SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

                  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934





For the quarter ended   March 31, 2005           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 Rule 12b-2 of the Securities Exchange Act of 1934). Yes X  No
                                                                  ---   ---



Number of shares of the Registrant's common stock outstanding on April 29, 2005:
48,550,134.





                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                                      INDEX




                                                                          Page
                                                                         number

Part I.     FINANCIAL INFORMATION

  Item 1.   Financial Statements

            Consolidated Balance Sheets -
             December 31, 2004 and March 31, 2005 (Unaudited)               3

            Consolidated Statements of Income -
             Three months ended March 31, 2004 and 2005 (Unaudited)         5

            Consolidated Statements of Comprehensive Income (Loss) -
             Three months ended March 31, 2004 and 2005 (Unaudited)         6

            Consolidated Statement of Stockholders' Equity -
             Three months ended March 31, 2005 (Unaudited)                  7

            Consolidated Statements of Cash Flows -
             Three months ended March 31, 2004 and 2005 (Unaudited)         8

            Notes to Consolidated Financial Statements (Unaudited)         10

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

  Item 4.   Controls and Procedures                                        36

Part II.    OTHER INFORMATION

  Item 1.   Legal Proceedings                                              39

  Item 6.   Exhibits                                                       39



                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                 (In thousands)

                                   (Unaudited)

<TABLE>

               ASSETS                                    December 31,          March 31,
                                                             2004                2005
                                                         ------------         -----------
                                                          (Restated)
 Current assets:
<S>                                                      <C>                 <C>
   Cash and cash equivalents                             $   99,185          $  127,426
   Restricted cash and cash equivalents                       7,810               5,128
   Restricted marketable debt securities                      9,446               9,916
   Accounts and other receivables                            24,302              24,063
   Refundable income taxes                                       32                 222
   Receivable from affiliates                                 1,634               1,037
   Inventories                                               28,781              20,838
   Prepaid expenses                                           1,332                 881
   Deferred income taxes                                     13,604               4,065
                                                         ----------          ----------

       Total current assets                                 186,126             193,576
                                                         ----------          ----------

 Other assets:
   Marketable equity securities                              75,793              92,568
   Restricted marketable debt securities                      3,848               2,441
   Investment in Kronos Worldwide, Inc.                     175,578             172,664
   Receivable from affiliate                                 10,000              10,000
   Deferred income taxes                                        545                   -
   Goodwill                                                  20,772              19,387
   Other                                                      3,715               7,735
                                                         ----------          ----------

       Total other assets                                   290,251             304,795
                                                         ----------          ----------

 Property and equipment:
   Land                                                       5,356               8,810
   Buildings                                                 26,877              27,076
   Equipment                                                127,044             104,529
   Construction in progress                                   2,431               3,841
                                                         ----------          ----------
                                                            161,708             144,256
   Less accumulated depreciation and amortization            86,490              74,626
                                                         ----------          ----------

       Net property and equipment                            75,218              69,630
                                                         ----------          ----------

                                                         $  551,595          $  568,001
                                                         ==========          ==========
</TABLE>






                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS (CONTINUED)

                                 (In thousands)

                                   (Unaudited)

<TABLE>

    LIABILITIES AND STOCKHOLDERS' EQUITY                 December 31,          March 31,
                                                            2004                 2005
                                                         (Restated)
 Current liabilities:
<S>                                                      <C>                 <C>
   Current maturities of long-term debt                  $       42          $       42
   Accounts payable                                          14,649              11,257
   Accrued liabilities                                       23,134              18,994
   Accrued environmental costs                               16,570              18,144
   Payable to affiliates                                        391               4,405
   Income taxes                                               3,661               1,982
   Deferred income taxes                                     23,842              24,392
                                                         ----------          ----------

       Total current liabilities                             82,289              79,216
                                                         ----------          ----------

 Noncurrent liabilities:
   Long-term debt                                                85                  75
   Accrued pension costs                                      7,968               7,573
   Accrued postretirement benefits costs                     10,572              10,283
   Accrued environmental costs                               51,247              48,698
   Deferred income taxes                                     45,274              46,454
   Other                                                      4,028               4,010
                                                         ----------          ----------

       Total noncurrent liabilities                         119,174             117,093
                                                         ----------          ----------

 Minority interest                                           58,404              58,829
                                                         ----------          ----------

 Stockholders' equity:
   Common stock                                               6,054               6,068
   Additional paid-in capital                               417,760             420,159
   Retained earnings                                         10,970              17,575
   Accumulated other comprehensive income (loss):
     Marketable securities                                   26,783              37,588
     Currency translation                                  (136,648)           (135,336)
     Pension liabilities                                    (33,191)            (33,191)
                                                         ----------          ----------

       Total stockholders' equity                           291,728             312,863
                                                         ----------          ----------

                                                         $  551,595          $  568,001
                                                         ==========          ==========
</TABLE>



Commitments and contingencies (Notes 11 and 13)



          See accompanying notes to consolidated financial statements.






                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

                   Three months ended March 31, 2004 and 2005

                      (In thousands, except per share data)

                                   (Unaudited)
<TABLE>

                                                            2004               2005
                                                            ----               ----

<S>                                                      <C>                <C>
Net sales                                                $ 306,843          $  46,843
Cost of sales                                              237,407             36,560
                                                         ---------          ---------

    Gross margin                                            69,436             10,283

Selling, general and administrative expense                 41,310              6,122
Other operating income (expense):
  Currency transaction gains (losses), net                     398                (54)
  Disposition of property and equipment                        (23)                (4)
  Other income                                                  86                265
  Corporate expense                                         (6,708)            (5,837)
                                                         ---------          ---------

    Income (loss) from operations                           21,879             (1,469)

Equity in earnings of Kronos Worldwide, Inc.                     -              7,790
Other income (expense):
  Trade interest income                                        203                 21
  Interest and dividend income from affiliates                 842                619
  Other interest income                                        357                866
  Securities transactions, net                                 (22)            14,578
  Interest expense                                          (9,426)               (80)
                                                         ---------          ---------

    Income from continuing operations before
         income taxes and minority interest                 13,833             22,325

Provision for income taxes                                   3,472              8,089

Minority interest in after-tax earnings                      5,282                731
                                                         ---------          ---------

    Income from continuing operations                        5,079             13,505

Discontinued operations                                          5               (326)
                                                         ---------          ---------

    Net income                                           $   5,084          $  13,179
                                                         =========          =========

Basic and diluted net income per share                   $     .11          $     .27
                                                         =========          =========

Weighted-average shares used in the calculation
 of net income per share:
  Basic                                                     48,140             48,490
  Dilutive impact of stock options                             139                 71
                                                         ---------          ---------

  Diluted                                                   48,279             48,561
                                                         =========          =========
</TABLE>

          See accompanying notes to consolidated financial statements.





                      NL INDUSTRIES, INC. AND SUBSIDIARIES

             CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

                   Three months ended March 31, 2004 and 2005

                                 (In thousands)

                                   (Unaudited)
<TABLE>

                                                            2004               2005
                                                            ----               ----

<S>                                                      <C>                <C>
Net income                                               $   5,084          $  13,179
                                                         ---------          ---------

Other comprehensive income (loss), net of tax:
  Marketable securities adjustment -
    unrealized holding gains (losses) arising
    during the period                                       (7,130)            10,805

 Currency translation adjustment, net of tax                  (947)             1,312
                                                         ---------          ---------

      Total other comprehensive income (loss)               (8,077)            12,117
                                                         ---------          ---------

          Comprehensive income (loss)                    $  (2,993)         $  25,296
                                                         =========          =========
</TABLE>


          See accompanying notes to consolidated financial statements.





                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                        Three months ended March 31, 2005

                                 (In thousands)

                                   (Unaudited)
<TABLE>

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

<S>                 <C> <C>         <C>      <C>          <C>         <C>            <C>            <C>             <C>
Balance at December 31,
  2004 (Resetated)                  $6,054   $417,760     $ 10,970    $  26,783      $(136,648)     $ (33,191)      $291,728

Net income                            -          -          13,179         -              -              -            13,179

Issuance of common stock                14      2,399         -            -              -              -             2,413

Distribution of shares of
  Kronos Worldwide, Inc.
    common stock                      -          -          (2,637)        -              -              -            (2,637)

Income tax on distribution            -          -          (3,937)        -              -              -            (3,937)

Other comprehensive income, net       -          -            -          10,805          1,312           -            12,117
                                    ------   --------     --------    ---------      ---------      ---------       --------

Balance at March 31, 2005           $6,068   $420,159     $ 17,575    $  37,588      $(135,336)     $ (33,191)      $312,863
                                    ======   ========     ========    =========      =========      =========       ========
</TABLE>



                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                   Three months ended March 31, 2004 and 2005

                                 (In thousands)

                                   (Unaudited)

<TABLE>

                                                            2004               2005
                                                            ----               ----

 Cash flows from operating activities:
<S>                                                      <C>                <C>
   Net income                                            $   5,084          $ 13,179
   Depreciation and amortization                            14,883             2,807
   Deferred income taxes:
     Continuing operations                                  (1,745)            5,236
     Discontinued operations                                     2              (187)
   Minority interest:
     Continuing operations                                   5,282               731
     Discontinued operations                                    (2)             (151)
   Equity in earnings of Kronos Worldwide, Inc.               -               (7,790)
   Distributions from Kronos Worldwide, Inc.                  -                4,456
   Distributions from TiO2 manufacturing joint venture       1,800              -
   Net (gains) losses from securities transactions              22           (14,578)
   Other, net                                                1,975               369
   Change in assets and liabilities:
     Accounts and other receivables                        (32,873)           (4,246)
     Inventories                                            35,276               (46)
     Prepaid expenses                                          152               216
     Accrued environmental costs                            (3,300)             (975)
     Accounts payable and accrued liabilities              (31,381)           (2,930)
     Income taxes                                           22,339             3,509
     Accounts with affiliates                                   50              (324)
     Other, net                                               (764)           (3,162)
                                                         ---------          ---------
         Net cash provided (used) by
          operating activities                              16,800            (3,886)
                                                         ---------          ---------
 Cash flows from investing activities:
   Capital expenditures                                     (5,127)           (5,253)
   Change in restricted cash equivalents and
    marketable debt securities, net                          1,689              2,058
   Proceeds from disposal of:                                 -
     Business unit                                            -                18,094
     Kronos common stock                                      -                19,047
   Cash of disposed business unit                             -                (4,006)
   Other, net                                                   40                  6
                                                         ---------          ---------

         Net cash provided (used) by
          investing activities                              (3,398)            29,946
                                                         =========          =========
</TABLE>





                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                   Three months ended March 31, 2004 and 2005

                                 (In thousands)

                                   (Unaudited)
<TABLE>

                                                            2004               2005
                                                            ----               ----

 Cash flows from financing activities:
   Indebtedness:
<S>                                                      <C>                <C>
     Borrowings                                          $ 100,220          $    -
     Principal payments                                    (79,532)               (10)
     Deferred financing costs paid                             (28)               (28)
   Distributions to minority interest                       (5,974)              (602)
   Proceeds from issuance of common stock:
     NL common stock                                         7,664              2,413
     CompX common stock                                       -                   191
                                                         ---------          ---------

         Net cash provided by financing activities          22,350              1,964
                                                         ---------          ---------

 Cash and cash equivalents - net change from:
   Operating, investing and financing activities            35,752             28,024
   Currency translation                                     (1,265)               217
 Cash and cash equivalents at beginning of period           89,525             99,185
                                                         ---------          ---------

 Cash and cash equivalents at end of period              $ 124,012          $ 127,426
                                                         =========          =========


 Supplemental disclosures - cash paid (received) for:
     Interest, net of amounts capitalized                $   1,337          $      55
     Income taxes, net                                     (16,431)             3,050

     Noncash investing activity - note receivable
          received upon disposal of business segment     $    -             $   4,179
</TABLE>



          See accompanying notes to consolidated financial statements.




                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (Unaudited)


Note 1 - Organization and basis of presentation:

     NL Industries,  Inc. (NYSE: NL) is a subsidiary of Valhi, Inc. (NYSE: VHI).
At March 31, 2005, Valhi held approximately 83% of NL's outstanding common stock
and Contran  Corporation and its subsidiaries held  approximately 91% 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, or is
held by Mr.  Simmons  or  persons  or other  entities  related  to Mr.  Simmons.
Consequently, Mr. Simmons may be deemed to control each of such companies.

     The  consolidated  balance  sheet at March 31, 2005,  and the  consolidated
statements of income, comprehensive income (loss), stockholders' equity and cash
flows for the interim  periods ended March 31, 2004 and 2005, have been prepared
by  the  Company,  without  audit,  in  accordance  with  accounting  principles
generally  accepted in the United States of America ("GAAP").  In the opinion of
management,  all adjustments,  consisting only of normal recurring  adjustments,
necessary  to state  fairly  the  consolidated  financial  position,  results of
operations and cash flows have been made.  See also Note 2.

     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  normally  included  in  financial  statements  prepared in
accordance   with  GAAP  has  been  condensed  or  omitted.   The   accompanying
consolidated  financial  statements  should  be read  in  conjunction  with  the
Company's  Annual  Report on Form 10-K for the year ended  December 31, 2004, as
filed on March 30, 2005 (the "2004 Annual Report").

     On September 24, 2004, the Company  completed the acquisition of 10,374,000
shares of CompX  International  Inc.  (NYSE:  CIX)  common  stock,  representing
approximately  68% of  the  outstanding  shares  of  CompX  common  stock.  NL's
acquisition  was  accounted  for under  GAAP as a transfer  of net assets  among
entities under common control, and accordingly resulted in a change in reporting
entity.  The Company  has  retroactively  restated  its  consolidated  financial
statements to reflect the consolidation of CompX for all periods presented.

     Prior to July 2004, Kronos Worldwide, Inc. (NYSE: KRO) was a majority-owned
subsidiary of the Company.  Following  the  Company's  July 2004 dividend in the
form of  shares of Kronos  common  stock  distributed  to NL  shareholders,  the
Company's  ownership  of Kronos  was  reduced  to less  than 50%.  Consequently,
effective  July 1, 2004 the  Company  ceased to  consolidate  Kronos'  financial
position,  results  of  operations  and cash  flows  and the  Company  commenced
accounting  for its  interest  in  Kronos  by the  equity  method.  The  Company
continues to report Kronos as a consolidated  subsidiary  through June 30, 2004,
including the  consolidation of Kronos' results of operations and cash flows for
the first quarter of 2004.

     As  disclosed  in  the  2004  Annual  Report,   the  Company  accounts  for
stock-based employee compensation in accordance with Accounting Principles Board
Opinion  ("APBO") No. 25,  "Accounting  for Stock Issued to Employees,"  and its
various interpretations. See Note 15. Under APBO No. 25, no compensation cost is
generally  recognized  for fixed stock  options in which the  exercise  price is
greater than or equal to the market price on the grant date.  Prior to 2004, and
following the cash  settlement of certain stock options held by employees of NL,
the  Company  commenced  accounting  for its stock  options  using the  variable
accounting  method of APBO No. 25, because NL could not overcome the presumption
that it would not similarly cash settle its remaining  stock options.  Under the
variable accounting method, the intrinsic value of all unexercised stock options
(including  stock  options  with an exercise  price at least equal to the market
price on the date of grant) is accrued as an expense,  with subsequent increases
(decreases)  in the  Company's  market  price  resulting in the  recognition  of
additional  compensation  expense (income).  Net compensation cost recognized by
the Company in accordance with APBO No. 25 was approximately $1.1 million in the
first quarter of 2004, and net  compensation  cost recognized by the Company was
not significant in the first quarter of 2005.

     The following  table presents what the Company's  consolidated  net income,
and related per share amounts,  would have been in the first quarter of 2004 and
2005 if the Company and its  subsidiaries  and  affiliates  had each  elected to
account for their respective  stock-based employee compensation related to stock
options  in  accordance  with the fair  value-based  recognition  provisions  of
Statement of Financial  Accounting  Standards ("SFAS") No. 123,  "Accounting for
Stock-Based Compensation," for all awards granted subsequent to January 1, 1995.

<TABLE>
                                                              Three months
                                                             ended March 31,
                                                         2004               2005
                                                         ----               ----
                                                          (In millions, except
                                                            per share amounts)

<S>                                                      <C>               <C>
Net income as reported                                   $ 5.1             $13.2

Adjustments, net of applicable income
 tax effects and minority interest:
Stock-based employee compensation expense
   determined under APBO No. 25                             .6                -
Stock-based employee compensation expense
   determined under SFAS No. 123                           (.1)               -
                                                         -----             -----

Pro forma net income                                     $ 5.6             $13.2
                                                         =====             =====

Basic and diluted net income per share:
  As reported                                            $ .11             $ .27
  Pro forma                                              $ .12             $ .27
</TABLE>

Note 2 - December 31, 2004 restated balance sheet:

     The consolidated balance sheet of the Company at December 31, 2004 has been
condensed from the Companys audited consolidated  fianancial  statements at that
date. On May 9, 2005,  the Company and its audit  committee  concluded  that the
Company will restate its  consolidated  financial  statements as of December 31,
2004,  and for the year then ended,  to reflect an additional  $4.2 million,  or
$.08 per diluted share,  noncash income tax benefit in its results of operations
for such  year.  Such $4.2  million  relates  to  recognition  of an  additional
deferred income tax benefit related to discontinued operations, to be recognized
in the fourth  quarter of 2004.  The  following  table  shows (i) the  Company's
December  31, 2004  consolidated  balance  sheet as  originally  reported,  (ii)
adjustments  to such  consolidated  balance  sheet  to  reflect  the  additional
deferred  income  tax  benefit  and  (iii)  the  Company's   December  31,  2004
consolidated  balance  sheet,  as restated to reflect  the  additional  deferred
income tax benefit.


                      (In thousands, except per share data)

                                   (Unaudited)

<TABLE>
<CAPTION>
               ASSETS
                                                       Originally                         As
                                                        reported      Adjustment       restated
                                                        --------      ----------       ---------

 Current assets:
<S>                                                     <C>             <C>            <C>
   Cash and cash equivalents                            $  99,185       $  -           $  99,185
   Restricted cash and cash equivalents                     7,810          -               7,810
   Restricted marketable debt securities                    9,446          -               9,446
   Accounts and other receivables                          24,302          -              24,302
   Refundable income taxes                                     32          -                  32
   Receivable from affiliates                               1,634          -               1,634
   Inventories                                             28,781          -              28,781
   Prepaid expenses                                         1,332          -               1,332
   Deferred income taxes                                    9,368        4,236            13,604
                                                       ----------       ------        ----------

       Total current assets                               181,890        4,236           186,126
                                                       ----------       ------        ----------

 Other assets:
     Marketable equity securities                          75,793          -              75,793
     Restricted marketable debt securities                  3,848          -               3,848
     Investment in Kronos Worldwide, Inc.                 175,578          -             175,578
     Receivable from affiliate                             10,000          -              10,000
     Deferred income taxes                                    545          -                 545
     Goodwill                                              20,772          -              20,772
     Other assets                                           3,715          -               3,715
                                                       ----------       ------        ----------

       Total other assets                                 290,251          -             290,251
                                                       ----------       ------        ----------

 Property and equipment:
   Land                                                     5,356          -               5,356
   Buildings                                               26,877          -              26,877
   Equipment                                              127,044          -             127,044
   Construction in progress                                 2,431          -               2,431
                                                       ----------       ------        ----------
                                                          161,708                        161,708
   Less accumulated depreciation                           86,490          -              86,490
                                                       ----------       ------        ----------

       Net property and equipment                          75,218          -              75,218
                                                       ----------       ------        ----------

                                                       $  547,359       $4,236        $  551,595
                                                       ==========       ======        ==========
</TABLE>



                      (In thousands, except per share data)

                                   (Unaudited)

<TABLE>
<CAPTION>
    LIABILITIES AND STOCKHOLDERS' EQUITY
                                                       Originally                           As
                                                        reported       Adjustment        restated
                                                       ----------      ----------        --------
 Current liabilities:
<S>                                                    <C>               <C>           <C>
   Current maturities of long-term debt                $       42        $  -          $       42
   Accounts payable                                        14,649           -              14,649
   Accrued liabilities                                     23,134           -              23,134
   Accrued environmental costs                             16,570           -              16,570
   Payable to affiliates                                      391           -                 391
   Income taxes                                             3,661           -               3,661
   Deferred income taxes                                   23,842           -              23,842
                                                       ----------        ------        ----------

       Total current liabilities                           82,289           -              82,289
                                                       ----------        ------        ----------

 Noncurrent liabilities:
   Long-term debt                                              85           -                  85
   Accrued pension costs                                    7,968           -               7,968
   Accrued postretirement benefits cost                    10,572           -              10,572
   Accrued environmental costs                             51,247           -              51,247
   Deferred income taxes                                   45,274           -              45,274
   Other                                                    4,028           -               4,028
                                                       ----------        ------        ----------

       Total noncurrent liabilities                       119,174           -             119,174
                                                       ----------        ------        ----------

 Minority interest                                         58,404           -              58,404
                                                       ----------        ------        ----------

 Stockholders' equity:
   Preferred stock, no par value; 5,000
    Shares authorized; none issued                           -              -                -
   Common stock, $.125 par value; 150,000
    shares authorized; 66,845 and 48,440
    shares issued                                           6,054           -               6,054
   Additional paid-in capital                             417,760           -             417,760
   Retained earnings                                        6,734         4,236            10,970
   Accumulated other comprehensive income:
     Marketable securities                                 26,783           -              26,783
     Currency translation                                (136,648)          -            (136,648)
     Pension liabilities                                  (33,191)          -             (33,191)
                                                       ----------        ------        ----------

       Total stockholders' equity                         287,492         4,236           291,728
                                                       ----------        ------        ----------

                                                       $  547,359        $4,236        $  551,595
                                                       ==========        ======        ==========
</TABLE>






Note 3 - Business segment information
                                                        % owned at
  Business segment             Entity                 March 31, 2005
---------------------  -------------------------     ----------------

  Component products    CompX International Inc.            68%
  Chemicals             Kronos Worldwide, Inc.              36%

     The Company's  ownership of CompX is held directly by CompX Group,  Inc, an
82.4%-owned  subsidiary of the Company. An affiliate of Valhi owns the remaining
17.6% of CompX  Group.  CompX  Group's  sole asset  consists  of shares of CompX
common stock representing  approximately 83% of the total number of CompX shares
outstanding,  and the percentage  ownership of CompX shown above represents NL's
ownership interest in CompX Group multiplied by CompX Group's ownership interest
in CompX.

     In March 2005, NL paid its $.25 per share regular quarterly dividend in the
form of shares of Kronos common stock in which approximately  266,000 shares, or
approximately  .5% of Kronos'  outstanding  common stock, were distributed to NL
shareholders  in the form of a  pro-rata  dividend.  NL's  distribution  of such
shares of Kronos  common stock is taxable to NL, and NL is required to recognize
a taxable  gain equal to the  difference  between the fair  market  value of the
shares of Kronos  common stock  distributed  and NL's adjusted tax basis in such
stock at the date of  distribution.  The Company  recognized  a $3.9 million tax
liability in the first quarter of 2005 related to the Kronos shares distributed.

     During the first quarter of 2005, NL also sold approximately 467,000 shares
of Kronos common stock in market transactions for an aggregate of $19.0 million.
The Company  recognized a $14.6 million  securities  transaction gain related to
such sales.

     CompX (NYSE:  CIX) and Kronos (NYSE:  KRO) each file periodic  reports with
the  Securities  and  Exchange  Commission  ("SEC")  pursuant to the  Securities
Exchange Act of 1934, as amended.


<TABLE>

                                                               Three months
                                                              ended March 31,
                                                         2004                2005
                                                         ----                ----
                                                              (In millions)

 Net sales:
<S>                                                      <C>                <C>
   Chemicals                                             $263.3             $   -
   Component products                                      43.5               46.8
                                                         ------             ------

     Total net sales                                     $306.8             $ 46.8
                                                         ======             ======

 Segment profit:
   Chemicals                                             $ 26.2             $   -
   Component products                                       2.5                4.2
                                                         ------             ------

     Total segment profit                                  28.7                4.2

 General corporate items:
   Interest and dividend income from affiliates              .8                 .6
   Other interest income                                     .4                 .9
   Securities transactions, net                              -                14.6
   Other income                                              -                  .1
   General corporate expenses, net                         (6.7)              (5.8)
   Interest expense                                        (9.4)               (.1)
                                                         ------             ------

                                                           13.8               14.5
 Equity in Kronos                                            -                 7.8
                                                         ------             ------

     Income from continuing operations before
          income taxes and minority interest             $ 13.8             $ 22.3
                                                         ======             ======
</TABLE>


     Component  products  segment profit,  as presented  above,  may differ from
amounts separately  reported by CompX because the Company defines segment profit
differently than CompX.

Note 4 - Accounts and other receivables:
<TABLE>

                                                         December 31,          March 31,
                                                             2004                2005
                                                         ------------          ---------
                                                                  (In thousands)

<S>                                                      <C>                    <C>
 Trade receivables                                       $  24,759              $ 21,979
 Recoverable VAT and other receivables                         551                 2,457
 Allowance for doubtful accounts                            (1,008)                 (373)
                                                         ---------              --------

                                                         $  24,302              $ 24,063
                                                         =========              ========
</TABLE>

Note 5 - Inventories:
<TABLE>

                                                         December 31,          March 31,
                                                             2004                2005
                                                         ------------          ---------
                                                                  (In thousands)

<S>                                                      <C>                   <C>
 Raw materials                                           $   8,193              $  4,774
 Work in process                                            10,827                 9,776
 Finished products                                           9,696                 6,214
 Supplies                                                       65                    74
                                                         ---------              --------

                                                         $ 28,781               $ 20,838
                                                         =========              ========
</TABLE>





Note 6 - Marketable equity securities:
<TABLE>

                                                         December 31,          March 31,
                                                             2004                2005
                                                         ------------          ---------
                                                                  (In thousands)

<S>                                                      <C>                   <C>
 Valhi common stock                                      $  75,770              $ 92,535
 Other                                                          23                    33
                                                         ---------              --------

                                                         $  75,793              $ 92,568
                                                         =========              ========
</TABLE>

     At March 31, 2005,  the Company owned  approximately  4.7 million shares of
Valhi common stock with a quoted market price of $19.65 per share  (December 31,
2004 quoted market price - $16.09 per share).

Note 7 - Other noncurrent assets:
<TABLE>

                                                         December 31,          March 31,
                                                             2004                2005
                                                         ------------          ---------
                                                                  (In thousands)

<S>                                                      <C>                   <C>
 Intangible assets                                       $   3,190              $  3,041
 Note receivable                                              -                    4,179
 Other                                                         525                   515
                                                         ---------              --------

                                                         $   3,715              $  7,735
                                                         =========              ========
</TABLE>

     The note receivable relates to part of the consideration  received by CompX
from the January 2005 sale of its Thomas Regout  operations in Europe.  See Note
14.

Note 8 - Accrued liabilities:

<TABLE>

                                                         December 31,          March 31,
                                                             2004                2005
                                                         ------------          ---------
                                                                  (In thousands)

<S>                                                      <C>                    <C>
 Employee benefits                                       $  14,775              $ 11,141
 Other                                                       8,359                 7,853
                                                         ---------              --------

                                                         $  23,134              $ 18,994
                                                         =========              ========
</TABLE>


Note 9 - Other noncurrent liabilities:
<TABLE>

                                                         December 31,          March 31,
                                                             2004                2005
                                                         ------------          ---------
                                                                  (In thousands)

<S>                                                      <C>                    <C>
 Insurance                                               $   2,507              $  2,498
 Other                                                       1,521                 1,512
                                                         ---------              --------

                                                         $   4,028              $  4,010
                                                         =========              ========
</TABLE>






Note 10 - Minority interest:
<TABLE>

                                                         December 31,          March 31,
                                                             2004                2005
                                                         ------------          ---------
                                                                  (In thousands)

 Minority interest in net assets:
<S>                                                      <C>                    <C>
   CompX International Inc.                              $  49,154              $ 49,549
   NL Environmental Management Services, Inc.                9,250                 9,280
                                                         ---------              --------

                                                         $  58,404              $ 58,829
                                                         =========              ========
</TABLE>

<TABLE>

                                                               Three months
                                                              ended March 31,
                                                         2004                2005
                                                         ----                ----
                                                              (In thousands)

 Minority interest in net earnings:
<S>                                                      <C>                <C>
   Kronos Worldwide, Inc.                                $   4,786          $  -
   CompX International Inc.                                    488               701
   NL Environmental Management Services, Inc.                 -                   30
   Subsidiary of Kronos Worldwide, Inc.                          8             -
                                                         ---------          --------

                                                         $   5,282          $    731
                                                         =========          ========
</TABLE>

Note 11 - Provision for income taxes:

<TABLE>

                                                               Three months
                                                              ended March 31,
                                                         2004                2005
                                                         ----                ----
                                                              (In millions)

<S>                                                      <C>                <C>
 Expected tax expense                                    $  4.9             $  7.8
 Non-U.S. tax rates                                          .1                (.1)
 Incremental U.S. tax and rate differences on                                 (1.4)
  equity in earnings of non-tax group companies              .2
 Change in deferred income tax valuation                                        -
   allowance, net                                          (3.0)
 Nondeductible expenses                                     1.0                 .1
 U.S. state income taxes, net                                -                  .1
 Excess of book basis over tax basis of Kronos                                 1.6
   common stock sold                                         -
 Other, net                                                  .3                 -
                                                         ------             ------

                                                         $  3.5             $  8.1
                                                         ======             ======
</TABLE>

     Certain U.S.  and non-U.S.  tax returns of the Company and Kronos are being
examined and tax  authorities  have or may propose tax  deficiencies,  including
penalties and interest. For example:

o    NL's  and  NL's  majority-owned  subsidiary,  NL  Environmental  Management
     Services,  Inc. ("EMS"), U.S. federal income tax returns for the years 1998
     through  2000 have been  audited by the U.S.  tax  authorities.  During the
     course  of the  audit,  the IRS  proposed  a  substantial  tax  deficiency,
     including  interest,  related  to a  restructuring  transaction.  To  avoid
     protracted  litigation,  minimize the hazards of such  litigation and other
     considerations,  NL and  EMS  applied  to take  part  in an IRS  settlement
     initiative   applicable  to  transactions   similar  to  the  restructuring
     transaction.  In April 2003, the IRS notified NL and EMS that they had been
     accepted into such settlement initiative.  NL has reached an agreement with
     the IRS concerning the settlement of this matter  pursuant to which,  among
     other  things,  the  Company  paid  approximately  $21  million,  including
     interest,  up front as a partial  payment of the  settlement  amount (which
     amount was paid in April 2005 and is classified  as a current  liability at
     March  31,  2005),  and NL will be  required  to  recognize  the  remaining
     settlement amount  (approximately  $15 million) ratably over a 15-year time
     period  beginning  in  2004.  NL and the IRS  have  signed  the  settlement
     agreement, and the case is now closed.

o    Kronos has received a preliminary  tax assessment  related to 1993 from the
     Belgian tax  authorities  proposing  tax  deficiencies,  including  related
     interest,  of approximately  euro 6 million ($8 million at March 31, 2005).
     Kronos  has  filed  a  protest  to this  assessment,  and  believes  that a
     significant  portion of the  assessment is without  merit.  The Belgian tax
     authorities  have filed a lien on the fixed assets of Kronos'  Belgian TiO2
     operations  in  connection  with this  assessment.  In April  2003,  Kronos
     received a notification from the Belgian tax authorities of their intent to
     assess a tax  deficiency  related  to 1999  that,  including  interest,  is
     expected to be approximately euro 9 million ($12 million).  Kronos believes
     the proposed  assessment is  substantially  without  merit,  and Kronos has
     filed a written response.

o    The  Norwegian  tax  authorities  have  notified  Kronos of their intent to
     assess tax  deficiencies  of  approximately  kroner 12 million ($2 million)
     relating  to the years  1998  through  2000.  Kronos has  objected  to this
     proposed assessment.

o    Kronos has  received a  preliminary  tax  assessment  from the Canadian tax
     authorities  related to the years 1998 and 1999 proposing tax  deficiencies
     of Cdn. $11 million ($9 million). Kronos has filed a protest and believes a
     significant portion of the assessment is without merit.

     No  assurance  can be given  that  these  unresolved  tax  matters  will be
resolved in the Company's favor in view of the inherent  uncertainties  involved
in settlement initiatives,  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  its  consolidated  financial  position,  results  of  operations  or
liquidity.

Note 12 - Employee benefit plans:

     The components of net periodic  defined  benefit  pension cost (income) are
presented in the table below.
<TABLE>

                                                               Three months
                                                              ended March 31,
                                                         2004                2005
                                                         ----                ----
                                                              (In thousands)

<S>                                                      <C>                 <C>
 Service cost                                            $ 1,669             $  -
 Interest cost                                             5,031                 760
 Expected return on plan assets                           (4,722)             (1,017)
 Amortization of prior service cost                          141                -
 Amortization of net transition obligations                  143                 (17)
 Recognized actuarial losses                                 962                 100
                                                         -------             -------

                                                         $ 3,224             $  (174)
                                                         =======             =======
</TABLE>

     The components of net periodic  postretirement benefits other than pensions
("OPEB") cost are presented in the table below.

<TABLE>

                                                               Three months
                                                              ended March 31,
                                                         2004                2005
                                                         ----                ----
                                                              (In thousands)


<S>                                                      <C>                <C>
 Service cost                                            $   57             $  -
 Interest cost                                              471                211
 Amortization of prior service credit                      (255)               (72)
 Recognized actuarial losses                                 71                -
                                                         ------             ------

                                                         $  344             $  139
                                                         ======             ======
</TABLE>

Note 13 - Commitments and contingencies:

     Lead pigment  litigation.  The  Company's  former  operations  included the
manufacture  of lead pigments for use in paint and lead-based  paint.  NL, other
former  manufacturers of lead pigments for use in paint,  and lead-based  paint,
and the Lead Industries  Association (which discontinued  business operations in
2002) have been named as defendants in various legal proceedings seeking damages
for personal  injury,  property damage and governmental  expenditures  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
and school  districts,  and certain  others have been asserted as class actions.
These lawsuits seek recovery under a variety of theories,  including  public and
private nuisance,  negligent  product design,  negligent failure to warn, strict
liability,  breach  of  warranty,   conspiracy/concert  of  action,  aiding  and
abetting, enterprise liability, market share liability,  intentional tort, fraud
and  misrepresentation,   violations  of  state  consumer  protection  statutes,
supplier negligence and similar claims.

     The plaintiffs in these actions  generally seek to impose on the defendants
responsibility for lead paint abatement and 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.  A number of cases are  inactive  or have been
dismissed or  withdrawn.  Most of the remaining  cases are in various  pre-trial
stages.  Some are on appeal  following  dismissal or summary judgment rulings in
favor of the defendants. In addition,  various other cases are pending (in which
the Company is not a defendant)  seeking recovery for injury allegedly caused by
lead pigment and  lead-based  paint.  Although the Company is not a defendant in
these cases,  the outcome of these cases may have an impact on additional  cases
being filed against the Company in the future.

     The Company  believes these actions are without merit,  intends to continue
to deny all  allegations  of wrongdoing  and liability and to defend against all
actions vigorously. The Company has neither lost nor settled any of these cases.
The  Company has not  accrued  any  amounts  for the  pending  lead  pigment and
lead-based  paint  litigation.   Liability  that  may  result,  if  any,  cannot
reasonably  be  estimated.  There can be no assurance  that the Company will not
incur  liability in the future in respect of this pending  litigation in view of
the  inherent  uncertainties  involved in court and jury  rulings in pending and
possible  future cases.  If any such future  liability  were to be incurred,  it
could be material to the Company's consolidated financial statements, results of
operations and liquidity.

     NL  previously  filed an action  against  certain of its  former  insurance
carriers for coverage with respect to defense costs related to certain  specific
lead pigment litigation matters. This action was settled in 2000. The Company is
continuing  discussions with certain former insurance carriers for coverage with
respect to defense  costs related to the  Company's  remaining  past and present
lead pigment  litigation  matters.  Whether insurance coverage for defense costs
will be found to exist for lead  pigment  litigation  depends  on a  variety  of
factors,  and there can be no assurance  that the Company will be  successful in
obtaining  reimbursement for past or future defense costs incurred.  The Company
has  not  considered  any  potential  insurance   recoveries  for  lead  pigment
litigation in determining related accruals.

     Environmental matters and litigation. The Company's operations are governed
by  various  environmental  laws  and  regulations.  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 Company's  policy is to maintain  compliance
with applicable  environmental  laws and regulations at all of its plants and to
strive to improve environmental performance.  From time to time, the Company may
be subject to  environmental  regulatory  enforcement  under  U.S.  and  foreign
statutes, resolution of which typically involves the establishment of compliance
programs. 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.  The  Company  believes  all of its plants are in
substantial compliance with applicable environmental laws.

     Certain  properties and facilities used in the Company's former businesses,
including  divested  primary  and  secondary  lead  smelters  and former  mining
locations of NL, 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 various  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.  EPA'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.

     Environmental obligations are difficult to assess and estimate for numerous
reasons including the complexity and differing  interpretations  of governmental
regulations,  the number of PRPs and the PRPs'  ability or  willingness  to fund
such  allocation of costs,  their financial  capabilities  and the allocation of
costs among PRPs,  the  solvency of other  PRPs,  the  multiplicity  of possible
solutions,  and the years of  investigatory,  remedial and  monitoring  activity
required.   In  addition,   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,  the results of future  testing and analysis  undertaken
with respect to certain sites 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 or 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. If any such future liability
were  to be  incurred,  it  could  be  material  to the  Company's  consolidated
financial statements, results of operations and liquidity.

     The  Company  records  liabilities  related  to  environmental  remediation
obligations  when  estimated  future  expenditures  are probable and  reasonably
estimable.  Such accruals are adjusted as further  information becomes available
or  circumstances  change.  Estimated  future  expenditures  are  generally  not
discounted to their present value.  Recoveries of  remediation  costs from other
parties, if any, are recognized as assets when their receipt is deemed probable.
At March 31, 2005, no receivables for recoveries had been recognized.

     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
is classified as a noncurrent liability.

     A summary of the  activity in the  Company's  accrued  environmental  costs
during the first quarter of 2005 is presented in the table below.

                                                               Amount
                                                           --------------
                                                           (In thousands)

 Balance at the beginning of the period                       $ 67,817
 Additions charged to expense                                    1,993
 Payments                                                       (2,968)
                                                              --------

 Balance at the end of the period                             $ 66,842
                                                              ========

 Amounts recognized in the balance sheet
  at the end of the period:
      Current liability                                       $ 18,144
      Noncurrent liability                                      48,698
                                                              --------

                                                              $ 66,842
                                                              ========

     On a quarterly  basis,  the Company  evaluates the  potential  range of its
liability  at sites  where it has been  named as a PRP or  defendant,  including
sites for which EMS has contractually assumed the Company's obligation. At March
31, 2005, the Company had accrued $66.8 million for those environmental  matters
which the Company believes are reasonably estimable.  The Company believes it is
not possible to estimate the range of costs for certain sites.  The upper end of
the range of  reasonably  possible  costs to the Company for sites for which the
Company believes it is possible to estimate costs is approximately  $91 million.
The Company's  estimates of such liabilities have not been discounted to present
value.

     At March 31, 2005,  there are  approximately 20 sites for which the Company
is  unable  to  estimate  a range of  costs.  For  these  sites,  generally  the
investigation is in the early stages,  and it is either unknown as to whether or
not the Company  actually had any  association  with the site, or if the Company
had association with the site, the nature of its responsibility, if any, for the
contamination  at the site and the extent of  contamination.  The timing on when
information  would  become  available  to the  Company  to allow the  Company to
estimate a range of loss is unknown and dependent on events  outside the control
of the Company,  such as when the party alleging liability provides  information
to the Company.

     At March  31,  2005,  the  Company  had $14  million  in  restricted  cash,
restricted cash  equivalents  and restricted  marketable debt securities held by
special purpose trusts,  the assets of which can only be used to pay for certain
of the  Company's  future  environmental  remediation  and  other  environmental
expenditures  (December 31, 2004 - $19 million). Use of such restricted balances
does not affect the Company's consolidated net cash flows.

     Other  litigation.  Reference  is  made to the  2004  Annual  Report  for a
discussion of certain other legal proceedings to which the Company is a party.

     NL has been  named as a  defendant  in  various  lawsuits  in a variety  of
jurisdictions,  alleging personal injuries as a result of occupational  exposure
primarily to products manufactured by formerly-owned operations of NL containing
asbestos,  silica and/or mixed dust.  Approximately  500 of these types of cases
involving a total of  approximately  22,000  plaintiffs and their spouses remain
pending. Of these plaintiffs,  approximately 4,700 are represented by five cases
pending in Mississippi state courts and  approximately  5,000 are represented by
three cases that have been removed to federal court in  Mississippi,  where they
have been,  or are in the process of being,  transferred  to the  multi-district
litigation  pending in the United States District Court for the Eastern District
of  Pennsylvania.  NL has not accrued any  amounts for this  litigation  because
liability that might result to NL, if any,  cannot be reasonably  estimated.  In
addition,  from time to time,  NL has  received  notices  regarding  asbestos or
silica  claims  purporting  to be brought  against  former  subsidiaries  of NL,
including   notices  provided  to  insurers  with  which  NL  has  entered  into
settlements  extinguishing  certain insurance policies.  These insurers may seek
indemnification from NL.

     In  addition  to the  litigation  described  above,  the  Company  and  its
affiliates  are also  involved  in  various  other  environmental,  contractual,
product  liability,  patent (or  intellectual  property),  employment  and other
claims and disputes incidental to its present and former businesses.  In certain
cases,  the Company has insurance  coverage for such items;  however the Company
does  not  currently  expect   additional   material   insurance   coverage  for
environmental claims. The Company currently believes that the disposition of all
claims  and  disputes,  individually  or in the  aggregate,  should  not  have a
material  adverse  effect on its  consolidated  financial  position,  results of
operations or liquidity.

Note 14 - Discontinued operations:

     As discussed in the 2004 Annual  Report,  in December 2004 CompX's board of
directors  committed to a formal plan to dispose of its Thomas Regout operations
in the  Netherlands.  Such  operations,  which  previously  were included in the
Company's  component  products  operating  segment  (see Note 3), met all of the
criteria  under GAAP to be  classified as an asset held for sale at December 31,
2004,  and  accordingly  the results of  operations  of Thomas  Regout have been
classified as discontinued operations for all periods presented. The Company has
not reclassified its consolidated balance sheets or statements of cash flows. In
classifying the net assets of the Thomas Regout  operations as an asset held for
sale, the Company  concluded that the carrying  amount of the net assets of such
operations  exceeded  the  estimated  fair  value  less  costs  to  sell of such
operations, and accordingly in the fourth quarter of 2004 the Company recognized
a $6.5 million  impairment  charge to  write-down  its  investment in the Thomas
Regout operations to its estimated net realizable value. Such charge represented
an impairment of goodwill.

     In January 2005,  CompX  completed the sale of such operations for proceeds
(net of expenses) of approximately $22.3 million.  The net proceeds consisted of
approximately  $18.1  million  in cash at the  date of sale  and a $4.2  million
principal amount note receivable from the purchaser  bearing interest at a fixed
rate of 7% and payable over four years. The note receivable is collateralized by
a secondary lien on the assets sold and is subordinated  to certain  third-party
indebtedness of the purchaser.  Accordingly,  the Company no longer includes the
results of operations  of Thomas  Regout  subsequent to December 31, 2004 in its
consolidated  financial statements.  The net proceeds from the January 2005 sale
of Thomas Regout were approximately  $860,000 less than the net realizable value
estimated at the time of the goodwill impairment charge (primarily due to higher
expenses  associated  with the disposal of the Thomas  Regout  operations),  and
discontinued  operations in the first quarter of 2005 includes a charge  related
to such  differential  ($326,000  loss,  net of income tax benefit and  minority
interest).  During the first  quarter  of 2004,  the  Thomas  Regout  operations
reported  net sales of $9.9  million,  operating  income of  $400,000,  interest
expense of $400,000 and a nominal amount of net income.

Note 15 - Accounting principles not yet implemented:

     Inventory costs. The Company will adopt SFAS No. 151,  "Inventory Costs, an
amendment of ARB No. 43,  Chapter 4," for inventory  costs  incurred on or after
January 1, 2006.  SFAS No. 151 requires that the allocation of fixed  production
overhead costs to inventory shall be based on normal  capacity.  Normal capacity
is not defined as a fixed amount;  rather,  normal capacity refers to a range of
production  levels expected to be achieved over a number of periods under normal
circumstances,  taking into account the loss of capacity  resulting from planned
maintenance  shutdowns.  The amount of fixed overhead  allocated to each unit of
production is not increased as a consequence of idle plant or production  levels
below the low end of normal  capacity,  but instead a portion of fixed  overhead
costs is charged to expense as incurred. Alternatively, in periods of production
above the high end of  normal  capacity,  the  amount  of fixed  overhead  costs
allocated to each unit of  production is decreased so that  inventories  are not
measured above cost.  SFAS No. 151 also clarifies  existing GAAP to require that
abnormal freight and wasted materials (spoilage) are to be expensed as incurred.
The Company  believes its production cost accounting  already  complies with the
requirements  of SFAS No. 151, and the Company does not expect  adoption of SFAS
No. 151 will have a material effect on its consolidated financial statements.

     Stock  options.  As permitted by regulations of the Securities and Exchange
Commission ("SEC") the Company will adopt SFAS No. 123R,  "Share-Based Payment,"
as of January  1, 2006.  SFAS No.  123R,  among  other  things,  eliminates  the
alternative in existing GAAP to use the intrinsic value method of accounting for
stock-based  employee  compensation under APBO No. 25. Upon adoption of SFAS No.
123R,  the Company will  generally be required to recognize the cost of employee
services  received in exchange for an award of equity  instruments  based on the
grant-date  fair value of the award,  with the cost  recognized  over the period
during  which an employee is  required to provide  services in exchange  for the
award (generally, if the vesting period of the award). No compensation cost will
be recognized in the  aggregate  for equity  instruments  for which the employee
does not render the requisite  service  (generally,  the instrument is forfeited
before it has  vested).  The  grant-date  fair  value  will be  estimated  using
option-pricing  models  (e.g.  Black-Scholes  or a  lattice  model).  Under  the
transition  alternatives  permitted  under SFAS No. 123R, the Company will apply
the new standard to all new awards  granted on or after January 1, 2006,  and to
all awards  existing as of December  31, 2005 which are  subsequently  modified,
repurchased or cancelled.  Additionally, as of January 1, 2006, the Company will
be required to  recognize  compensation  cost for the portion of any  non-vested
award  existing  as of  December  31, 2005 over the  remaining  vesting  period.
Because the number of non-vested  awards as of December 31, 2005 with respect to
options  granted by NL is not  expected to be  material,  the effect of adopting
SFAS No.  123R is not  expected  to be  significant  in so far as it  relates to
existing stock options.  Should NL or its subsidiaries and affiliates,  however,
either grant a  significant  number of options or modify,  repurchase  or cancel
existing  options  in the  future,  the  effect  on the  Company's  consolidated
financial statements could be material.

     Impairment of  investments.  In June 2004,  the Emerging  Issues Task Force
("EITF") issued EITF No. 03-01, The Meaning of  Other-Than-Temporary  Impairment
and Its Application to Certain  Investments.  EITF No. 03-01, the effective date
of which  is still  pending  based  upon a  deferral  granted  by the  Financial
Accounting Standards Board, provides guidance for determining when an investment
covered by its scope is  considered  impaired,  whether any  impairment is other
than  temporary and the date when an impairment  loss is to be  recognized.  The
Company does not  currently  expect  compliance  with EITF No. 03-01 will have a
material affect on its consolidated  financial  statements,  whenever it becomes
effective.

Note 16 - Investment in Kronos:

     At March 31, 2005,  the Company  held 17.5 million  shares of Kronos with a
quoted  market price of $42.51 per share,  or an aggregate  market value of $745
million.

     At March  31,  2005,  Kronos  reported  total  assets of $1.3  billion  and
stockholder's  equity of $482.3 million.  Kronos' total assets at March 31, 2005
include current assets of $502.1  million,  net property and equipment of $441.8
million  and an  investment  in a TiO2  manufacturing  joint  venture  of $121.1
million. Kronos' total liabilities at March 31, 2005 include current liabilities
of $213.7 million,  long-term debt of $493.1  million,  accrued OPEB and pension
costs aggregating $68.1 million and deferred income taxes of $58.9 million.

     During the three months ended March 31, 2005,  Kronos reported net sales of
$291.9 million,  income from operations of $46.4 million and net income of $21.4
million.



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

-------------------------------------------------------------------------------
RESULTS OF OPERATIONS:

General

     The  Company  reported  net income of $13.2  million,  or $.27 per  diluted
share, in the first quarter of 2005 compared to income of $5.1 million,  or $.11
per diluted share, in the first quarter of 2004.

     The  increase in the  Company's  diluted  earnings per share from the first
quarter of 2004  compared to the first  quarter of 2005 is due  primarily to the
net  effects  of (i) higher  component  products  segment  profit,  (ii)  higher
earnings  attributable to Kronos and (iii) security  transactions gains from the
sale of shares of Kronos common stock.  The Company  currently  believes its net
income in 2005 will be lower  than 2004 due  primarily  to the effect of certain
income tax benefits recognized primarily in the second quarter of 2004.

     As  discussed  in  Note  1 to the  Consolidated  Financial  Statements,  on
September  24, 2004,  the Company  purchased  10,374,000  shares of CompX common
stock, representing  approximately 68% of the outstanding shares of CompX common
stock, from Valhi and a wholly-owned  subsidiary of Valhi. Because Valhi, NL and
CompX are all  entities  under the common  control  of  Contran,  the  Company's
acquisition of the shares of CompX common stock results in a change in reporting
entity and the Company has  retroactively  restated its  consolidated  financial
statements to reflect the consolidation of CompX for all periods presented.

     Also discussed in Note 1, prior to July 2004,  Kronos was a  majority-owned
subsidiary of the Company.  Following  the  Company's  July 2004 dividend in the
form of  shares of Kronos  common  stock  distributed  to NL  shareholders,  the
Company's  ownership  of Kronos  was  reduced  to less  than 50%.  Consequently,
effective  July 1, 2004 the  Company  ceased to  consolidate  Kronos'  financial
position,  results  of  operations  and cash  flows  and the  Company  commenced
accounting  for its  interest  in  Kronos  by the  equity  method.  The  Company
continues to report Kronos as a consolidated  subsidiary  through June 30, 2004,
including the  consolidation of Kronos' results of operations and cash flows for
the first quarter of 2004.

     As  provided  by the  safe  harbor  provisions  of the  Private  Securities
Litigation  Reform Act of 1995, the Company cautions that the statements in this
Quarterly Report on Form 10-Q relating to matters that are not historical facts,
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,"
"should," "could," "anticipates,"  "expected" or comparable  terminology,  or by
discussions  of  strategies  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 substantial risks and uncertainties that
could  significantly  impact expected  results,  and actual future results could
differ materially from those described in such forward-looking statements. While
it is not possible to identify all factors,  the Company  continues to face many
risks and  uncertainties.  The factors that could cause actual future results to
differ  materially from those described  herein are the risks and  uncertainties
discussed in this Quarterly  Report and those described from time to time in the
Company's  other  filings  with the SEC  include,  but are not  limited  to, the
following:

o    Future supply and demand for the Company's products,
o    The extent of the  dependence  of certain of the  Company's  businesses  on
     certain market sectors,
o    The  cyclicality  of  the  Company's   businesses  (such  as  Kronos'  TiO2
     operations),
o    Customer  inventory  levels (such as the extent to which Kronos'  customers
     may,  from  time to  time,  accelerate  purchases  of TiO2  in  advance  of
     anticipated  price  increases  or defer  purchases  of TiO2 in  advance  of
     anticipated price decreases),
o    Changes in raw material and other operating costs (such as energy and steel
     costs),
o    The possibility of labor disruptions,
o    General global  economic and political  conditions  (such as changes in the
     level of gross  domestic  product in  various  regions of the world and the
     impact of such changes on demand for TiO2 and component products),
o    Demand for office furniture,
o    Competitive   products  and  substitute   products,   including   increased
     competition from low-cost manufacturing sources (such as China),
o    Customer and competitor strategies,
o    The impact of pricing and production decisions,
o    Competitive technology positions,
o    Service industry employment levels,
o    Fluctuations  in currency  exchange  rates (such as changes in the exchange
     rate between the U.S.  dollar and each of the euro,  the Norwegian  kroner,
     the New Taiwan dollar and the Canadian dollar),
o    Operating  interruptions  (including,  but not limited to, labor  disputes,
     leaks,   fires,   explosions,   unscheduled   or  unplanned   downtime  and
     transportation interruptions),
o    The ability of the Company to renew or refinance credit facilities,
o    The ultimate  outcome of income tax audits,  tax settlement  initiatives or
     other tax matters,
o    The introduction of trade barriers,
o    Potential difficulties in integrating completed or future acquisitions,
o    Decisions to sell  operating  assets  other than in the ordinary  course of
     business,
o    Uncertainties associated with new product development,
o    The ultimate ability to utilize income tax attributes, the benefit of which
     has been recognized under the "more-likely-than-not" recognition criteria,
o    Environmental  matters  (such as those  requiring  emission  and  discharge
     standards for existing and new facilities),
o    Government  laws and  regulations  and possible  changes  therein  (such as
     changes in government regulations which might impose various obligations on
     present and former  manufacturers  of lead  pigment and  lead-based  paint,
     including NL, with respect to asserted health concerns  associated with the
     use of such products),
o    The ultimate  resolution of pending  litigation  (such as NL's lead pigment
     litigation and litigation surrounding environmental matters), and
o    Possible future litigation.

     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  or  revise  any
forward-looking statement whether as a result of changes in information,  future
events or otherwise.

Component products

                                         Three months ended
                                               March 31,
                                        --------------------           %
                                        2004            2005        Change
                                        ----            ----        ------
                                           (In millions)

 Net sales                            $ 43.5          $ 46.8          +8%
 Segment profit                          2.5             4.2         +68%

     Component  products  sales  were  higher  in the first  quarter  of 2005 as
compared  to the first  quarter of 2004 due  primarily  to an  increase in sales
volume and selling prices for certain of CompX's  precision  slide and ergonomic
products.  During  the  first  quarter  of 2005,  sales of slide  and  ergonomic
products increased 16% and 10%,  respectively,  as compared to the first quarter
of 2004, while sales of security products  decreased 1%. The percentage  changes
in both slide and ergonomic  products  include the impact resulting from changes
in foreign  currency  exchange rates.  Sales of security  products are generally
denominated in U.S. dollars.

     Component  products  operating  income  comparisons  in 2005 were favorably
impacted  by  the  effect  of  certain  cost  reduction  initiatives  previously
undertaken.  Component  products operating income comparisons were also impacted
by the net effects of  increases  in the cost of steel (the primary raw material
for  CompX's  products)  and a  favorable  change in  product  mix for  security
products.

     CompX has  substantial  operations  and assets  located  outside the United
States in Canada  and  Taiwan.  A portion of CompX's  sales  generated  from its
non-U.S.  operations are denominated in currencies  other than the U.S.  dollar,
principally  the  Canadian  dollar and the New Taiwan  dollar.  In  addition,  a
portion of CompX's sales generated from its non-U.S.  operations (principally in
Canada) are denominated in the U.S. dollar. Most raw materials,  labor and other
production costs for such non-U.S. operations are denominated primarily in local
currencies.  Consequently,  the translated U.S. dollar values of CompX's foreign
sales and operating  results are subject to currency  exchange rate fluctuations
which may  favorably  or  unfavorably  impact  reported  earnings and may affect
comparability of period-to-period operating results. During the first quarter of
2005, currency exchange rate fluctuations positively impacted component products
sales  comparisons  with the same period in 2004,  while currency  exchange rate
fluctuations  did not  significantly  impact  component  products segment profit
comparisons for the same periods.

     While demand has stabilized across most product segments, certain customers
are seeking lower cost Asian sources as alternatives to CompX's products.  CompX
believes the impact of this will be mitigated  through  ongoing  initiatives  to
expand both new products and new market opportunities. Asian sourced competitive
pricing  pressures  are  expected  to  continue  to  be  a  challenge  as  Asian
manufacturers,  particularly those located in China, gain market share.  CompX's
strategy in responding to the competitive pricing pressure has included reducing
production  cost through  product  reengineering,  improvement in  manufacturing
processes or moving production to lower-cost  facilities,  including CompX's own
Asian based manufacturing  facilities.  CompX also has emphasized and focused on
opportunities  where it can provide  value-added  customer support services that
Asian based  manufacturers  are generally unable to provide.  The combination of
CompX's cost  control  initiatives  together  with its  value-added  approach to
development  and  marketing of products are believed to help mitigate the impact
of competitive pricing pressures.

     Additionally,  CompX's  cost for steel  continues to be unstable due to the
continued  high demand and shortages in various parts of the world.  While CompX
has thus far been able to pass a majority of its higher raw material costs on to
its customers through price increases and surcharges, there is no assurance that
CompX would be able to continue to pass along any additional higher costs to its
customers. The price increases and surcharges may accelerate the efforts of some
of CompX's customers to find less expensive products from foreign manufacturers.
CompX will continue to focus on cost  improvement  initiatives,  utilizing  lean
manufacturing  techniques  and  prudent  balance  sheet  management  in order to
minimize  the  impact  of lower  sales,  particularly  to the  office  furniture
industry,  and to develop value-added customer  relationships with an additional
focus on sales of CompX's  higher-margin  ergonomic  computer support systems to
improve  operating  results.  These  actions,  along  with other  activities  to
eliminate  excess  capacity,  are  designed  to  position  CompX to expand  more
effectively on both new product and new market  opportunities  to improve CompX'
profitability.

Chemicals

     Relative changes in Kronos' TiO2 sales and operating income during the 2004
and 2005 periods  presented are  primarily  due to (i) relative  changes in TiO2
average selling prices and (ii) relative  changes in foreign  currency  exchange
rates.  Selling  prices (in  billing  currencies)  for TiO2,  Kronos'  principal
product, were generally: decreasing during the first half of 2004 and increasing
in the last half of 2004 and the first quarter of 2005.



<TABLE>

                                                   Three months ended
                                                         March 31,
                                                   --------------------             %
                                                   2004            2005           Change
                                                   ----            ----           ------
                                                      (In millions)

<S>                                               <C>            <C>               <C>
 Net sales                                        $263.3         $291.9           +11%
 Segment profit                                     26.2           48.0           +83%

 TiO2 operating statistics:
   Sales volumes*                                  118            114              -3%
   Production volumes*                             117            122              +4%

   Percentage change in Ti02 average selling
    prices:
     Using actual foreign currency exchange rates                                 +13%
     Impact of changes in foreign currency
      exchange rates                                                               -5%
                                                                                  ----

     In billing currencies                                                         +8%
                                                                                  ====
</TABLE>

_______________________________

* Thousands of metric tons

     Kronos'  sales  increased  $28.6 million (11%) in the first quarter of 2005
compared to the first  quarter of 2004 due to the net effects of higher  average
TiO2 selling  prices,  lower TiO2 selling  volumes and the  favorable  effect of
fluctuations in foreign currency exchange rates, which increased chemicals sales
by approximately $11 million,  as further discussed below.  Excluding the effect
of fluctuations  in the value of the U.S.  dollar relative to other  currencies,
Kronos'  average TiO2 selling prices in billing  currencies in the first quarter
of 2005 were 8% higher as compared to the first quarter of 2004. When translated
from billing  currencies to U.S. dollars using actual foreign currency  exchange
rates  prevailing  during the respective  periods,  Kronos' average TiO2 selling
prices in the first quarter of 2005  increased 13% compared to the first quarter
of 2004.

     Kronos' 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 Kronos'  average TiO2 selling prices 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 Kronos'  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 GAAP ("GAAP
measure").  Kronos  discloses  percentage  changes in its average TiO2 prices in
billing  currencies  because Kronos  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 13%
increase in Kronos' average TiO2 selling prices during the first quarter of 2005
as compared to the first quarter of 2004 using actual foreign currency  exchange
rates prevailing  during the respective  periods (the GAAP measure),  and the 8%
increase in Kronos'  average  TiO2  selling  prices 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 Kronos'  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 prices 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).

     Kronos'  TiO2 sales  volumes  in the first  quarter  of 2005  decreased  3%
compared to the first quarter of 2004,  due primarily to lower volumes in export
markets. Demand for TiO2 has remained strong throughout 2004 and 2005, and while
Kronos  believes that the strong demand is largely  attributable  to the end-use
demand of its  customers,  it is possible that some portion of the strong demand
resulted from customers  increasing their inventory levels of TiO2 in advance of
implementation  of announced or anticipated  price increases.  Kronos' operating
income  comparisons were also favorably  impacted by higher  production  levels,
which  increased 4% in the first  quarter of 2005 as compared to the same period
in 2004.  Kronos'  operating rates were near full capacity in both periods,  and
Kronos'  production  volume in the first  quarter  of 2005 was a new  record for
Kronos for a first quarter.

     Kronos has  substantial  operations and assets  located  outside the United
States (primarily in Germany,  Belgium, Norway and Canada). A significant amount
of Kronos' 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.  A  portion  of  Kronos'  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
Kronos'  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  TiO2  sales by a net $11  million  in the first
quarter of 2005 as compared to the first  quarter of 2004.  Fluctuations  in the
value of the U.S. dollar relative to other currencies similarly impacted Kronos'
foreign  currency-denominated  operating expenses.  Kronos' operating costs that
are not denominated in the U.S. dollar, when translated into U.S. dollars,  were
higher in the first  quarter  of 2005 as  compared  to the same  period in 2004.
Overall,  currency  exchange  rate  fluctuations  resulted  in a net $1  million
increase in Kronos'  segment  profit in the first quarter of 2005 as compared to
the first quarter of 2004.

     Reflecting the continued  implementation  of price increase  announcements,
Kronos'  average TiO2 selling prices in billing  currencies in the first quarter
of 2005 were 4% higher than the fourth quarter of 2004.  Kronos expects its TiO2
production  volumes in the  remainder  of 2005 will be slightly  higher than its
2004  volumes,  with sales volumes  comparable  to or slightly  lower in 2005 as
compared to 2004. Kronos' average TiO2 selling prices, which started to increase
during  the  second  half of 2004 and  continued  to  increase  during the first
quarter of 2005,  are expected to continue to increase  during the  remainder of
2005,  and  consequently,  Kronos  currently  expects its average  TiO2  selling
prices, in billing  currencies,  will be higher in 2005 as compared to 2004. The
anticipated  higher  selling  prices  in 2005  reflect  the  expected  continued
implementation  of selling price  announcements,  including Kronos' latest price
increases  announced  in March  2005.  The  extent  to which  all of such  price
increases,   and  any  additional   price   increases  which  may  be  announced
subsequently  in 2005,  will be  realized  will depend on,  among other  things,
economic factors.  Overall,  Kronos expects its chemicals segment profit in 2005
will be higher than 2004,  due  primarily  to higher  expected  selling  prices.
Kronos'  expectations as to the future prospects of Kronos and the TiO2 industry
are based upon a number of factors beyond Kronos' 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 Kronos'  expectations,  Kronos'  results of operations
could be unfavorably affected.

     Kronos' efforts to debottleneck its production facilities to meet long-term
demand continues to prove  successful.  Such  debottlenecking  efforts included,
among other things,  the addition of back-end  finishing  capacity to be able to
process a larger  quantity of the base TiO2 produced and equipment  upgrades and
enhancements to allow for reduced downtime for maintenance  activities.  Kronos'
production  capacity has increased by approximately  30% over the past ten years
due to debottlenecking programs, with only moderate capital expenditures. Kronos
believes its annual  attainable  production  capacity for 2005 is  approximately
500,000  metric tons,  with some slight  additional  capacity  available in 2006
through its continued debottlenecking efforts.

Equity in earnings of Kronos - first quarter 2005

                                                         Three months ended
                                                             March 31,
                                                                2005
                                                                ----
                                                           (In millions)

 Kronos historical:
   Net sales                                                  $291.9
                                                              ======

   Segment profit                                               48.0
   Other general corporate, net                                 (1.1)
   Interest expense                                            (11.8)
                                                              ------
                                                                35.1

   Income tax expense                                           13.7
                                                              ------

     Net income                                                 21.4
                                                              ======

   Equity in earnings of Kronos Worldwide, Inc.               $  7.8
                                                              ======


     See the preceding  discussion  relating to Kronos'  segment  profit for the
first  quarter of 2005.  Kronos'  interest  expense in the first quarter of 2005
relates  principally  to Kronos  International,  Inc.'s  ("KII")  Senior Secured
Notes.

General corporate items

     Securities   transactions,   net  in  the  first  quarter  of  2005  relate
principally  to a $14.6 million gain ($7.9  million,  or $.16 per diluted share,
net of income taxes)  related to NL's sale of  approximately  467,000  shares of
Kronos  common  stock in  market  transactions.  See Note 3 to the  Consolidated
Financial Statements.

     Substantially  all of the  interest  expense  in the first  quarter of 2004
relates to Kronos.  Interest  expense related to CompX declined by approximately
$100,000 in the first  quarter of 2005  compared to 2004 due  primarily to lower
average levels of outstanding debt. CompX expects interest expense will continue
to be lower during the remainder of 2005 as compared to the last three  quarters
of 2004 due to lower average levels of outstanding debt.

     Net general corporate expenses in the first quarter of 2005 were lower than
the same period of 2004 due  primarily to lower  environmental  remediation  and
legal  expenses of NL. Net  general  corporate  expenses  in  calendar  2005 are
currently  expected to be higher  than 2004,  primarily  due to higher  expected
legal  expenses  of NL  resulting  from an increase  in  litigation  and related
expenses.  However,  obligations for environmental  remediation are difficult to
assess and  estimate  and no  assurance  can be given that actual costs will not
exceed accrued  amounts or that costs will not be incurred with respect to sites
for which no estimate of liability  can  presently  be made.  See Note 13 to the
Consolidated Financial Statements.

Provision for income taxes

     The principal  reasons for the difference  between the Company's  effective
income tax rate and the U.S. federal statutory income tax rates are explained in
Note 11 to the Consolidated Financial Statements.

Minority interest

     See Note 10 to the Consolidated Financial Statements.

     Minority   interest   in   NL's   subsidiaries   includes   the   Company's
majority-owned  environmental management subsidiary, EMS. EMS was established in
1998,  at  which  time  EMS  contractually  assumed  certain  of  the  Company's
environmental liabilities. EMS' earnings are based, in part, upon its ability to
favorably  resolve these  liabilities on an aggregate basis. The shareholders of
EMS, other than the Company,  actively manage the environmental  liabilities and
share in 39% of EMS' cumulative  earnings.  The Company continues to consolidate
EMS and provides accruals for the reasonably  estimable costs for the settlement
of EMS' environmental liabilities, as discussed below.

Discontinued operations.

     See Note 14 to the Consolidated Financial Statements.

Accounting principles not yet implemented.

     See Note 15 to the Consolidated Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES:

Consolidated cash flows

Summary

     The  Company's  primary  source of liquidity on an ongoing  short-term  and
long-term basis is its cash flows from operating activities,  which is generally
used to (i) fund capital  expenditures,  (ii) repay any short-term  indebtedness
incurred  primarily  for  working  capital  purposes  and (iii)  provide for the
payment of  dividends.  In addition,  from  time-to-time  the Company will incur
indebtedness,  generally to (i) fund  short-term  working  capital  needs,  (ii)
refinance existing  indebtedness or (iii) fund major capital expenditures or the
acquisition of other assets outside the ordinary  course of business.  Also, the
Company  will from  time-to-time  sell  assets  outside the  ordinary  course of
business,  the  proceeds  of which  are  generally  used to (i)  repay  existing
indebtedness  (including  indebtedness which may have been collateralized by the
assets sold),  (ii) make investments in marketable and other  securities,  (iii)
fund major capital  expenditures  or the acquisition of other assets outside the
ordinary course of business or (iv) pay dividends.

Operating activities

     Cash flows from operating  activities decreased from $16.8 million provided
by  operating  activities  in the first three  months of 2004 to $3.9 million of
cash used by operating  activities in the first three months of 2005. This $20.7
million decrease was due primarily to the  deconsolidation of Kronos,  effective
July 1, 2004. As such,  cash from  operating  activities in the first quarter of
2005 is not comparable to the corresponding  period in 2004. Relative changes in
accounts receivable are affected by, among other things, the timing of sales and
the collection of the resulting receivables. Relative changes in inventories and
accounts  payable and accrued  liabilities  are affected by, among other things,
the timing of raw material  purchases and the payment for such purchases and the
relative  difference  between  production  volumes and sales  volumes.  Relative
changes in accrued  environmental costs are affected by, among other things, the
period in which recognition of the  environmental  accrual is recognized and the
period in which the remediation expenditure is actually made.

     Trends in cash flows from  operating  activities  (excluding  the impact of
significant  asset  dispositions and relative changes in assets and liabilities)
are generally  similar to trends in the  Company's  earnings.  However,  certain
items included in the  determination  of net income are non-cash,  and therefore
such  items have no impact on cash flows  from  operating  activities.  Non-cash
items  included in the  determination  of net income  include  depreciation  and
amortization  expense,  deferred  income  taxes and non-cash  interest  expense.
Non-cash interest expense relates  principally to Kronos in 2004 and consists of
amortization of deferred financing costs.

     Certain other items included in the determination of net income may have an
impact on cash flows from operating activities,  but the impact of such items on
cash  flows from  operating  activities  will  differ  from their  impact on net
income. For example, equity in earnings of affiliates will generally differ from
the amount of distributions received from such affiliates,  and equity in losses
of affiliates does not  necessarily  result in current cash outlays paid to such
affiliates.  The amount of periodic  defined  benefit  pension  plan expense and
periodic  OPEB  expense  depends  upon a number of  factors,  including  certain
actuarial assumptions,  and changes in such actuarial assumptions will result in
a change in the  reported  expense.  In  addition,  the amount of such  periodic
expense  generally  differs from the  outflows of cash  required to be currently
paid for such benefits.

     Certain  other items  included in the  determination  of net income have no
impact on cash flows from  operating  activities,  but such items do impact cash
flows  from  investing  activities  (although  their  impact on such cash  flows
differs from their impact on net income). For example, realized gains and losses
from the disposal of long-lived  assets are included in the determination of net
income,  although the proceeds  from any such disposal are shown as part of cash
flows from investing activities.

     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.

     NL does not have complete access to the cash flows of its  subsidiaries and
affiliates, in part due to limitations contained in certain credit agreements as
well as the fact that certain of such  subsidiaries  and affiliates are not 100%
owned by NL. A detail of NL's consolidated cash flows from operating  activities
is presented in the table below.  Eliminations consist of intercompany dividends
(most of which are paid by Kronos to NL in 2004, and by CompX to NL in 2005).

<TABLE>
                                                               Three months
                                                              ended March 31,
                                                         2004                2005
                                                         ----                ----
                                                              (In millions)

Cash provided (used) by operating activities:
<S>                                                      <C>                 <C>
  Kronos                                                 $19.1               $  -
  CompX                                                    3.4                 1.9
  NL Parent                                                3.1                (3.4)
  Other                                                   (2.6)               (1.1)
  Eliminations                                            (6.2)               (1.3)
                                                         -----               -----

                                                         $16.8               $(3.9)
                                                         =====               =====
</TABLE>


Investing and financing activities

     In  2005,   substantially  all  of  the  Company's   consolidated   capital
expenditures  relate to CompX.  During the first  quarter  of 2005,  (i) NL sold
shares of Kronos common stock in market  transactions for $19.0 million and (ii)
CompX received a net $18.1 million from the sale of its Thomas Regout operations
(which had  approximately  $4.0  million of cash at the date of  disposal).  See
Notes 3 and 14 to the Consolidated Financial Statements.

     Distributions to minority  interest in 2005 consist of CompX dividends paid
to  shareholders  other than NL. Other cash flows from  financing  activities in
2005 relate primarily to proceeds from the issuance of NL and CompX common stock
upon exercise of stock options.

     At March 31, 2005, unused credit available under existing credit facilities
approximated $47.5 million, all under CompX's revolving credit facility.

     Provisions  contained in certain of the Company's and its subsidiaries' and
affiliates' credit agreements could result in the acceleration of the applicable
indebtedness  prior to its stated  maturity for reasons other than defaults from
failing to comply with typical financial covenants.  For example, certain credit
agreements allow the lender to accelerate the maturity of the indebtedness  upon
a change of control (as defined) of the borrower.  In addition,  certain  credit
agreements  could  result  in  the  acceleration  of  all  or a  portion  of the
indebtedness following a sale of assets outside the ordinary course of business,
which  provision was waived in connection with CompX's sale of its Thomas Regout
operations.  Other than  operating  leases  discussed in the 2004 Annual Report,
neither  NL  nor  any of its  subsidiaries  or  affiliates  are  parties  to any
off-balance sheet financing arrangements.

Component products - CompX

     CompX  received  approximately  $18.1  million  cash (net of  expenses)  in
January 2005 upon the sale of its Thomas Regout  operations in the  Netherlands.
See Note 14 to the Consolidated  Financial  Statements.  CompX believes that its
cash on hand,  together  with  cash  generated  from  operations  and  borrowing
availability under its bank credit facility,  will be sufficient to meet CompX's
liquidity  needs for working  capital,  capital  expenditures,  debt service and
dividends.  To the extent that CompX's actual operating  results or developments
differ from CompX's expectations, CompX's liquidity could be adversely affected.
CompX,  which had suspended its regular quarterly dividend of $.125 per share in
the second  quarter of 2003,  reinstated its regular  quarterly  dividend at the
$.125 per share rate in the fourth quarter of 2004.

     Certain of the CompX's  sales  generated  by its  non-U.S.  operations  are
denominated in U.S. dollars.  CompX periodically uses currency forward contracts
to manage a very nominal  portion of foreign  exchange rate risk associated with
receivables  denominated  in a  currency  other  than  the  holder's  functional
currency or similar  exchange rate risk associated with future sales.  CompX has
not entered  into these  contracts  for trading or  speculative  purposes in the
past,  nor does CompX  currently  anticipate  entering  into such  contracts for
trading  or  speculative  purposes  in the  future.  Derivatives  used to  hedge
forecasted transactions and specific cash flows associated with foreign currency
denominated  financial assets and liabilities  which meet the criteria for hedge
accounting  are  designated  as cash flow hedges.  Consequently,  the  effective
portion of gains and losses is  deferred  as a component  of  accumulated  other
comprehensive  income and is  recognized in earnings at the time the hedged item
affects  earnings.  Contracts that do not meet the criteria for hedge accounting
are  marked-to-market at each balance sheet date with any resulting gain or loss
recognized in income currently as part of net currency  transactions.  To manage
such exchange  rate risk,  at March 31, 2005,  CompX held a series of contracts,
which  matured in May 2005, to exchange an aggregate of U.S. $2.5 million for an
equivalent amount of Canadian dollars at an exchange rates of Cdn. $1.20 to Cdn.
$1.23 per U.S.  dollar.  At March 31, 2005,  the actual  exchange  rate was Cdn.
$1.21 per U.S.  dollar.  The  estimated  fair  values of such  foreign  currency
forward contracts at March 31, 2005 is not material.

     CompX periodically evaluates its liquidity  requirements,  alternative uses
of  capital,  capital  needs and  available  resources  in view of,  among other
things,  its capital  expenditure  requirements,  dividend  policy and estimated
future operating cash flows. As a result of this process,  CompX has in the past
and may in the future seek to raise additional capital, refinance or restructure
indebtedness,   issue  additional   securities,   modify  its  dividend  policy,
repurchase  shares of its common  stock or take a  combination  of such steps or
other steps to manage its liquidity and capital resources.  In the normal course
of business,  CompX may review  opportunities  for  acquisitions,  divestitures,
joint  ventures  or  other  business  combinations  in  the  component  products
industry.  In the event of any such transaction,  CompX may consider using cash,
issuing  additional equity securities or increasing the indebtedness of CompX or
its subsidiaries.

Chemicals - Kronos

     At March 31, 2005,  Kronos had cash,  cash  equivalents and marketable debt
securities of $42.1 million,  including restricted balances of $3.7 million, and
Kronos had  approximately  $143 million  available for borrowing under its U.S.,
Canadian and European credit facilities. Based upon Kronos' expectations for the
TiO2  industry and  anticipated  demands on Kronos' cash  resources as discussed
herein,  Kronos  expects  to  have  sufficient  liquidity  to  meet  its  future
obligations including operations, capital expenditures, debt service and current
dividend  policy.  To the extent that actual  developments  differ from  Kronos'
expectations, Kronos' liquidity could be adversely affected.

     At March 31, 2005,  Kronos'  outstanding  debt was  comprised of (i) $493.0
million  related to KII's Senior  Secured Notes,  (ii) $12.9 million  related to
KII's  European  revolving  bank credit  facility which matures in June 2005 and
(iii) approximately $300,000 of other indebtedness. KII expects to seek to renew
its European revolving bank credit facility during the second quarter of 2005.

     Kronos'   assets   consist   primarily  of  investments  in  its  operating
subsidiaries,  and  Kronos'  ability to service  its parent  level  obligations,
including the Senior Secured Notes,  depends in large part upon the distribution
of earnings of its subsidiaries,  whether in the form of dividends,  advances or
payments on account of intercompany  obligation,  or otherwise.  None of Kronos'
subsidiaries have guaranteed the Senior Secured Notes,  although KII has pledged
65% of the  common  stock  or  other  ownership  interest  of  certain  of KII's
first-tier operating subsidiaries as collateral of such Senior Secured Notes.

     As  disclosed  in the 2004 Annual  Report,  KII may redeem up to 35% of the
Senior  Secured  Notes on or before  June 30,  2005 with the net  proceeds  of a
qualified  public  offering of equity  securities  of either  Kronos or KII. KII
currently has no plans to so redeem the Senior Secured Notes, although until the
June 30, 2005 date passes, KII retains the right to so redeem the Senior Secured
Notes.

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

     Based upon  Kronos'  expectations  for the TiO2  industry  and  anticipated
demand for Kronos' cash  resources as discussed  herein,  Kronos expects to have
sufficient  short-term and long-term liquidity to meet its obligations including
operations, capital expenditures, debt service and dividends. To the extent that
actual developments differ from Kronos' expectations, Kronos' liquidity could be
adversely affected.

     See Note 11 to the Consolidated Financial Statements for certain income tax
examinations  currently  underway with respect to certain of Kronos'  income tax
returns in  various  U.S.  and  non-U.S.  jurisdictions,  and see Note 13 to the
Consolidated Financial Statements with respect to certain legal proceedings with
respect to Kronos.

     Certain of the Kronos'  sales  generated  by its  non-U.S.  operations  are
denominated in U.S. dollars. Kronos periodically uses currency forward contracts
to manage a very nominal  portion of foreign  exchange rate risk associated with
receivables  denominated  in a  currency  other  than  the  holder's  functional
currency or similar exchange rate risk associated with future sales.  Kronos has
not entered  into these  contracts  for trading or  speculative  purposes in the
past,  nor does Kronos  currently  anticipate  entering into such  contracts for
trading  or  speculative  purposes  in the  future.  Derivatives  used to  hedge
forecasted transactions and specific cash flows associated with foreign currency
denominated  financial assets and liabilities  which meet the criteria for hedge
accounting  are  designated  as cash flow hedges.  Consequently,  the  effective
portion of gains and losses is  deferred  as a component  of  accumulated  other
comprehensive  income and is  recognized in earnings at the time the hedged item
affects  earnings.  Contracts that do not meet the criteria for hedge accounting
are  marked-to-market at each balance sheet date with any resulting gain or loss
recognized in income currently as part of net currency  transactions.  To manage
such  exchange  rate risk,  at March 31,  2005,  Kronos held a  contract,  which
matured in April,  2005 to  exchange  an  aggregate  of U.S.  $5 million  for an
equivalent amount of Canadian dollars at an exchange rate of Cdn. $1.24 per U.S.
dollar.  At March 31, 2005,  the actual  exchange  rate was Cdn.  $1.21 per U.S.
dollar.  The estimated fair values of such foreign currency forward contracts at
March 31, 2005 is insignificant.

     Kronos 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, Kronos has in the past and may in the future 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,  Kronos 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  entities.  In the event of any such  transaction,  Kronos may
consider  using  available  cash,   issuing  equity   securities  or  increasing
indebtedness  to the  extent  permitted  by  the  agreements  governing  Kronos'
existing debt.

     Kronos has  substantial  operations  located  outside the United States for
which the functional  currency is not the U.S. dollar. As a result, the reported
amounts of Kronos' assets and  liabilities  related to its non-U.S.  operations,
and therefore Kronos' net assets,  will fluctuate based upon changes in currency
exchange rates.

NL Industries

     At March 31, 2005, NL (exclusive of CompX) had cash,  cash  equivalents and
marketable debt securities of $114.5 million,  including  restricted balances of
$17.5  million.  Of such  restricted  balances,  $14 million was held by special
purpose trusts,  the assets of which can only be used to pay for certain of NL's
future environmental remediation and other environmental expenditures.  See Note
13 to the Consolidated Financial Statements.

     See Note 11 to the Consolidated Financial Statements for certain income tax
examinations  currently  underway  with  respect to  certain of NL's  income tax
returns,  and see Note 13 to the Consolidated  Financial Statements and Part II,
Item 1,  "Legal  Proceedings"  with  respect to certain  legal  proceedings  and
environmental matters with respect to NL.

     In  addition  to  those  legal  proceedings  described  in  Note  13 to the
Consolidated  Financial  Statements,   various  legislation  and  administrative
regulations  have,  from time to time,  been  proposed  that seek to (i)  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 (ii)  effectively  overturn court decisions in which NL
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.   While  no  legislation  or
regulations  have been  enacted  to date that are  expected  to have a  material
adverse effect on NL's consolidated financial position, results of operations or
liquidity,  imposition of market share liability or other legislation could have
such an effect.

     NL  previously  filed an action  against  certain of its  former  insurance
carriers for coverage with respect to defense costs related to certain  specific
lead pigment litigation matters. This action was settled in 2000. The Company is
continuing  discussions with certain former insurance carriers for coverage with
respect to defense  costs related to the  Company's  remaining  past and present
lead pigment  litigation  matters.  Whether insurance coverage for defense costs
will be found to exist for lead  pigment  litigation  depends  on a  variety  of
factors,  and there can be no assurance  that the Company will be  successful in
obtaining  reimbursement for past or future defense costs incurred.  The Company
has  not  considered  any  potential  insurance   recoveries  for  lead  pigment
litigation in determining related accruals.

     NL 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,  NL has in the past and may in the future  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,  NL 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  entities.  In the  event  of any such  transaction,  NL may
consider using its available cash,  issuing its equity  securities or increasing
its  indebtedness  to the extent  permitted  by the  agreements  governing  NL's
existing debt.

     Because NL's operations are conducted  primarily  through its  subsidiaries
and  affiliates,  NL's  long-term  ability  to meet  its  parent  company  level
corporate  obligations is dependent in large measure on the receipt of dividends
or other  distributions  from its  subsidiaries  and  affiliates.  In the fourth
quarter of 2004,  CompX reinstated its regular  quarterly  dividend at the $.125
per share rate. At that rate, and based on the 10.4 million shares of CompX held
indirectly by NL through CompX Group, Inc. ("CGI")  (representing  NL's pro-rata
ownership  of CGI's  ownership  of CompX) at March 31,  2005,  NL would  receive
aggregate annual dividends from CompX of $5.2 million.  In February 2004, Kronos
announced it would pay its first  regular  quarterly  cash  dividend of $.25 per
share.  At that rate,  and based on the 17.5 million shares of Kronos held by NL
at March 31, 2005, NL would receive  aggregate  annual  dividends from Kronos of
$17.5 million.

     The Company routinely  compares its liquidity  requirements and alternative
uses of capital against the estimated  future cash flows to be received from its
subsidiaries,  and the estimated sales value of those units. As a result of this
process,  the  Company  has in the  past  and may in the  future  seek to  raise
additional   capital,   refinance  or   restructure   indebtedness,   repurchase
indebtedness in the market or otherwise,  modify its dividend policies, consider
the sale of interests in subsidiaries,  affiliates,  business units,  marketable
securities or other assets,  or take a combination of such steps or other steps,
to increase  liquidity,  reduce  indebtedness and fund future  activities.  Such
activities have in the past and may in the future involve related companies.

     The  Company  and  related  entities  routinely  evaluate  acquisitions  of
interests in, or combinations  with,  companies,  including  related  companies,
perceived by management to be undervalued in the  marketplace.  These  companies
may or may  not be  engaged  in  businesses  related  to the  Company's  current
businesses.  The Company intends to consider such acquisition  activities in the
future and, in connection with this activity,  may consider  issuing  additional
equity   securities  and  increasing  the  indebtedness  of  the  Company,   its
subsidiaries and related  companies.  From time to time, the Company and related
entities  also evaluate the  restructuring  of ownership  interests  among their
respective subsidiaries and related companies.

Non-GAAP financial measures

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

o    The Company  discloses  percentage  changes in Kronos' average TiO2 selling
     prices in  billing  currencies,  which  excludes  the  effects  of  foreign
     currency  translation.  The Company believes  disclosure of such percentage
     changes  allows  investors 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.

ITEM 4.  CONTROLS AND PROCEDURES

     General. As discussed in Note 2 to the Consolidated  Financial  Statements,
the Company and its audit  committee has concluded that the Company will restate
its consolidated  financial statements as of December 2004 and for the year then
ended, to reflect an additional $4.2 million, or $.08 per diluted share, noncash
income tax benefit in its results of operations  for the year ended December 31,
2004. Such $4.2 million relates to recognition of an additional  deferred income
tax benefit related to discontinued  operations,  to be recognized in the fourth
quarter of 2004 as a component of discontinued operations.

     The  guidance  set forth in Auditing  Standard  No. 2 ("AS2") of the Public
Company Accounting  Oversight Board states that restatement of previously-issued
financial  statements  to reflect the  correction  of a  misstatement  should be
regarded as at least a significant  control deficiency and as a strong indicator
that a material weakness in internal control over financial reporting exists. In
connection  with this  restatement,  the Company has  concluded  that a material
weakness  existed as of December  31,  2004 which  precludes  the  Company  from
concluding that its internal  control over financial  reporting was effective as
of December 31, 2004. Therefore, the Company's previous conclusion,  as reported
in the Company's  Management Report on Internal Control Over Financial Reporting
contained  in Item 9A of its  Annual  Report  on Form  10-K for the  year  ended
December 31, 2004 (as filed on March 30,  2005),  that it  maintained  effective
internal control over financial  reporting as of December 31, 2004, as set forth
in its Annual Report on Form 10-K for the year ended December 31, 2004,  will be
restated, in which the Company (i) will conclude it lacked effective controls as
of  December  31, 2004  surrounding  the proper  consideration  of the effect of
subsequent events on the evaluation of certain income tax attributes and related
deferred  income  tax  asset  valuation  allowances  in the  preparation  of its
December 31, 2004  consolidated  financial  statements and (ii) expects that the
Company's  independent  registered  public accounting firm will issue an opinion
stating  that the Company  did not  maintain  effective  internal  control  over
financial reporting as of December 31, 2004.

     In  order  to  remediate  this  material  weakness,  in  May  2005,  and in
connection  with the  Company's  quarterly  close  process for the quarter ended
March 31, 2005,  the Company has enhanced  its focus and  instituted  additional
procedures,  to be performed each quarter in connection with the Company's close
process,  that are designed to help ensure that  subsequent  events are properly
evaluated as they pertain to the evaluation of income tax attributes and related
deferred  income  tax  asset  valuation  allowances  in the  preparation  of its
consolidated  financial  statements.  Such  actions  taken with  respect to this
enhanced focus and additional procedures instituted include:

o    The  Company  formed a formal  committee  comprised  of the  Company's  Tax
     Director and Chief  Financial  Officer.  Immediately  before the  Company's
     consolidated  financial statements are issued each quarter,  such committee
     will meet and discuss events or circumstances  that have arisen  subsequent
     to  the  balance  sheet  date,   and  will  evaluate  any  such  events  or
     circumstances to consider  whether any additional  evidence has arisen that
     would  justify  (i)  reversal of an existing  valuation  allowance  or (ii)
     recognizing a valuation  allowance for an existing gross deferred tax asset
     without any current valuation allowance, and
o    Prior to such meeting,  the Company's Chief  Financial  Officer will review
     applicable  resource materials  regarding the evaluation of deferred income
     tax  asset  valuation  allowances  and the  effect  on such  evaluation  of
     subsequent  events,  in order to provide a proper  focus in such meeting on
     the effect of any subsequent events.

     On May 9 and 10,  and in  connection  with the  Company's  quarterly  close
process for its quarter ended March 31, 2005,  this  committee met and discussed
the items as described above. The Company has remediated this weakness as of May
10, 2005 (the date of this Form 10-Q for the quarter ended March 31, 2005).

     Evaluation of Disclosure  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 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 and Chief  Financial  Officer,  has evaluated  the Company's  disclosure
controls and procedures as of March 31, 2005. Based upon their  evaluation,  and
solely as a result of the material  weakness  discussed  above,  these executive
officers have  concluded that the Company's  disclosure  controls and procedures
were not  effective  as of the date of such  evaluation.  However,  as discussed
above, in May 2005, and in connection with the Company's quarterly close process
for the quarter  ended March 31,  2005,  the Company has  enhanced its focus and
instituted  additional  procedures,  to be performed  each quarter in connection
with  the  Company's  close  process,  that are  designed  to help  ensure  that
subsequent  events are properly  evaluated as they pertain to the  evaluation of
income tax attributes and related deferred income tax asset valuation allowances
in the preparation of its consolidated  financial statements.  Therefore,  these
executive  officers have  concluded that the Company's  disclosure  controls and
procedures were effective as of May 10, 2005 (the date of this Form 10-Q for the
quarter ended March 31, 2005).

     Internal  Control Over  Financial  Reporting.  The Company  also  maintains
internal  control 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 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 an
     unauthorized  acquisition,  use or disposition of the Company's assets that
     could  have a  material  effect  on the  Company's  Consolidated  Financial
     Statements.

     Changes in Internal  Control Over  Financial  Reporting.  There has been no
change to the Company's  internal  control over financial  reporting  during the
quarter  ended March 31, 2005 that has  materially  affected,  or is  reasonably
likely to materially  affect,  the  Company's  internal  control over  financial
reporting.  However, as discussed above, in May 2005, and in connection with the
Company's  quarterly  close  process for the quarter  ended March 31, 2005,  the
Company has  enhanced  its focus and  instituted  additional  procedures,  to be
performed each quarter in connection with the Company's close process,  that are
designed to help ensure that  subsequent  events are properly  evaluated as they
pertain to the evaluation of income tax attributes and related  deferred  income
tax asset valuation allowances in the preparation of its consolidated  financial
statements.  Therefore,  the Company has remediated the weakness discussed above
as of May 10, 2005 (the date of this Form 10-Q for the  quarter  ended March 31,
2005).

                           PART II. OTHER INFORMATION

Item 1. Legal Proceedings

     Reference is made to Note 13 to the Consolidated  Financial  Statements and
to the 2004 Annual Report for descriptions of certain previously  reported legal
proceedings.

     State of Rhode  Island v. Lead  Industries  Association,  et al.  (Superior
Court of Rhode Island, No. 99-5226).  In May 2005, the trial court dismissed the
conspiracy  claim  with  prejudice,  and the time for the state to  appeal  this
dismissal has not yet begun to run.

     Smith,  et al. v. Lead  Industries  Association,  et al. (Circuit Court for
Baltimore City, Maryland, Case No. 24-C-99-004490).  In April 2005, the court of
appeals vacated the decision of the intermediate  appellate court,  stating that
such court should not have  accepted  the appeal,  and remanded the case back to
the trial court for further proceedings.

Lewis,  et al. v. Lead  Industries  Association,  et al.  (Circuit Court of Cook
County, Illinois, County Department,  Chancery Division, Case No. 00CH09800). In
March 2005, the plaintiffs appealed the trial court's dismissal of the case.

     Barker, et al. v. The  Sherwin-Williams  Company,  et al. (Circuit Court of
Jefferson County, Mississippi,  Civil Action No. 2000-587, and formerly known as
Borden, et al. vs. The  Sherwin-Williams  Company,  et al.). With respect to the
seven  plaintiffs  remaining  in  Jefferson  County,  five of  these  plaintiffs
voluntarily dismissed their claims without prejudice in March 2005.

     Houston Independent School District v. Lead Industries Association,  et al.
(District Court of Harris County,  Texas,  No.  2000-33725).  In March 2005, the
plaintiff voluntarily dismissed the case without prejudice.

     City of Chicago v. American Cynamid,  et al. (Circuit Court of Cook County,
Illinois, No. 02CH16212).  In February 2005, the plaintiff filed a petition with
the Illinois  Supreme Court seeking  review of the  appellate  court's  decision
affirming the dismissal of the case.

Item 6.  Exhibits

     31.1 - Certification

     31.2 - Certification

     32.1 - Certification

     The Company  has  retained a signed  original of any of the above  exhibits
that  contains  signatures,  and the Company  will  provide  such exhibit to the
Commission or its staff upon request.  NL will also furnish,  without charge,  a
copy of its Code of Business Conduct and Ethics, its Audit Committee Charter and
its Corporate Governance  Guidelines,  each as adopted by the Company's board of
directors,  upon request.  Such requests  should be directed to the attention of
NL's Corporate  Secretary at NL's corporate offices located at 5430 LBJ Freeway,
Suite 1700, Dallas, Texas 75240.



                                   SIGNATURES


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



                                                   NL INDUSTRIES, INC.
                                                -----------------------
                                                     (Registrant)



Date   May 10, 2005                             By /s/ Gregory M. Swalwell
     ---------------                               ---------------------------
                                                Gregory M. Swalwell
                                                  Vice President, Finance and
                                                  Chief Financial Officer
                                                  (Principal Financial Officer)


Date   May 10, 2005                             By /s/ James W. Brown
     ---------------                               ---------------------------
                                                James W. Brown
                                                Vice President and Controller
                                                (Principal Accounting Officer)