls and procedures," as defined by regulations of the
Securities and Exchange Commission ("SEC"),  means controls and other procedures
that are  designed to ensure that  information  required to be  disclosed in the
reports  that the  Company  files or  submits  to the SEC under  the  Securities
Exchange Act of 1934, as amended (the "Act"), is recorded, processed, summarized
and  reported,  within the time periods  specified in the SEC's rules and forms.
Disclosure  controls and procedures include,  without  limitation,  controls and
procedures  designed to ensure that information  required to be disclosed by the
Company  in the  reports  that it files or  submits  to the SEC under the Act is
accumulated  and  communicated  to  the  Company's  management,   including  its
principal  executive  officer and its principal  financial  officer,  or persons
performing  similar  functions,  as appropriate to allow timely  decisions to be
made regarding  required  disclosure.  Each of Harold C. Simmons,  the Company's
Chief  Executive  Officer,  and Robert D. Hardy,  the Company's  Chief Financial
Officer,  have evaluated the Company's  disclosure controls and procedures as of
June 30,  2003.  Based upon their  evaluation,  these  executive  officers  have
concluded that the Company's disclosure controls and procedures are effective as
of the date of such evaluation.

        The Company also maintains a system of internal  controls over financial
reporting.  The term "internal control over financial  reporting," as defined by
regulations  of the SEC, means a process  designed by, or under the  supervision
of, the  Company's  principal  executive and principal  financial  officers,  or
persons  performing  similar  functions,  and effected by the Company's board of
directors,  management  and other  personnel,  to provide  reasonable  assurance
regarding  the  reliability  of  financial  reporting  and  the  preparation  of
financial  statements  for  external  purposes  in  accordance  with  accounting
principles  generally  accepted in the United  States of America  ("GAAP)",  and
includes those policies and procedures that:

o       Pertain  to  the  maintenance  of  records  that  in  reasonable  detail
        accurately and fairly reflect the  transactions  and dispositions of the
        assets of the Company,
o       Provide reasonable assurance that transactions are recorded as necessary
        to permit  preparation of financial  statements in accordance with GAAP,
        and that receipts and expenditures of the Company are being made only in
        accordance  with  authorizations  of  management  and  directors  of the
        Company, and
o       Provide reasonable assurance regarding prevention or timely detection of
        unauthorized  acquisition,  use or disposition  of the Company's  assets
        that  could  have  a  material  effect  on  the  Company's  consolidated
        financial statements.

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

                                      -29-
<PAGE>


                           PART II. OTHER INFORMATION

ITEM 1.       LEGAL PROCEEDINGS

           Reference  is  made  to  Note  14  to  the   Consolidated   Financial
Statements,   and  for  descriptions  of  certain   previously   reported  legal
proceedings,  reference  is made to the 2002  Annual  Report  and the  Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2003.

        County of Santa Clara v. Atlantic  Richfield  Company,  et al. (Superior
Court of the State of California,  County of Santa Clara, Case No. CV788657). In
July 2003, the trial court granted  defendants'  motion to dismiss all remaining
claims in this previously-described case. The time for appeal has not yet run.

        State of Rhode Island v. Lead Industries  Association,  et al. (Superior
Court of Rhode Island,  No. 99-5226).  In June 2003, the court set April 5, 2004
as the date for the retrial of Phase I of this previously-described case.

        Lewis et al. v. Lead  Industries  Association,  et al. (Circuit Court of
Cook  County,   Illinois,   County  Department,   Chancery  Division,  Case  No.
00CH09800).  In June 2003, the appellate court affirmed the dismissal of five of
the six counts of plaintiffs' complaint in this  previously-described  case, but
reversed the dismissal of the conspiracy  count. The time for appeal has not yet
run.

        Borden, et al. v. The Sherwin-Williams Company, et al. (Circuit Court of
Jefferson  County,  Mississippi,  Civil  Action  No.  2000-587).  In June  2003,
plaintiffs   and   defendants   jointly   moved   the   court  to   vacate   the
previously-described October 2003 trial date.

        Quitman County School  District v. Lead Industries  Association,  et al.
(Circuit Court of Quitman  County,  Mississippi,  Case No.  2001-0106).  In June
2003,   the   Court  set  a  trial   date  of   September   13,   2004  in  this
previously-described case.

        Thomas v. Lead Industries Association, et al. (Circuit Court, Milwaukee,
Wisconsin,  Case No.  99-CV-6411).  In June 2003,  plaintiff  appealed the trial
court's grant of summary  judgment for  defendants in this  previously-described
case.

        City of St.  Louis v.  Lead  Industries  Association,  et al.  (Missouri
Circuit Court 22nd Judicial Circuit, St. Louis City, Cause No. 002-245, Division
1). In May 2003,  plaintiffs filed an amended complaint alleging only a nuisance
claim in this  previously-described  case. Defendants' renewed motion to dismiss
and motion for summary judgment are pending.  Plaintiffs have moved the Court to
set an October 2003 trial date.

        City of Milwaukee v. NL Industries, Inc. and Mautz Paint (Circuit Court,
Civil Division, Milwaukee County, Wisconsin, Case No. 01CV0030066). In May 2003,
the court vacated the previously-described October 2003 trial date. No new trial
date has been set. Defendants' motion for summary judgment is pending.


                                      -30-
<PAGE>

        Justice et al. v Sherwin-Williams, et al. (Superior Court of California,
County of San Francisco,  No. 314686). This  previously-described  case has been
voluntarily dismissed without prejudice by plaintiffs.

        Sabater, et al. v. Lead Industries Association, et al. (Supreme Court of
the State of New York, County of Bronx, Index No. 25533/98).  Plaintiffs' motion
for class certification is pending in this previously-described case.

        The  Company  expects  that  additional  lead  pigment   litigation  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. (Case No. CJ-2001-443),  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).  In
May 2003,  the Company was  voluntarily  dismissed  with prejudice by plaintiffs
from these previously-described cases.

        Cole, et al. v. ASARCO  Incorporated et al. (U.S. District Court for the
Northern  District of  Oklahoma,  Case No. 03C V327 EA (J)).  In June 2003,  the
Company was served with a complaint in this purported  class action on behalf of
two  classes of  persons  living in the  Picher/Cardin,  Oklahoma,  area:  (1) a
medical  monitoring  class of persons who have lived in the area since 1994; and
(2) a property owner class of  residential,  commercial and government  property
owners.  Plaintiffs are nine individuals and, in their official capacities,  the
Mayor of Picher and the Chairman of the Picher/Cardin  School Board.  Plaintiffs
allege  causes of action in trespass and nuisance and seek a medical  monitoring
program, a relocation program, property damages, and punitive damages.

        Crawford, et al. v. ASARCO,  Incorporated,  et al. (Case No. CJ-03-304);
Barr, et al. v. ASARCO Incorporated, et al. (Case No. CJ-03-305); Brewer, et al.
v. ASARCO  Incorporated,  et al. (Case No. CJ-03-306);  Kloer, et al. v. ASARCO,
Incorporated,   et  al.  (Case  No.   CJ-03-307);   Rhoten,  et  al.  v.  Asarco
Incorporated,  et al. (Case No. CJ-03-308) (all in the District Court in and for
Ottawa  County,  State of Oklahoma).  In July 2003,  the Company was served with
complaints in these five cases  asserting  personal  injuries due to exposure to
lead from mining waste on behalf of,  respectively,  two, four, two, three,  and
four  children.  Each complaint  alleges causes of action in negligence,  strict
liability,  nuisance,  and  attractive  nuisance;  and each seeks $20 million in
compensatory and $20 million in punitive damages.  The Company intends to answer
each complaint denying all liability and to defend itself vigorously.

        United States of America v. NL Industries,  Inc., et al., (United States
District Court for the Southern District of Illinois,  Civ. No. 91-CV 00578). In
May 2003, the court entered the previously-described  consent decree between the
United States and the Company.  Pursuant to the consent  decree,  the Company in
June  2003  paid  $30.8  million  to the  United  States,  and will pay up to an
additional  $.7  million  upon  completion  of an EPA audit of certain  response
costs.


                                      -31-
<PAGE>

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

        The Company held its Annual Meeting of Shareholders on May 20, 2003. All
the  nominees for  director  were  elected  with the voting  results for each as
follows:

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

Mr. J. Landis Martin                        46,641,822           190,018
Mr. George E. Poston                        46,425,918           405,922
Mr. Glenn R. Simmons                        46,641,816           190,024
Mr. Harold C. Simmons                       46,640,586           191,254
General Thomas P. Stafford                  46,660,008           171,832
Dr. R. Gerald Turner                        46,653,138           178,702
Mr. Steven L. Watson                        45,118,497         1,713,343


ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

              (a)     Exhibits

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

                      10.1 -  Intercorporate  Services  Agreement by and between
                      Contran  Corporation  and the  Registrant  effective as of
                      January 1, 2003.

                      10.2 -  Intercorporate  Services  Agreement by and between
                      Titanium Metals  Corporation and the Registrant  effective
                      as of January 1, 2003.

                      99.1     - Certification.

                      99.2     - Certification.

                      99.3     - Certification.

              (b)     Reports on Form 8-K

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

                      July 14, 2003 - Reported Items 7 and 9.

                      July 25, 2003 - Reported Items 7 and 9.


                                      -32-

<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:  July 25, 2003             By /s/ Robert D. Hardy
--------------------                --------------------------------------------
                                    Robert D. Hardy
                                      Principal Financial and Accounting Officer

                                      -33-