SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                  FORM 10-Q/A-1



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

                                       OR

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

                          Commission file number 1-640


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



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




5430 LBJ Freeway, Suite 1700, Dallas, Texas                         75240
--------------------------------------------------          --------------------
     (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 May 9, 2003:  47,694,784

<PAGE>



        This  Amendment  No.  1 to the  Quarterly  Report  on Form  10-Q for the
quarter ended March 31, 2003 of NL  Industries,  Inc. is filed to revise certain
disclosures,  and reclassify the Company's  Consolidated Statement of Income, as
requested by the Securities and Exchange Commission.  There was no impact on net
income as a result of the  reclassification  of the  Consolidated  Statement  of
Income.  The  revised  disclosures  are  primarily  contained  in  "Management's
Discussion  and  Analysis of  Financial  Condition  and Results of  Operations -
Liquidity  and  Capital  Resources"  and the  Company's  Consolidated  Financial
Statements.  This  Amendment  is being filed  solely to provide the  information
referenced  above.  For the convenience of the reader,  the Company is re-filing
the entire Quarterly Report as clarified.  No other modifications have been made
to the Quarterly Report except as described above.



<PAGE>


                             NL INDUSTRIES, INC. AND SUBSIDIARIES

                                      INDEX




                                                                           Page
PART I.        FINANCIAL INFORMATION

  Item 1.      Financial Statements.

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

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

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

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

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

               Notes to Consolidated Financial Statements                  10-17

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

  Item 3.      Quantitative and Qualitative Disclosures About Market Risk   26

  Item 4.      Controls and Procedures                                     26-27


PART II.       OTHER INFORMATION

  Item 1.      Legal Proceedings                                           28-29

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


                                      -3-
<PAGE>


                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                 (In thousands)


<TABLE>
<CAPTION>


                                                         March 31,  December 31,
              ASSETS                                       2003        2002
                                                         ---------- ------------

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

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

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

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

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

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

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


                                      -4-
<PAGE>



                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS (CONTINUED)

                                 (In thousands)

<TABLE>
<CAPTION>

    LIABILITIES AND SHAREHOLDERS' EQUITY             March 31,      December 31,
                                                       2003             2002
                                                    -----------     ------------

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

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


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

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


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


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

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

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

Commitments and contingencies (Note 13)



          See accompanying notes to consolidated financial statements.
                                      -5-

<PAGE>


                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

                   Three months ended March 31, 2003 and 2002

                      (In thousands, except per share data)


<TABLE>
<CAPTION>

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

<S>                                                             <C>          <C>
Net sales ...................................................   $ 252,973    $ 202,357
Cost of sales ...............................................     188,417      156,253
                                                                ---------    ---------
    Gross margin ............................................      64,556       46,104

Selling, general and administrative expenses ................      29,379       24,728
Other operating income (expense):
  Currency transaction gains (losses), net ..................      (1,098)         598
  Disposition of property and equipment .....................         (61)         (46)
  Noncompete agreement income ...............................         333        1,000
  Litigation settlement gains, net ..........................        --          1,920
  Other income ..............................................         148           21
  Corporate expense .........................................     (15,315)     (10,117)
                                                                ---------    ---------

      Income from operations ................................      19,184       14,752

Other income (expense):
  Trade interest income .....................................         163          222
  Other interest income and dividend income .................         948        1,280
  Securities gains, net .....................................       2,234         --
  Interest expense ..........................................      (7,985)      (6,535)
                                                                ---------    ---------

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

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

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

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

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

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

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

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


                                      -6-
<PAGE>


                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                   Three months ended March 31, 2003 and 2002

                                 (In thousands)

<TABLE>
<CAPTION>

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

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

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

                                                                      5,619      (1,523)

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

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

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



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


                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

                        Three months ended March 31, 2003

                                 (In thousands)
<TABLE>
<CAPTION>

                                                                                   Accumulated other
                                                                               comprehensive income (loss)
                                                    Additional             -----------------------------------
                                            Common   paid-in    Retained    Currency     Pension    Marketable  Treasury
                                            stock    capital    earnings   translation  liabilities securities   stock       Total
                                           -------  ----------  ---------  -----------  ----------- ---------- ---------   ---------

<S>                                        <C>      <C>         <C>         <C>         <C>         <C>       <C>         <C>
Balance at December 31, 2002               $ 8,355  $ 777,819   $ 101,554   $(170,670)  $(21,447)   $ 5,896   $(436,180)  $ 265,327

Net income ...........................      --         --           9,430       --        --            --        --          9,430
Other comprehensive income, net of tax      --         --            --         3,742     --          5,619       --          9,361
Dividends ............................      --         --          (9,539)      --        --            --        --         (9,539)
Treasury stock - reissued                   --         --           --          --        --            --           77          77
                                           -------  ---------   ---------   ---------   --------    -------   ---------   ---------


Balance at March 31, 2003 ............     $ 8,355  $ 777,819   $ 101,445   $(166,928)  $(21,447)   $11,515   $(436,103)  $ 274,656
                                           =======  =========   =========   =========   ========    =======   =========   =========
</TABLE>
          See accompanying notes to consolidated financial statements.
                                       -8-


<PAGE>


                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                   Three months ended March 31, 2003 and 2002

                                 (In thousands)


<TABLE>
<CAPTION>
                                                                 2003        2002
                                                               --------    --------

<S>                                                            <C>         <C>
Cash flows from operating activities:
    Net income .............................................   $  9,430    $  6,384
    Depreciation, depletion and amortization ...............      9,691       7,782
    Deferred income taxes ..................................      1,630         687
    Distributions from (contributions to) TiO2 manufacturing
      joint venture ........................................     (1,250)        900
    Other, net .............................................     (3,968)       (578)
    Change in assets and liabilities:
        Accounts and other receivable ......................    (31,545)    (25,282)
        Insurance receivable ...............................      2,247      10,909
        Inventories ........................................     18,702      43,049
        Prepaid expenses ...................................      1,960        (845)
        Accrued environmental costs ........................      8,678       3,384
        Accounts payable and accrued liabilities ...........    (33,174)    (36,161)
        Income taxes .......................................        339        (629)
        Other, net .........................................      3,569       3,196
                                                               --------    --------

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

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

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


                                      -9-
<PAGE>


                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                   Three months ended March 31, 2003 and 2002

                                 (In thousands)

<TABLE>
<CAPTION>

                                                            2003         2002
                                                         ---------    ---------
<S>                                                      <C>          <C>
Cash flows from financing activities:
    Dividends paid ...................................   $  (9,539)   $  (9,764)
    Treasury stock:
        Purchased ....................................        --         (3,271)
        Reissued .....................................          77          140
    Indebtedness:
        Borrowings ...................................      16,106         --
        Principal payments ...........................        (342)     (25,263)
                                                         ---------    ---------

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

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

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

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


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

    Acquisition of business:

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

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


          See accompanying notes to consolidated financial statements.
                                      -10-

<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 Worldwide Inc.
(formerly known as Kronos,  Inc.). At March 31, 2003, Valhi, Inc., ("Valhi") and
its subsidiaries held  approximately  85% of NL's outstanding  common stock, and
Contran  Corporation  ("Contran") and its subsidiaries held approximately 90% of
Valhi's  outstanding  common stock.  Substantially all of Contran's  outstanding
voting stock is held by trusts  established for the benefit of certain  children
and  grandchildren  of Harold C. Simmons,  of which Mr. Simmons is sole trustee.
Mr. Simmons, the Chairman of the Board of each of Contran,  Valhi and NL, may be
deemed to control each of such companies. See Notes 6 and 7.


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

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

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


                                      -11-
<PAGE>

        The following  table  illustrates  the effect on net income and earnings
per share if the Company had applied the fair value  recognition  provisions  of
SFAS No. 123 to stock-based employee compensation.

<TABLE>
<CAPTION>

                                                       Three months ended March 31,
                                                       ----------------------------
                                                           2003         2002
                                                         ---------    ---------
                                                        (In thousands, except per
                                                              share amounts)

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

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

</TABLE>

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

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


                                      -12-
<PAGE>
<TABLE>
<CAPTION>

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

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

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

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

Note 2 - Earnings per share:

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


Note 3 - Other operations income (expense):

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

        The  noncompete  agreement  income  relates to a covenant not to compete
agreement  related  to the sale of Rheox in 1998.  The  agreement  became  fully
amortized in January 2003.

        Corporate  expense  includes   environmental,   legal  and  other  costs
attributable to formerly owned business units, as well as certain administrative
expenses (primarily legal,  finance,  accounting and tax). Corporate expense for
the first  quarter of 2003  increased  of $5.2 million  compared  with the first
quarter  of 2002  primarily  due to higher  environmental  expenses  related  to
remediation of formerly owned business units.


                                      -13-
<PAGE>


Note 4 - Accounts and other receivable:


<TABLE>
<CAPTION>

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

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

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

Note 5 - Inventories:
<TABLE>
<CAPTION>

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

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

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

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

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

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

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

        In  February  2003  Valhi  completed  a series  of  merger  transactions
pursuant to which, among other things, Tremont Group, Inc. ("Tremont Group") and
Tremont Corporation  ("Tremont") both became wholly owned subsidiaries of Valhi.
Under these  merger  transactions,  (i) Valhi  issued 3.5 million  shares of its
common stock to the Company in return for the Company's  20% ownership  interest
in Tremont Group and (ii) Valhi issued 3.4 shares of its common stock (plus cash
in lieu of fractional shares) to all Tremont  stockholders (other than Valhi and
Tremont  Group) in exchange for each share of Tremont  common stock held by such
stockholders.  The Company received  approximately 27,770 shares of Valhi common
stock in the  second  transaction.  The number of shares of Valhi  common  stock
issued to the Company in exchange for the Company's  20%  ownership  interest in
Tremont Group was equal to the Company's 20% pro-rata  interest in the shares of
Tremont common stock held by Tremont  Group,  adjusted for the same 3.4 exchange
ratio.  The Valhi common stock owned by the Company is restricted under SEC Rule
144. The Company reported a pre-tax securities transaction gain of approximately
$2.3  million  in the first  quarter of 2003 which  represented  the  difference
between the market  value of the shares of Valhi  received and the cost basis of
the Tremont Group and Tremont shares  exchanged.  Following these  transactions,
the Company owns approximately 4.7 million shares of Valhi's  outstanding common
stock  (approximately  4% of  Valhi's  outstanding  shares).  The  Company  will
continue to account for its shares of Valhi common  stock as  available-for-sale
marketable  equity  securities  carried  at fair value  (based on quoted  market
prices).  The shares of Valhi common stock cannot be voted by the Company  under

                                      -14-
<PAGE>

Delaware  Corporation Law, but the Company does receive  dividends from Valhi on
these shares, when declared. For financial reporting purposes, Valhi reports its
proportional interest in these shares as treasury stock.

Note 7 - Receivable from affiliates:

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

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

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

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

                                                          $26,571        $30,671
                                                          =======        =======
</TABLE>

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

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

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

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

                                                     $137,049           $167,574
                                                     ========           ========
</TABLE>
                                      -15-
<PAGE>

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

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

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

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

Note 11 - Long-term debt:
<TABLE>
<CAPTION>

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

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

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

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

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

Note 12 - Income taxes:

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

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

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

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

                                      -16-
<PAGE>



Note 13 - Commitments and contingencies:


        For  descriptions  of certain  legal  proceedings,  income tax and other
commitments and contingencies  related to the Company,  reference is made to (i)
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations,  (ii)  Part II,  Item 1 - "Legal  Proceedings,"  and  (iii) the 2002
Annual Report.


                                      -17-

<PAGE>


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

RESULTS OF OPERATIONS


<TABLE>
<CAPTION>

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

<S>                                                  <C>         <C>         <C>
Net Sales ......................................     $  253.0    $  202.4     +25%
Cost of sales ..................................        188.4       156.3     +20%
                                                     --------    --------

  Gross margin .................................         64.6        46.1     +40%

Selling, general and administrative expense ....         29.4        24.7     +19%
Currency transaction gains (losses), net .......         (1.1)         .6
Litigation settlement gain .....................          --          1.9
Noncompete agreement income ....................           .3         1.0
Other expense ..................................          --          (.1)
Corporate expense ..............................        (15.3)      (10.1)
                                                     --------    --------

     Income from operations ....................     $   19.1    $   14.7      +3%
                                                     ========    ========

TiO2 operating statistics
    Percent change in average selling price:
        Using actual foreign currency exchange
          rates ................................                              +18%
        Impact of changes in foreign currency
          exchange rates .......................                              -12%
                                                                             -----

        In billing currencies ..................                               +6%
                                                                             -----

    Sales volume (metric tons in thousands) ....          118         112      +5%
    Production volume (metric tons in thousands)          117         106     +11%

</TABLE>


        The Company's  sales and gross margin  increased $50.6 million (25%) and
$18.5 million (40%), respectively,  in the first quarter of 2003 compared to the
first  quarter of 2002 due  primarily to higher  average TiO2 selling  prices as
well as higher  TiO2 sales and  production  volumes  partially  offset by higher
operating costs  (particularly  energy costs,  which increased by  approximately
$2.9  million).  Excluding the effect of  fluctuations  in the value of the U.S.
dollar relative to other currencies, the Company's average TiO2 selling price in
billing  currencies  in the first  quarter of 2003 was 6% higher  than the first
quarter of 2002. When translated from billing  currencies to U.S.  dollars using
actual foreign currency exchange rates prevailing during the respective periods,
the Company's average TiO2 selling prices in the first quarter of 2003 increased
18% compared to the first quarter of 2002.

        The Company's sales are denominated in various currencies, including the
U.S. dollar, the euro, other major European  currencies and the Canadian dollar.
The  disclosure of the percentage  change in the Company's  average TiO2 selling
price in billing  currencies  (which excludes the effects of fluctuations in the
value  of the  U.S.  dollar  relative  to  other  currencies)  is  considered  a
"non-GAAP" financial measure under regulations of the SEC. The disclosure of the
percentage  change in the  Company's  average TiO2  selling  prices using actual
foreign  currency  exchange rates  prevailing  during the respective  periods is
considered  the  most  directly   comparable   financial  measure  presented  in
accordance with accounting


                                      -18-
<PAGE>


        principles generally accepted in the United States ("GAAP measure"). The
Company  discloses  percentage  changes in its  average  TiO2  prices in billing
currencies  because  the  Company  believes  such  disclosure   provides  useful
information  to  investors  to allow them to analyze  such  changes  without the
impact of changes in  foreign  currency  exchange  rates,  thereby  facilitating
period-to-period  comparisons of the relative  changes in average selling prices
in the actual various billing currencies. Generally, when the U.S. dollar either
strengthens  or weakens  against  other  currencies,  the  percentage  change in
average  selling  prices  in  billing   currencies  will  be  higher  or  lower,
respectively,  than such percentage changes would be using actual exchange rates
prevailing during the respective periods.  The difference between the 18% change
in the Company's average TiO2 selling prices during the first quarter of 2003 as
compared to the first  quarter of 2002 using actual  foreign  currency  exchange
rates  prevailing  during the  respective  periods (the GAAP measure) and the 6%
percentage  change  in the  Company's  average  TiO2  selling  price in  billing
currencies  (the non-GAAP  measure)  during such periods is due to the effect of
changes in foreign  currency  exchange  rates.  The above  table  presents  in a
tabular format (i) the percentage  change in the Company's  average TiO2 selling
prices  using actual  foreign  currency  exchange  rates  prevailing  during the
respective  periods  ( the GAAP  measure),  (ii) the  percentage  change  in the
Company's  average  TiO2  selling  price in  billing  currencies  (the  non-GAAP
measure)  and (iii) the  percentage  change due to  changes in foreign  currency
exchange  rates (or the  reconciling  item between the non-GAAP  measure and the
GAAP measure).

        The  Company's  TiO2  sales  volume in the first  quarter  of 2003 was a
record and was 5% higher  than the first  quarter of 2002.  The  Company's  TiO2
production volume in the first quarter of 2003, an all-time quarterly record for
NL, was 11% higher than the first quarter of 2002,  with operating rates at near
full  capacity in 2003 compared to 96% of capacity in 2002.  These  increases in
TiO2 sales and production volume increased gross margin by $4.6 million and $6.2
million,  respectively,  while the  increase  in  average  TiO2  selling  prices
increased gross margin by $10.1 million.

        The Company's cost of sales  increased  $32.2 million (21%) in the first
quarter of 2003  compared to the first quarter of 2002.  The  Company's  cost of
sales as a percentage  of net sales  decreased  3% in the first  quarter of 2003
primarily due to the higher average selling prices and higher production volume,
partially offset by the higher energy costs. The Company's selling,  general and
administrative  expenses in the first  quarter of 2003  increased  $4.7  million
(19%) as  compared  to the  first  quarter  of 2002 due to  higher  distribution
expenses in the first quarter of 2003 of $2.3 million associated with the higher
sales  volume,  as well as the impact of  relative  changes in foreign  currency
exchange  rates which  increased  the  Company's  expenses in the 2003 period as
compared  to the same  period  in  2002.  The  Company's  selling,  general  and
administrative  expenses  were  approximately  12% of sales  in both  the  first
quarter of 2003 and the first quarter of 2002.

        The increase in the Company's  gross margin  quantified  above is due to
the net effect of the changes in sales and cost of sales during such period.

        The Company has  substantial  operations and assets located  outside the
United States (primarily in Germany,  Belgium,  Norway and Canada). As discussed
above, a significant  amount of the Company's  sales generated from its non-U.S.
operations are denominated in currencies other than the U.S. dollar, principally
the euro, other major European  currencies and the Canadian dollar. In addition,
a portion of the Company's  sales  generated  from its non-U.S.  operations  are
denominated   in   the   U.S.   dollar.   Certain   raw   materials,   primarily
titanium-containing  feedstocks,  are purchased in U.S. dollars, while labor and
other   production  costs  are  denominated   primarily  in  local   currencies.
Consequently,  the translated U.S.  dollar value of the Company's  foreign sales
and operating results are subject to currency  exchange rate fluctuations  which
may  favorably  or  adversely  impact  reported  earnings  and  may  affect  the
comparability of period-to-period  operating results.  Overall,  fluctuations in
the value of the U.S. dollar relative to other  currencies,  primarily the euro,
increased  the  Company's  sales in the  first  quarter  of 2003 by a net  $26.6
million  compared to the same period in 2002.  Fluctuations  in the value of the
U.S.  dollar  relative to other  currencies  similarly  impacted  the  Company's
foreign  currency-denominated  operating expenses. The Company's operating costs
that are not denominated in the U.S. dollar,  when translated into U.S. dollars,
were  higher in the first six quarter of 2003  compared to the first  quarter of
2002. Overall,  the net impact of currency exchange rate fluctuations  decreased
the  Company's  gross margin by $1.8  million in the first  quarter of 2003 when
compared to the year-earlier period.

        The  noncompete  agreement  income  relates to a covenant not to compete
agreement  related  to the sale of Rheox in 1998.  The  agreement  became  fully
amortized in January 2003. The $1.9 million  litigation  settlement  gain in the

                                      -19-
<PAGE>


first  quarter of 2002 relates to a  settlement  with former  insurance  carrier
groups.  No further  material  settlements  relating  to  litigation  concerning
environmental remediation coverage are expected.

        Corporate  expense for the first quarter of 2003 was $15.3  million,  an
increase of $5.2 million  compared with the first quarter of 2002  primarily due
to higher  environmental  expenses  related to  remediation  of  formerly  owned
business units.  Corporate expenses are expected to be higher for full-year 2003
as compared to full-year  2002 due to higher  environmental  expenses and higher
legal expenses associated with the defense of lead pigment litigation, including
two trials scheduled for 2003.

        The Company  currently  expects TiO2 industry demand in 2003 to increase
slightly  over  2002  levels.  The  Company  currently  expects  its  sales  and
production  volumes for the full year of 2003 will be  slightly  higher than the
full year of 2002. The Company's TiO2  production  volume in 2003 is expected to
approximate  the Company's 2003 TiO2 sales volume.  In December 2002 and January
2003,  the Company  announced  additional  price  increases  in Europe and North
America which averaged  approximately 8% in Europe and approximately 7% in North
America.  The Company is hopeful that it will realize additional price increases
during the  remainder  of 2003,  but the extent to which the Company can realize
price increases will depend on market  conditions and global economic  recovery.
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.

        As a net result of the items discussed  above, the Company's income from
operations  increased  30% from $14.8  million  in the first  quarter of 2002 to
$19.2 million in the first quarter of 2003.


Other income (expense):


<TABLE>
<CAPTION>

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

<S>                                              <C>          <C>          <C>
Securities gains, net ...................        $  2.2       $--          $  2.2
Interest and dividend income ............            .9          1.3          (.4)
Other corporate income ..................            .1        --              .1
Interest expense ........................          (8.0)        (6.5)        (1.5)
                                                 ------       ------       ------

                                                 $ (4.8)      $ (5.2)      $   .4
                                                 ======       ======       ======
</TABLE>



                                      -20-
<PAGE>


        Securities gains for the first quarter of 2003 represents 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. Interest and dividend
income was lower by $400,000 in the first quarter of 2003 as compared with first
quarter 2002 due to lower levels of available  funds  invested and lower average
yields.  The Company expects interest income to be lower for full-year 2003 than
full-year  2002 due to lower average  yields and lower  average  levels of funds
available for investment.


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

  Provision for income taxes

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

  Other

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

  Recently adopted accounting principles

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


                                      -21-
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

        The  Company's  consolidated  cash flows from  operating,  investing and
financing  activities  for the three  months  ended  March 31, 2003 and 2002 are
presented below.


<TABLE>
<CAPTION>

                                                               Three months ended
                                                                    March 31,
                                                               ------------------
                                                                 2003       2002
                                                               -------    -------
                                                                  (In millions)
<S>                                                            <C>        <C>
Net cash provided (used) by:
    Operating activities .................................     $ (13.7)   $  12.8
    Investing activities .................................        (4.4)     (14.2)
    Financing activities .................................         6.3      (38.2)
                                                               -------    -------

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


  Operating activities


        The TiO2 industry is cyclical and changes in economic  conditions within
the industry  significantly  affect the earnings and operating cash flows of the
Company.  Cash flows from  operations is the primary source of liquidity for the
Company.  Changes in TiO2 pricing,  production volume and customer demand, among
other things, could significantly affect the liquidity of the Company.

        Relative  changes in assets and  liabilities  generally  result from the
timing of production,  sales,  purchases and income tax payments.  Such relative
changes can significantly  impact the comparability of cash flow from operations
from period to period, as the income statement impact of such items may occur in
a  different  period  from when the  underlying  cash  transaction  occurs.  For
example,  raw materials may be purchased in one period, but the payment for such
raw materials may occur in a subsequent period. Similarly, inventory may be sold
in one  period,  but the  cash  collection  of the  receivable  may  occur  in a
subsequent period.

        Cash flows from operating  activities decreased from a net generation of
cash of $12.8 million in the first quarter of 2002 to a net use of cash of $13.7
million  in the first  quarter  of 2003.  This $26.5  million  decrease  was due
primarily  to the net  effect of (i) higher  net  income of $3.0  million,  (ii)
higher  depreciation  expense of $1.9  million and (iii) a higher  amount of net
cash used to fund changes in the Company's inventories, receivables and payables
of $31.0  million in the first  quarter of 2003.  Relative  changes in  accounts
receivable  are  affected by,  among other  things,  the timing of sales and the
collection of the resulting  receivable.  Relative  changes in  inventories  and
accounts  payable and accrued  liabilities  are affected by, among other things,
the timing of raw material  purchases and the payment for such purchases and the
relative difference between production volume and sales volume.



                                      -22-
<PAGE>

  Investing activities

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


        In March 2002, the Company  redeemed $25.0 million  principal  amount of
the 11.75% Senior Secured Notes due October 2003 at par.


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

  Financing activities

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

        In the  first  quarter  of 2002 and  2003,  the  Company  paid a regular
quarterly  dividend to shareholders of $.20 per share,  aggregating $9.8 million
and $9.5 million, respectively.

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

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


        At March 31, 2003, the Company had cash and cash equivalents aggregating
$46.7 million,  current  restricted cash  equivalents of $47.1 million,  current
restricted  marketable debt securities of $9.7 million and noncurrent restricted
marketable  debt  securities of $9.6 million.  Of such aggregate  $113.1 million
amount,$22 million was held by non-U.S. subsidiaries. At March 31, 2003, certain
of the Company's  subsidiaries  had $83 million  available  for  borrowing  with
approximately $43 million available under non-U.S.  credit facilities (including
$41 million under the European Credit  Facility) and  approximately  $40 million
under the U.S. Credit Facility. At March 31, 2003, the Company had complied with
all financial covenants governing its debt agreements.


                                      -23-
<PAGE>


  Income tax contingencies

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

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

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

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

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

                                      -24-
<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 March 31, 2003 the Company had the equivalent of  approximately  $451
million of income tax loss  carryforwards  in Germany with no  expiration  date.
However,  the Company has provided a deferred tax  valuation  allowance  against
substantially  all of these  income tax loss  carryforwards  because the Company
currently  believes  they do not  meet  the  "more-likely-than-not"  recognition
criteria. In 2002, the German federal government proposed certain changes to its
income tax law, including certain changes that would have imposed limitations on
the annual  utilization  of income tax loss  carryforwards.  Such  proposal,  if
enacted,  would have significantly affected the Company's 2003 and future income
tax expense and cash tax payments.  In April 2003 the German federal  government
passed a new tax law which  does not  contain  the  provision  that  would  have
restricted  the  utilization  of  tax  loss  carryforwards.   Furthermore,   the
provisions  contained in the new law are not expected to  materially  impact the
Company's income tax expense or cash tax payments.

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

  Environmental matters and litigation


        The Company has been named as a defendant, potentially responsible party
("PRP"), or both, in a number of legal proceedings associated with environmental
matters,  including  waste  disposal  sites,  mining  locations  and  facilities
currently or previously owned, operated or used by the Company, certain of which
are on the U.S.  Environmental  Protection  Agency's (the "U.S.  EPA") Superfund
National  Priorities  List or similar  state lists.  On a quarterly  basis,  the
Company  evaluates  the  potential  range of its liability at sites where it has
been  named  as  a  PRP  or  defendant,   including  sites  for  which  EMS  has
contractually  assumed the  Company's  obligation.  The Company  believes it has
adequate  accruals  ($104  million at March 31, 2003) for  reasonably  estimable
costs of such matters, but the Company's ultimate liability may be affected by a
number of factors,  including  changes in remedial  alternatives  and costs, the
allocations of such costs among PRPs, and the financial viability of other PRPs.
It is not possible to estimate the range of costs for certain  sites.  The upper
end of the range of reasonably possible costs to the Company for sites for which
it is possible to estimate costs is  approximately  $145 million.  The Company's
estimates of such  liabilities  have not been  discounted to present  value.  No
assurance can be given that actual costs will not exceed either accrued  amounts
or the upper end of the range for sites for which  estimates have been made, and
no assurance  can be given that costs will not be incurred with respect to sites
as to which no estimate  presently can be made. The imposition of more stringent
standards  or  requirements  under   environmental  laws  or  regulations,   new
developments or changes with respect to site cleanup costs, or the allocation of
such costs  among  PRPs,  or a  determination  that the  Company is  potentially
responsible for the release of hazardous substances at other sites, could result

                                      -25-
<PAGE>

in  expenditures in excess of amounts  currently  estimated by the Company to be
required for such matters. In addition,  with respect to other PRPs and the fact
that the Company may be jointly and severally  liable for the total  remediation
cost at certain  sites,  the Company  could  ultimately be liable for amounts in
excess of its accruals due to, among other things,  reallocation  of costs among
PRPs  or the  insolvency  of one of  more  PRPs.  Furthermore,  there  can be no
assurance that  additional  environmental  matters will not arise in the future.

        The exact time frame over which the Company makes  payments with respect
to its accrued environmental costs is unknown and is dependent upon, among other
things,  the timing of the actual  remediation  process which in part depends on
factors  outside the control of the  Company.  At each balance  sheet date,  the
Company makes an estimate of the amount of its accrued environmental costs which
will be paid out over the subsequent 12 months,  and the Company classifies such
amount as a current liability.  The remainder of the accrued environmental costs
are classified as a noncurrent liability.

        At March  31,  2003,  there  are  approximately  15 sites  for which the
Company is unable to estimate a range of costs.  For these sites,  generally the
investigation is in the early stages,  and it is either unknown as to whether or
not the Company  actually had any  association  with the site, or if the Company
had association with the site, the nature of its responsibility, if any, for the
contamination  at the site and the extent of  contamination.  The timing on when
information  would  become  available  to the  Company  to allow the  Company to
estimate a range of loss is unknown and dependent on events  outside the control
of the Company,  such as when the party alleging liability provides  information
to the Company.


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

                                      -26-
<PAGE>


  Lead pigment litigation

        The Company is also a defendant in a number of legal proceedings seeking
damages for personal  injury and property damage arising out of the sale of lead
pigments and lead-based paints.  There is no assurance that the Company will not
incur  future  liability in respect of this  pending  litigation  in view of the
inherent  uncertainties  involved  in court  and jury  rulings  in  pending  and
possible  future cases.  However,  based on, among other things,  the results of
such litigation to date, the Company  believes that the pending lead pigment and
paint  litigation is without merit.  The Company has not accrued any amounts for
such pending litigation. Liability that may result, if any, cannot reasonably be
estimated. In addition, various legislation and administrative regulations have,
from time to time,  been  enacted or  proposed  that seek to (a) impose  various
obligations on present and former  manufacturers  of lead pigment and lead-based
paint with respect to asserted health  concerns  associated with the use of such
products and (b)  effectively  overturn the precedent set by court  decisions in
which the Company and other pigment manufacturers have been successful. Examples
of such proposed  legislation  include bills which would permit civil  liability
for damages on the basis of market share,  rather than  requiring  plaintiffs to
prove that the defendant's  product caused the alleged  damage,  and bills which
would revive actions barred by the statute of limitations. The Company currently
believes the  disposition  of all claims and disputes,  individually  and in the
aggregate,   should  not  have  a  material  adverse  effect  on  the  Company's
consolidated financial position, results of operations or liquidity. The Company
expects that  additional  lead pigment and  lead-based  litigation  may be filed
against the Company in the future asserting  similar or different legal theories
and seeking  similar or  different  types of damages  and  relief.  See Item 1 -
"Legal Proceedings."

  Other

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



Non-GAAP Financial Measures

        In an effort to provide investors with additional  information regarding
the Company's  results as determined by GAAP, the Company has disclosed  certain
non-GAAP  information which the Company believes provides useful  information to
investors:

o       As discussed  above,  the Company  discloses  percentage  changes in its
        average TiO2 prices in billing currencies, which excludes the effects of
        foreign currency  translation.  Such disclosure of the percentage change
        in the  Company's  average TiO2 selling  price in billing  currencies is
        considered a "non-GAAP"  financial measure under regulations of the SEC.
        The  disclosure of the percentage  change in the Company's  average TiO2
        selling prices using actual foreign  currency  exchange rates prevailing

                                      -27-
<PAGE>

        during the respective periods is considered the most directly comparable
        GAAP measure.  The Company discloses  percentage  changes in its average
        TiO2 prices in billing  currencies  because the  Company  believes  such
        disclosure  provides  useful  information  to investors to allow them to
        analyze such changes  without the impact of changes in foreign  currency
        exchange rates, thereby facilitating period-to-period comparisons of the
        relative changes in average selling prices in the actual various billing
        currencies.  Generally,  when  the U.S.  dollar  either  strengthens  or
        weakens  against  other  currencies,  the  percentage  change in average
        selling  prices  in  billing   currencies   will  be  higher  or  lower,
        respectively,  than  such  percentage  changes  would  be  using  actual
        exchange rates prevailing during the respective periods.



  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  paint  litigation,  the  outcome  of  other
litigation and tax controversies,  and other risks and uncertainties included in
this Quarterly Report and in the 2002 Annual Report,  and the  uncertainties set
forth  from  time to time in the  Company's  filings  with  the  Securities  and
Exchange  Commission.  Should  one or more of these  risks  materialize  (or the
consequences of such a development worsen), or should the underlying assumptions
prove incorrect, actual results could differ materially from those forecasted or
expected.  The Company  disclaims any intention or obligation to update publicly
or revise such statements whether as a result of new information,  future events
or otherwise.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

                                      -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 Gregory M. Swalwell,  the Company's Vice President,
Finance,  have evaluated the Company's  disclosure controls and procedures as of
March 31, 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 March 31, 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 the 2002 Annual Report for descriptions of
certain previously reported legal proceedings.

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

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

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

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

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

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

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

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

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


                                      -30-
<PAGE>

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

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

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

              (a)     Exhibits

                      31.1  Certification

                      31.2  Certification

                      32.1  Certification

              (b)     Reports on Form 8-K

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

                      April 30, 2003 - Reported Items 7 and 9.


                                      -31-

<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:  October 31, 2003          By /s/ Gregory M. Swalwell
-------------------------           -------------------------------------
                                    Gregory M. Swalwell
                                      Principal Financial and Accounting Officer


                                      -32-