NL INDUSTRIES, INC.

                                    Form 10-Q

                       For the quarter ended June 30, 2003

                       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 June 30, 2003

                                       OR

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

                          Commission file number 1-640


                               NL INDUSTRIES, INC.

             (Exact name of registrant as specified in its charter)



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




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




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

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

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

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


This Amendment No. 1 to the Quarterly  Report on Form 10-Q for the quarter ended
June 30, 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.



                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                                      INDEX




                                                                      Page
PART I.           FINANCIAL INFORMATION

  Item 1.         Financial Statements.

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

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

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

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

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

                  Notes to Consolidated Financial Statements          10

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

  Item 3.         Quantitative and Qualitative Disclosures
                   About Market Risk                                  28

  Item 4.         Controls and Procedures                             29


PART II.          OTHER INFORMATION

  Item 1.         Legal Proceedings                                   30

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

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

                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                 (In thousands)


<TABLE>

<CAPTION>
                                                                               June 30,             December 31,
              ASSETS                                                             2003                   2002
                                                                          --------------------   -------------------

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

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

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

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

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

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

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


                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS (CONTINUED)

                                 (In thousands)


<TABLE>
<CAPTION>
    LIABILITIES AND SHAREHOLDERS' EQUITY                                        June 30,            December 31,
                                                                                  2003                  2002
                                                                           -------------------   -------------------

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

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


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

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


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


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

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

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

Commitments and contingencies (Notes 12 and 13)

  NL INDUSTRIES, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

                      (In thousands, except per share data)


<TABLE>

<CAPTION>
                                                      Three months ended                  Six months ended
                                                           June 30,                           June 30,
                                                -------------------------------- -----------------------------------
                                                     2003            2002             2003              2002
                                                -------------- ----------------- ----------------- -----------------


Revenues and other income:
<S>                                                <C>            <C>                 <C>             <C>
    Net sales                                      $  266,631     $   226,909         $519,604        $  429,266
    Cost of sales                                     197,649         176,247          386,066           332,500
                                                -------------- ----------------- ----------------- -----------------
          Gross margin                                 68,982          50,662          133,538            96,766

Selling, general and administrative
expense                                                30,975          24,898           60,354            49,626
Other operating income (expense):
    Currency transaction gains (losses), net           (2,743)         (2,049)          (3,841)           (1,451)
    Disposition of property and equipment               1,116             643            1,055               597
    Noncompete agreement income                             -           1,000              333             2,000
      Litigation settlement gains, net                    650             435              650             2,355
    Corporate expense                                 (23,202)         (7,491)         (38,517)          (17,608)
    Other income                                           63               5              211                26
                                                -------------- ----------------- ----------------- -----------------

        Income from operations                         13,891          18,307           33,075            33,059

Other income (expense):
      Trade interest income                               198             333              361               555
       Other interest and dividend income                 838           1,280            1,786             2,560
       Securities gains (losses), net                     218             (12)           2,452               (12)
     Currency transaction gain                              -           6,271                -             6,271
      Interest expense                                 (8,367)         (8,078)         (16,352)          (14,613)
                                                -------------- ----------------- ----------------- -----------------

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

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

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

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

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

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

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

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

                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                                 (In thousands)


<TABLE>
<CAPTION>
                                                        Three months ended                 Six months ended
                                                             June 30,                          June 30,
                                                 --------------------------------- ---------------------------------
                                                      2003             2002             2003             2002
                                                 ---------------- ---------------- ---------------- ----------------

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

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

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

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

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

            Comprehensive income                   $    33,237      $    57,665       $   52,028      $    59,917
                                                 ================ ================ ================ ================
</TABLE>



                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

                         Six months ended June 30, 2003

                                 (In thousands)


<TABLE>
<CAPTION>
                                                                                 Accumulated other
                                                                             comprehensive income (loss)
                                                     Additional           ----------------------------------
                                            Common     paid-in   Retained  Currency    Pension    Marketable 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                                    -           -        38,265       -          -         -          -        38,265
Other comprehensive income, net of tax        -           -          -        12,568       -       1,195        -        13,763
Dividends                                     -           -       (19,079)      -          -         -          -       (19,079)

Treasury stock - reissued                     -           -          -          -          -         -           175        175
                                        ---------   ---------    --------  ---------   --------   ------   ---------   --------
Balance at June 30, 2003                $   8,355   $ 777,819    $120,740  $(158,102)  $(21,447)  $7,091   $(436,005)  $298,451
                                        =========   =========    ========  =========   ========   ======   =========   ========
</TABLE>


                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                     Six months ended June 30, 2003 and 2002

                                 (In thousands)


<TABLE>

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

Cash flows from operating activities:
<S>                                                                                <C>                <C>
    Net income                                                                     $    38,265        $    20,432
    Depreciation, depletion and amortization                                            19,681             15,820
    Deferred income taxes                                                               (3,006)             2,400
    Distributions from TiO2 manufacturing joint
      venture, net                                                                         800              2,250
    Net (gains) losses from securities transactions                                     (2,452)                12
    Other, net                                                                          (3,522)            (3,572)
    Change in assets and liabilities:
        Accounts and other receivable                                                  (37,409)           (29,665)
        Insurance receivable                                                             2,122             11,053
        Inventories                                                                     25,301             68,227
        Prepaid expenses                                                                 3,036               (796)
        Accounts payable and accrued liabilities                                       (29,526)           (58,638)
        Income taxes                                                                   (24,008)            (2,878)
        Accrued environmental costs                                                     25,990              8,913
        Other, net                                                                       3,378              2,943
                                                                                 ----------------   ----------------

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

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

        Net cash used by investing activities                                           (9,654)           (19,300)
                                                                                 ----------------   ----------------
</TABLE>

                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                     Six months ended June 30, 2003 and 2002

                                 (In thousands)


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

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

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

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

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

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


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

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


            Cash paid                                                          $            -       $       9,149
                                                                               =================   =================
</TABLE>
                      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 June  30,  2003,  Valhi,  Inc.,  ("Valhi")  and its
subsidiaries  held  approximately  85% of NL's  outstanding  common  stock,  and
Contran  Corporation  ("Contran") and its subsidiaries held approximately 90% of
Valhi's  outstanding  common stock.  Substantially all of Contran's  outstanding
voting stock is held by trusts  established for the benefit of certain  children
and  grandchildren  of Harold C. Simmons,  of which Mr. Simmons is sole trustee.
Mr. Simmons, the Chairman of the Board and Chief Executive Officer of NL and the
Chairman  of the Board of each of Contran  and  Valhi,  may be deemed to control
each of such companies. See Notes 6 and 7.


     The  consolidated  balance sheet of NL  Industries,  Inc. and  Subsidiaries
(collectively,  the  "Company") at December 31, 2002 has been condensed from the
Company's  audited   consolidated   financial   statements  at  that  date.  The
consolidated  balance sheet at June 30, 2003 and the consolidated  statements of
income,  comprehensive  income,  shareholders'  equity  and cash  flows  for the
interim  periods  ended June 30, 2003 and 2002 have been prepared by the Company
without audit. In the opinion of management all adjustments,  consisting only of
normal  recurring  adjustments,  necessary  to present  fairly the  consolidated
financial  position,  results of operations  and cash flows have been made.  The
results of operations for the interim periods are not necessarily  indicative of
the operating results for a full year or of future operations.

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

     The Company has elected the disclosure  alternative prescribed by Statement
of Financial  Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation,"  as  amended  by  SFAS  No.  148,   "Accounting  for  Stock-Based
Compensation - Transition and  Disclosure,"  and to account for its  stock-based
employee  compensation  related to stock options in accordance  with  Accounting
Principles  Board  Opinion  ("APBO")  No. 25,  "Accounting  for Stock  Issued to
Employees," and its various interpretations.  Under APBO No. 25, no compensation
cost is generally recognized for fixed stock options in which the exercise price
is not less than the market price on the grant date.  During the fourth  quarter
of  2002,  following  the cash  settlement  of  certain  stock  options  held by
employees of the Company,  the Company  commenced  accounting  for its remaining
stock options using the variable accounting method, which requires the intrinsic
value of all unexercised  stock options  (including those with an exercise price
at least  equal to the  market  price on the date of grant) to be  accrued as an
expense,  with subsequent  increases  (decreases) in the Company's  market price
resulting in additional  compensation expense (income). Net compensation expense
recognized  by the Company in  accordance  with APBO No. 25 in the three and six
months  ended  June 30,  2003 was $.5  million  and nil,  respectively,  and net
compensation  expense  (income)  recognized  by the Company in the three and six
months ended June 30, 2002 was nil for both periods.

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

<TABLE>
<CAPTION>
                                                         Three months ended                Six months ended
                                                              June 30,                         June 30,
                                                   --------------- ---------------- --------------------------------
                                                        2003            2002             2003            2002
                                                   --------------- ---------------- --------------- ----------------
                                                               (In thousands, except per share amounts)

<S>                                                   <C>            <C>              <C>             <C>
Net income - as reported                              $  28,835      $   14,048       $    38,265     $   20,432
Add:  Stock-based compensation cost, net of
  tax, included in reported net income                      339               -                 -              -
Deduct:  Stock-based compensation cost, net
  of tax, determined under fair value based
  method for all awards                                    (121)           (271)             (241)          (542)
                                                   --------------- ---------------- --------------- ----------------

Net income - pro forma                               $   29,053      $   13,777       $    38,024     $   19,890
                                                   =============== ================ =============== ================
Net income per basic common share:
    As reported                                    $        .60    $        .29       $       .80   $        .42
    Pro forma                                      $        .61             .28       $       .80   $        .41
Net income per diluted common share:
    As reported                                    $         .60   $        .29       $       .80   $        .42
    Pro forma                                      $         .61   $        .28       $       .80   $        .41
</TABLE>

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

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

<TABLE>
<CAPTION>
                                                                                                       Amount
                                                                                                 -------------------
                                                                                                   (In millions)

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

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

     At June 30, 2003, the asset  retirement  obligation was  approximately  $.7
million and was included in other noncurrent  liabilities.  Accretion expense on
the asset retirement obligation during the first six months of 2003, included in
cost of sales, was nil. If the Company had adopted SFAS No. 143 as of January 1,
2002, the asset retirement  obligation would have been approximately $.5 million
at  January  1, 2002 and $.6  million  at June 30,  2002,  and the effect on the
Company's  reported  net income for the six months ended June 30, 2002 would not
have been material.

Note 2 - Earnings per share:


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


Note 3 - Other (income) expense:


Operating items

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


     In all periods  presented,  the Company  recognized  litigation  settlement
gains with former insurance carrier groups to settle certain insurance  coverage
claims related to environmental remediation.  Income related to these litigation
settlement  gains are recognized as part of income from  operations  because the
related environmental remediation expense to which the recovery related are also
recognized  as a  component  of income  from  operations.  No  further  material
settlements relating to litigation concerning environmental remediation coverage
are expected to be received.



     Corporate expense include environmental, legal and other costs attributable
to formerly  owned business  units,  as well as certain  administative  expenses
(primarily legal, finance, accounting and tax). Corporate expense for the second
quarter  and first  half of 2003  increased  $15.7  million  and $20.9  million,
respectively,  from  comparable  prior-year  periods  primarily  due  to  higher
environmental and legal expenses.


Nonoperating items


     Currency  transaction  gains in the  second  quarter  of 2002 was a foreign
currency  transaction  gain of $6.3  million  related to the  extinguishment  of
certain  intercompany  indebtedness with Kronos  International,  Inc. ("KII"), a
wholly-owned subsidiary of the Company.



Note 4 - Accounts and other receivable:


<TABLE>
<CAPTION>
                                                                                 June 30,           December 31,
                                                                                   2003                 2002
                                                                             ------------------   ------------------
                                                                                         (In thousands)

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

                                                                                $   182,196          $   136,858
                                                                             ==================   ==================

Note 5 - Inventories:

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

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

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

Note 6 - Marketable equity securities:

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

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

        Aggregate fair value                                                     $   45,431         $     40,901
                                                                              =================   ==================
</TABLE>

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

Note 7 - Receivable from affiliates:

     In May 2001 a  wholly  owned  subsidiary  of the  Company's  majority-owned
environmental management subsidiary,  NL Environmental Management Services, Inc.
("EMS")  loaned $20.0  million to the Harold C. Simmons  Family Trust No. 2 (the
"Family  Trust"),  one of the trusts  described in Note 1, under a $25.0 million
revolving credit agreement.  The loan was approved by special  committees of the
Company's and EMS's Boards of Directors.  The loan bears interest at prime (4.0%
at June 30, 2003), is due on demand with 60 days notice and is collateralized by
13,749 shares,  or approximately  35%, of Contran's  outstanding  Class A voting
common  stock  and 5,000  shares,  or 100%,  of  Contran's  Series E  Cumulative
preferred  stock,  both of which are owned by the Family Trust. The value of the
collateral  is  dependent,  in part,  on the value of the  Company as  Contran's
interest in the Company,  through its beneficial  ownership of Valhi,  is one of
Contran's  more  substantial  assets.  At June 30, 2003,  the  outstanding  loan
balance  was  $16.0  million  and $9.0  million  was  available  for  additional
borrowing by the Family Trust. The loan was classified as noncurrent at June 30,
2003, as the Company does not expect to demand repayment within one year.

Note 8 - Other noncurrent assets:

<TABLE>
<CAPTION>
                                                                                 June 30,           December 31,
                                                                                   2003                    2002
                                                                            -------------------   ------------------
                                                                                        (In thousands)

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

                                                                             $       27,320         $     30,671
                                                                            ===================   ==================

Note 9 - Accounts payable and accrued liabilities:

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

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

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

                                                                               $    150,549           $   167,574
                                                                             ===================   =================
</TABLE>

Note 10 - Other noncurrent liabilities:

<TABLE>
<CAPTION>
                                                                                 June 30,           December 31,
                                                                                   2003                 2002
                                                                            -------------------   ------------------
                                                                                        (In thousands)

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

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

Note 11 - Long-term debt:

<TABLE>
<CAPTION>
                                                                                  June 30,          December 31,
                                                                                    2003                2002
                                                                              -----------------   ------------------
                                                                                         (In thousands)

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

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

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

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

Note 12 - Income taxes:

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

<TABLE>
<CAPTION>
                                                                                          Six months ended
                                                                                              June 30,
                                                                                 -----------------------------------
                                                                                      2003               2002
                                                                                 ----------------   ----------------
                                                                                           (In thousands)

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

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

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


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


     The Company has received  preliminary tax assessments for the years 1991 to
1997 from the Belgian tax  authorities  proposing  tax  deficiencies,  including
related interest, of approximately (euro)10.1 million ($11.6 million at June 30,
2003).  The Company has filed protests to the  assessments  with respect to such
years.  The  Company is in  discussions  with the Belgian  tax  authorities  and
believes that a significant  portion of the  assessments  is without  merit.  In
April 2003 the Company received a notification  from the Belgian tax authorities
of their  intent to assess a tax  deficiency  related to 1999.  The  anticipated
assessment,  including interest,  is expected to approximate  (euro)13.1 million
($15.0 million at June 30, 2003). The Company  believes the proposed  assessment
related to 1999 is without  merit and in April 2003 filed a written  response in
opposition to the notification of intent to assess.

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

     In the first  quarter of 2003,  Kronos was  notified by the German  Federal
Fiscal Court (the "Court") that the Court had ruled in Kronos' favor  concerning
a claim for refund  suit in which  Kronos  sought  refunds  of prior  taxes paid
during the periods 1990 through 1997.  Kronos has filed certain  amended  German
tax returns and expects to file additional  amended German tax returns  claiming
such refunds for all years affected by the Court's  decision,  which is expected
to result in an  estimated  refund of taxes and  interest of  approximately  $40
million. Receipt of the German tax refunds is subject to satisfaction of various
procedural requirements, including a review and acceptance of the amended German
tax  returns  by  the  German  tax  authorities.  Certain  of  these  procedural
requirements  were  satisfied  in the second  quarter of 2003 with  respect to a
portion  of the  refund  claim,  and in July  2003 the  German  tax  authorities
refunded Kronos a portion of the total anticipated  refund. The portion received
in July was  (euro)21.5  million  ($24.6  million  using June 30, 2003  exchange
rates).  Kronos has reflected this tax refund in its second quarter 2003 results
of  operations.  The Company  expects to receive the remaining  refunds over the
next six to nine months,  a portion of which may result in an additional  income
tax benefit.  No assurance  can be given that the  Company's tax matters will be
favorably resolved due to the inherent  uncertainties  involved in court and tax
proceedings.  The Company  believes that it has provided  adequate  accruals for
additional taxes and related  interest expense which may ultimately  result from
all such  examinations  and  believes  that  the  ultimate  disposition  of such
examinations  should  not  have a  material  adverse  effect  on  the  Company's
consolidated financial position, results of operations or liquidity.

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

     At June 30,  2003,  the Company had net deferred  tax  liabilities  of $137
million. The Company operates in numerous tax jurisdictions, in certain of which
it has temporary  differences that net to deferred tax assets (before  valuation
allowance).  The Company has provided a deferred tax valuation allowance of $197
million at June 30, 2003,  principally related to Germany,  partially offsetting
deferred  tax  assets  which the  Company  believes  do not  currently  meet the
"more-likely-than-not" recognition criteria.

Note 13 - Commitments and contingencies:

  Environmental matters and litigation

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


     The  imposition  of  more  stringent   standards  or   requirements   under
environmental  laws or regulations,  new developments or changes respecting site
cleanup costs or allocation of such costs among PRPs, solvency of other PRPs, or
a determination  that the Company is potentially  responsible for the release of
hazardous  substances at other sites could result in  expenditures  in excess of
amounts currently  estimated by the Company to be required for such matters.  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.  No  assurance  can be given that actual costs will not exceed
accrued amounts or the upper end of the range for sites for which estimates have
been made and no  assurance  can be given that costs will not be  incurred  with
respect to sites as to which no estimate presently can be made.  Further,  there
can be no assurance that additional  environmental matters will not arise in the
future.


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

     At June 30,  2003,  the Company had accrued  approximately  $88 million for
those environmental matters which are reasonably  estimable.  It is not possible
to estimate the range of costs for certain sites.  The upper end of the range of
reasonably  possible  costs to the  Company  for sites  which it is  possible to
estimate costs is approximately  $125 million.  The Company's  estimates of such
liabilities  have not been discounted to present value,  and the Company has not
recognized  any  potential  insurance  recoveries  other  than  the  settlements
discussed in Note 3.


     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 June 30, 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.


     The Company currently  believes the disposition of all claims and disputes,
individually and in the aggregate,  should not have a material adverse effect on
the  Company's  consolidated  financial  position,   results  of  operations  or
liquidity.

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

  Lead pigment litigation

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

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

     The Company  believes  that these  actions are  without  merit,  intends to
continue to deny all  allegations  of wrongdoing and liability and to defend all
actions vigorously. The Company has not accrued any amounts for the pending lead
pigment  litigation.  Liability that may result,  if any,  cannot  reasonably be
estimated. In addition, various legislation and administrative regulations have,
from time to time,  been  enacted or  proposed  that seek to (a) impose  various
obligations on present and former  manufacturers  of lead pigment and lead-based
paint with respect to asserted health  concerns  associated with the use of such
products and (b)  effectively  overturn the precedent set by court  decisions in
which the Company and other pigment manufacturers have been successful. Examples
of such proposed  legislation  include bills which would permit civil  liability
for damages on the basis of market share,  rather than  requiring  plaintiffs to
prove that the defendant's  product caused the alleged  damage,  and bills which
would revive actions barred by the statute of limitations. The Company currently
believes the  disposition  of all claims and disputes,  individually  and in the
aggregate,   should  not  have  a  material  adverse  effect  on  the  Company's
consolidated financial position, results of operations or liquidity. Considering
the Company's  previous  involvement  in the lead pigment and  lead-based  paint
businesses,  the Company  expects that  additional  lead pigment and  lead-based
paint  litigation  may be filed  against the  Company in the  future,  asserting
similar or different  legal theories and seeking  similar or different  types of
damages and relief .

  Other litigation

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

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

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

     The Company currently  believes the disposition of all claims and disputes,
individually and in the aggregate,  should not have a material adverse effect on
the  Company's  consolidated  financial  position,   results  of  operations  or
liquidity.

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

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


RESULTS OF OPERATIONS[this has been revised/reformatted]

<TABLE>

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

<S>                                     <C>           <C>              <C>       <C>           <C>              <C>
Net sales                               $266.6        $226.9          +17%       $519.6        $429.3          +21%
Cost of sales                            197.6         176.2          +12%        386.1         332.5          +16%
                                        ------        ------                     ------        ------
  Gross margin                            69.0          50.7          +36%        133.5          96.8          +38%

Selling, general and
administrative expense                    31.0          24.9          +24%         60.4          49.6          +22%
Litigation settlement gains, net            .7            .4                         .7           2.4
Currency transaction gains
(losses), net                            (2.7)         (2.0)                      (3.8)         (1.5)
Disposition of property and
   Equipment                               1.1            .6                        1.1            .6
Noncompete agreement
   Income                              -                 1.0                         .3           2.0
Corporate expense                       (23.2)         (7.5)                     (38.5)        (17.6)
Other operating income                 -                -                            .2         -
                                        ------        ------                     ------        ------

    Income from operations               $13.9         $18.3          -24%        $33.1         $33.1           N/C
                                        ======        ======                     ======        ======


TiO2 operating statistics
    Percent change in average
      selling prices:
         Using actual foreign
         currency exchange rates                                  +19%                                     +18%
         Impact of changes in
         foreign currency exchange
         rates                                                    -12%                                     -12%
         In billing currencies                                    +7%                                      +6%

    Sales volume (metric tons in
      thousands)                         121.0        122.6        -1%           239.5          235.0        +2%
    Production volume (metric
      Tons in thousands)                 119.5        113.0        +6%           236.7          218.9        +8%
</TABLE>

     The  Company's  sales and gross margin  increased  $39.7  million (17%) and
$18.3 million (36%), respectively, in the second quarter of 2003 compared to the
second  quarter of 2002,  and  increased  $90.3  million (21%) and $36.7 million
(38%), respectively, in the first six months of 2003 compared to the same period
in 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 $5.3 million in the
year-to-date  period).  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 second quarter of 2003 was 7% higher than the
second  quarter of 2002,  with the greatest  improvement  in European and export
markets. the Company's average TiO2 selling prices in billing currencies were 6%
higher in the first six months of 2003 compared to the first six months 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 second quarter of 2003 increased 19% compared
to the second quarter of 2002, and increased 18% in the year-to-date period.

     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  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  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 19% and 18% changes in the Company's  average TiO2 selling prices during the
second  quarter and first six months of 2003 as compared to the same  periods in
2002  using  actual  foreign  currency  exchange  rates  prevailing  during  the
respective  periods  (the  GAAP  measure)  and  the  7%  and  6%,  respectively,
percentage  changes  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 Kronos
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 second quarter of 2003 decreased 1%
from the record second quarter of 2002.  Sales volume in the first six months of
2003, a Kronos  record,  increased 2% from the same period in 2002.  The Company
expects  sales  volumes in the second  half of 2003 will be lower than the first
half of 2003.  The  Company's  sales  volumes  for the full year 2003  should be
slightly higher than the full year of 2002. The Company's TiO2 production volume
in the  second  quarter of 2003,  an  all-time  quarterly  record for NL, was 6%
higher  than the  second  quarter  of 2002,  with  operating  rates at near full
capacity in all periods presented. Production volume for the first half of 2003,
also an all-time record for the Company,  increased 8% compared to the first six
months of 2002.  These increases in TiO2 sales and production  volume  increased
gross  margin by $1.9  million  and $3.9  million,  respectively,  in the second
quarter of 2003  compared to the second  quarter of 2002,  while the increase in
average  TiO2  selling   prices   increased   gross  margin  by  $10.5   million
(year-to-date  impacts  of  $6.5  million,  $10.1  million  and  $20.6  million,
respectively).  Finished  goods  inventories at the end of the second quarter of
2002 represented less than two months of sales.

     The  Company's  cost of sales  increased  $21.4 million (12%) in the second
quarter of 2003  compared to the second  quarter of 2002,  and  increased  $53.6
million (16%) in the year-to-date period.  Kronos' cost of sales as a percentage
of net sales  decreased  from 78% in the second  quarter and first six months of
2002 to 74% in the same  periods in 2003  primarily  due to the  higher  average
selling  prices and higher  production  volume,  partially  offset by the higher
energy costs.

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


     The Company's selling,  general and  administrative  expenses in the second
quarter of 2003  increased  $6.1 million (24%) as compared to the second quarter
of 2002 (and increased $10.7 million, or 22%, in the year-to-date period) due to
higher distribution  expenses in the second quarter and first six months of 2003
of $400,000 and $2.7  million,  respectively,  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 periods as compared to
the same periods in 2002.  The  Company's  selling,  general and  administrative
expenses  were  approximately  11% to 12% of  sales  in both  the  2002 and 2003
periods.

     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  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 second quarter and first six months of 2003
by a net $27.7  million and $54.4  million,  respectively,  compared to the same
periods in 2002.  Fluctuations in the value of the U.S. dollar relative to other
currencies  similarly  impacted Kronos' 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 second quarter and
first six months of 2003 as compared to the same periods of 2002.  Overall,  the
net impact of currency exchange rate fluctuations decreased the Company's income
from operations by $600,000 and $2.4 million in the second quarter and first six
months of 2003 when compared to the year-earlier periods.


     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  litigation  settlement  gains in all  periods
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 second  quarter and first half of 2003 increased
$15.7  million  and $20.9  million,  respectively,  from  comparable  prior-year
periods primarily due to higher environmental expenses related to remediation of
formerly owned business units and higher legal expenses.  Corporate expenses are
expected to be higher for  full-year  2003 as compared to full-year  2002 due to
higher environmental expenses and slightly higher legal expenses associated with
the defense of lead pigment litigation.

     As a net result of the items  discussed  above,  the Company's  income from
operations  decreased  24% from $18.3  million in the second  quarter of 2002 to
$13.9 million in the second  quarter of 2003.  For the first six months of 2003,
the Company's  income from operations was comparable to the $33.1 million in the
first six months of 2002.

     The Company  expects its average TiO2 selling prices in 2003 will be higher
than 2002.  The Company  expects  sales  volume in the second half of 2003 to be
lower than the first half of 2003. The Company's sales volume for full year 2003
should be slightly  higher  than full year 2002.  The  Company  anticipates  its
production  volume for full year 2003 will be higher  than full year  2002.  The
Company's  TiO2  production  volume in 2003 is  expected  to be higher  than the
Company's  2003  TiO2  sales  volume  with  finished  goods  inventories  rising
modestly.  Operating  costs in 2003 are expected to be higher than in 2002.  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.




Other Income (Expense)

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

<TABLE>

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

<S>                             <C>          <C>            <C>           <C>           <C>            <C>
Securities gains, net           $       .2   $       -      $      .2     $       2.5   $       -      $       2.5
Trade Interest income                   .2           .3           (.1)             .4            .6            (.2)
Other interest and dividend
   Income                               .8          1.3           (.5)            1.8           2.6            (.8)

Currency transaction gains             -            6.3          (6.3)            -             6.3           (6.3)

Interest expense                      (8.4)        (8.1)          (.3)          (16.4)        (14.6)          (1.8)
                               ------------- ------------- -------------  ------------- -------------  -------------

                                 $    (7.2)  $      (.2)      $  (7.0)     $    (11.7)     $   (5.1)     $    (6.6)
                               ============= ============= =============  ============= =============  =============
</TABLE>

     Securities gains for the first half of 2003 were higher than the first half
of 2002  primarily due to a $2.3 million  first quarter 2003 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 income was lower in the second
quarter and the first half of 2003 as compared to the year  earlier  periods due
to lower  levels of  available  funds  invested and lower  average  yields.  The
Company  expects  interest  income to be lower for full-year 2003 than full-year
2002 due to lower average yields and lower average levels of funds available for
investment.



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


     Interest expense in the second quarter and first half of 2003 increased $.3
million and $1.8 million from the comparable  prior-year periods,  primarily due
to higher levels of outstanding debt and associated currency effects,  partially
offset by lower interest rates.  Interest  expense in the second quarter of 2002
included  $2.0  million  related to the early  extinguishment  of the  Company's
11.75% Senior Secured Notes.  Assuming no significant  change in interest rates,
interest expense for full-year 2003 is expected to be higher than full-year 2002
due to higher  levels of  outstanding  indebtedness,  partially  offset by lower
average interest rates.

  Provision for income taxes

     The Company  reduced its  deferred  income tax  valuation  allowance by $.4
million  in the first  half of 2003 and $3.0  million  in the first half of 2002
primarily as a result of  utilization  of certain tax  attributes  for which the
benefit  had not been  previously  recognized  under the  "more-likely-than-not"
recognition criteria.

  Other

     Minority  interest  in  all  presented  periods  primarily  related  to  NL
Environmental Services, Inc.

  Recently adopted accounting principles

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

LIQUIDITY AND CAPITAL RESOURCES

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

<TABLE>

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

Net cash provided (used) by: [deleted subtotal on the table]
<S>                                                                                         <C>              <C>
    Operating activities                                                                    18.7             36.5
    Investing activities                                                                    (9.7)           (19.3)
    Financing activities                                                                   (14.4)            39.7
                                                                                     --------------   --------------

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


  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.  Certain  items  included  in the  determination  of net  income do not
represent  current  inflows or  outflows of cash.  For  example,  certain  items
included  in the  determination  of net income have an impact on cash flows from
operating  activities,  but the  impact of such items on cash will  differ  from
their  impact on net  income.  For  example,  the  amount  of income or  expense
recorded for pension and OPEB assets and obligations (which depend upon a number
of factors,  including  actuarial  assumptions used to value  obligations)  will
generally  differ from the  outflows of cash for such  benefits.  Similarly  the
amount of expense recorded for environmental  matters will generally differ from
the outflows of cash for such matters.


     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 $36.5 million in the
first six months of 2002 to $18.7 million in the first six months of 2003.  This
$17.8  million  decrease  was due  primarily to the net effect of (i) higher net
income of $17.8 million, (ii) higher depreciation expense of $3.9 million, (iii)
$21.1 million of higher  refundable income taxes in the first six months of 2003
and  (iv) a  higher  amount  of  net  cash  used  to  fund  changes  in  Kronos'
inventories, receivables, payables and accrued environmental of $13.4 million in
the first six  months 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  and accrued  environmental  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.



  Investing activities

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

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

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

  Financing activities

     In March 2003 the Company  borrowed  (euro)15  million  ($16.1 million when
borrowed)  and in April 2003 the Company  repaid NOK 80 million  ($11.0  million
when repaid) under the revolving credit facility.

     In March 2002,  the Company  redeemed $25 million  principal  amount of its
11.75% Senior  Secured Notes using  available cash on hand, and in June 2002 the
Company  redeemed the  remaining  $169 million  principal  amount of such 11.75%
Senior Secured Notes using a portion of the proceeds from the June 2002 issuance
of the (euro)285 million principal amount of the KII 8.875% Senior Secured Notes
($280 million when issued).  Also in June 2002, KII's operating  subsidiaries in
Germany,  Belgium and Norway  entered  into a new  three-year  (euro)80  million
secured  revolving  credit facility and borrowed  (euro)13 million ($13 million)
and NOK 200 million ($26 million) which,  along with available cash, was used to
repay and terminate KII's short term notes payable ($53.2 million when repaid).

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

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

     In the first half of 2003 and the second  quarter of 2002, the Company made
no  repurchases  of common stock.  During the first quarter of 2002, the Company
purchased approximately 228,000 shares of its common stock in the open market at
an aggregate cost of  approximately  $3.3 million.  The Company is authorized to
repurchase  approximately  1.3 million  additional  shares at July 25, 2003. The
shares may be purchased  over an  unspecified  period of time and,  depending on
market  conditions,  applicable  legal  requirements,  available  cash and other
factors,  the share repurchase program may be suspended at any time and could be
terminated  prior  to  completion.  The  repurchased  shares  are to be  held as
treasury shares available for general corporate purposes.

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


     At June 30,  2003,  the Company had cash and cash  equivalents  aggregating
$54.4 million,  current  restricted cash  equivalents of $25.3 million,  current
restricted marketable debt securities of $10.7 million and noncurrent restricted
marketable  debt  securities of $3.1 million.  Of such  aggregate  $93.5 million
amount, $18 million was held by non-U.S. subsidiaries. Restricted cash decreased
approximately $28 million in the second quarter of 2003 primarily due to a $30.8
million  payment  related  to the final  settlement  of the  previously-reported
Granite City,  Illinois lead smelter site.  The Company may have to pay up to an
additional $.7 million  related to this site upon  completion of an EPA audit of
certain response costs. No further material expenditures are expected to be made
for this site. At June 30, 2003, certain of the Company's  subsidiaries had $102
million  available for borrowing with  approximately $57 million available under
non-U.S.  credit  facilities  (including  $55 million under the European  Credit
Facility) and approximately $45 million under the U.S. Credit Facility.  At June
30, 2003,  the Company had complied with all financial  covenants  governing its
debt agreements.


  Income tax contingencies

     See Note 12 to the Consolidated Financial Statements.

  Lead pigment litigation, environmental matters and other litigation

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

  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:

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

ITEM 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     For a  discussion  of the  Company's  market  risks,  refer to the  caption
"Quantitative and Qualitative  Disclosures About Market Risk" in the 2002 Annual
Report.  There have been no material  changes to the  information  provided that
would require additional  information with respect to the quarter ended June 30,
2003.

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
June 30,  2003.  Based upon their  evaluation,  these  executive  officers  have
concluded that the Company's disclosure controls and procedures are effective as
of the date of such evaluation.

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

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

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



                           PART II. OTHER INFORMATION

ITEM 1.         LEGAL PROCEEDINGS

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

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

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

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

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

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

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

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

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

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

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

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

     Herd v. ASARCO,  et al. (Case No.  CJ-2001-443),  Reeves v. ASARCO,  et al.
(Case No. CJ-02-8), Carr v. ASARCO, et al. (Case No. CJ-02-59),  Edens v. ASARCO
et al. (Case No. CJ-02-245, and Koger v. ASARCO et al. (Case No. CJ-02-284).  In
May 2003,  the Company was  voluntarily  dismissed  with prejudice by plaintiffs
from these previously-described cases.

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

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

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

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

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

<TABLE>
<CAPTION>
            Director                                                    Shares For              Shares Withheld
---------------------------------                                 -----------------------   ------------------------

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


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

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

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

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

     99.1 - Certification.

     99.2 - Certification.

     99.3 - Certification.

     (b) Reports on Form 8-K

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

                July 14, 2003 - Reported Items 7 and 9.

                July 25, 2003 - Reported Items 7 and 9.



                                   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