SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q


|X|     QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR 15(d) OF THE  SECURITIES
        EXCHANGE ACT OF 1934 - For the quarter ended September 30, 2000

                                       OR

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

                          Commission file number 1-640



                               NL INDUSTRIES, INC.
--------------------------------------------------------------------------------

             (Exact name of registrant as specified in its charter)



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



16825 Northchase Drive, Suite 1200, Houston, Texas                77060-2544
--------------------------------------------------           -------------------
     (Address of principal executive offices)                     (Zip Code)



Registrant's telephone number, including area code:            (281)  423-3300
                                                             -------------------




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



Number of shares of common stock outstanding on November 10, 2000:  50,043,184


<PAGE>



                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                                      INDEX




                                                                          Page
PART I.        FINANCIAL INFORMATION                                      ----

  Item 1.      Financial Statements.

               Consolidated Balance Sheets - December 31, 1999
                and September 30, 2000                                     3-4

               Consolidated Statements of Income - Three months and
                nine months ended September 30, 1999 and 2000               5

               Consolidated Statements of Comprehensive Income
                - Three months and nine months ended
                September 30, 1999 and 2000                                 6

               Consolidated Statement of Shareholders' Equity
                - Nine months ended September 30, 2000                      7

               Consolidated Statements of Cash Flows - Nine months
                ended September 30, 1999 and 2000                          8-9

               Notes to Consolidated Financial Statements                 10-15

  Item 2.      Management's Discussion and Analysis of Financial
                Condition and Results of Operations                       16-22


PART II.       OTHER INFORMATION

  Item 1.      Legal Proceedings                                          23-24

  Item 6.      Exhibits and Reports on Form 8-K                             25

                                           - 2 -

<PAGE>



                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                 (In thousands)


<TABLE>
<CAPTION>


                                                        December 31,     September 30,
              ASSETS                                        1999              2000
                                                        ------------     -------------
<S>                                                      <C>              <C>
Current assets:

    Cash and cash equivalents ....................       $  134,224       $  125,064
    Restricted cash equivalents ..................           17,565           62,667
    Accounts and notes receivable ................          143,768          167,680
    Receivable from affiliates ...................              747              495
    Refundable income taxes ......................            4,473           10,169
    Inventories ..................................          191,184          148,592
    Prepaid expenses .............................            2,492            6,317
    Deferred income taxes ........................           11,974           10,579
                                                         ----------       ----------

        Total current assets .....................          506,427          531,563
                                                         ----------       ----------

Other assets:
    Marketable securities ........................           15,055           45,135
    Investment in TiO2 manufacturing joint venture          157,552          150,002
    Prepaid pension cost .........................           23,271           20,776
    Other ........................................            5,410            4,230
                                                         ----------       ----------

        Total other assets .......................          201,288          220,143
                                                         ----------       ----------

Property and equipment:
    Land .........................................           23,678           21,422
    Buildings ....................................          133,682          121,821
    Machinery and equipment ......................          550,842          500,478
    Mining properties ............................           71,952           65,038
    Construction in progress .....................            6,805           13,011
                                                         ----------       ----------
                                                            786,959          721,770
    Less accumulated depreciation and depletion ..          438,501          412,170
                                                         ----------       ----------

        Net property and equipment ...............          348,458          309,600
                                                         ----------       ----------

                                                         $1,056,173       $1,061,306
                                                         ==========       ==========
</TABLE>


                                           - 3 -

<PAGE>



                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS (CONTINUED)

                                 (In thousands)


<TABLE>
<CAPTION>


                                                   December 31,    September 30,
    LIABILITIES AND SHAREHOLDERS' EQUITY               1999            2000
                                                   ------------    -------------

<S>                                                <C>              <C>
Current liabilities:
    Notes payable ............................     $    57,076      $    22,622
    Current maturities of long-term debt .....             212              151
    Accounts payable and accrued liabilities .         190,360          202,920
    Payable to affiliates ....................          11,240            9,743
    Income taxes .............................           5,605           14,126
    Deferred income taxes ....................             326              720
                                                   -----------      -----------

        Total current liabilities ............         264,819          250,282
                                                   -----------      -----------

Noncurrent liabilities:
    Long-term debt ...........................         244,266          244,105
    Deferred income taxes ....................         108,226          134,992
    Accrued pension cost .....................          32,946           21,761
    Accrued postretirement benefits cost .....          37,105           29,577
    Other ....................................          93,821           72,606
                                                   -----------      -----------

        Total noncurrent liabilities .........         516,364          503,041
                                                   -----------      -----------


Minority interest ............................           3,903            5,483
                                                   -----------      -----------

Shareholders' equity:
    Common stock .............................           8,355            8,355
    Additional paid-in capital ...............         774,304          777,262
    Retained earnings ........................          19,150          113,744
    Accumulated other comprehensive loss .....        (158,921)        (197,461)
    Treasury stock ...........................        (371,801)        (399,400)
                                                   -----------      -----------

        Total shareholders' equity ...........         271,087          302,500
                                                   -----------      -----------

                                                   $ 1,056,173      $ 1,061,306
                                                   ===========      ===========
</TABLE>

Commitments and contingencies (Note 12)

          See accompanying notes to consolidated financial statements.
                                      - 4 -


<PAGE>



                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

                      (In thousands, except per share data)


<TABLE>
<CAPTION>
                                            Three months ended         Nine months ended
                                               September 30,              September 30,
                                          ----------------------    -----------------------
                                            1999         2000         1999         2000
                                          ---------    ---------    ---------   ---------

<S>                                       <C>          <C>          <C>         <C>
Revenues and other income:
    Net sales .........................   $ 242,621    $ 242,309    $ 676,758   $ 724,444
    Other, net ........................       3,967        4,906       20,040      63,352
                                          ---------    ---------    ---------   ---------

                                            246,588      247,215      696,798     787,796
                                          ---------    ---------    ---------   ---------

Costs and expenses:
    Cost of sales .....................     181,745      159,021      496,564     482,319
    Selling, general and administrative      32,119       33,972       97,761     104,194
    Interest ..........................       9,060        7,717       28,136      23,470
                                          ---------    ---------    ---------   ---------

                                            222,924      200,710      622,461     609,983
                                          ---------    ---------    ---------   ---------

       Income before income taxes and
        minority interest .............      23,664       46,505       74,337     177,813

Income tax benefit (expense) ..........      (6,507)     (14,882)      70,833     (58,843)
                                          ---------    ---------    ---------   ---------

       Income before minority interest       17,157       31,623      145,170     118,970

Minority interest .....................          11        1,454        2,261       1,655
                                          ---------    ---------    ---------   ---------

       Net income .....................   $  17,146    $  30,169    $ 142,909   $ 117,315
                                          =========    =========    =========   =========



Earnings per share:
    Basic .............................   $     .33    $     .60    $    2.76   $    2.32
                                          =========    =========    =========   =========
    Diluted ...........................   $     .33    $     .60    $    2.75   $    2.31
                                          =========    =========    =========   =========

Weighted average shares used in the
 calculation of earnings per share:
    Basic .............................      51,835       50,203       51,828      50,539
    Dilutive impact of stock options ..         108          403           68         330
                                          ---------    ---------    ---------   ---------

    Diluted ...........................      51,943       50,606       51,896      50,869
                                          =========    =========    =========   =========
</TABLE>


          See accompanying notes to consolidated financial statements.
                                      - 5 -


<PAGE>



                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                                 (In thousands)


<TABLE>
<CAPTION>

                                                   Three months ended          Nine months ended
                                                       September 30,             September 30,
                                                 ----------------------    ----------------------
                                                    1999         2000         1999        2000
                                                 ---------    ---------    ---------    ---------

<S>                                              <C>          <C>          <C>          <C>
Net income ...................................   $  17,146    $  30,169    $ 142,909    $ 117,315
                                                 ---------    ---------    ---------    ---------

Other comprehensive income (loss), net of tax:
  Marketable securities adjustment:
    Unrealized holding gain (loss) arising
     during period ...........................        (670)       2,021       (1,475)       2,729
      Less:  reclassification adjustment for
       gain included in net income ...........        --            (50)        --            (50)
                                                 ---------    ---------    ---------    ---------
                                                      (670)       1,971       (1,475)       2,679
    Currency translation adjustment ..........       2,198      (18,623)     (18,184)     (41,219)
                                                 ---------    ---------    ---------    ---------

        Total other comprehensive income
         (loss) ..............................       1,528      (16,652)     (19,659)     (38,540)
                                                 ---------    ---------    ---------    ---------

    Comprehensive income .....................   $  18,674    $  13,517    $ 123,250    $  78,775
                                                 =========    =========    =========    =========

</TABLE>



          See accompanying notes to consolidated financial statements.
                                      - 6 -


<PAGE>



                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

                      Nine months ended September 30, 2000

                                 (In thousands)

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

<S>                                         <C>            <C>            <C>             <C>             <C>             <C>
Balance at December 31, 1999 .........      $   8,355      $ 774,304      $  19,150       $(160,022)      $  (1,756)      $   2,857

Net income ...........................           --             --          117,315            --              --              --

Other comprehensive income (loss), net           --             --             --           (41,219)           --             2,679

Dividends ............................           --             --          (22,721)           --              --              --

Tax benefit of stock options exercised           --            2,958           --              --              --              --

Treasury stock:
   Acquired ..........................           --             --             --              --              --              --
   Reissued ..........................           --             --             --              --              --              --
                                            ---------      ---------      ---------       ---------       ---------       ---------


Balance at September 30, 2000 ........      $   8,355      $ 777,262      $ 113,744       $(201,241)      $  (1,756)      $   5,536
                                            =========      =========      =========       =========       =========       =========


<CAPTION>

                                             Treasury
                                              stock           Total
                                            ---------       ---------

<S>                                         <C>             <C>
Balance at December 31, 1999 .........      $(371,801)      $ 271,087

Net income ...........................           --           117,315

Other comprehensive income (loss), net           --           (38,540)

Dividends ............................           --           (22,721)

Tax benefit of stock options exercised           --             2,958

Treasury stock:
   Acquired ..........................        (29,180)        (29,180)
   Reissued ..........................          1,581           1,581

                                            ---------       ---------

Balance at September 30, 2000 ........      $(399,400)      $ 302,500
                                            =========       =========

</TABLE>



          See accompanying notes to consolidated financial statements.
                                      - 7 -


<PAGE>



                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                  Nine months ended September 30, 1999 and 2000

                                 (In thousands)


<TABLE>
<CAPTION>

                                                            1999         2000
                                                         ---------    ---------

<S>                                                      <C>          <C>
Cash flows from operating activities:
    Net income .......................................   $ 142,909    $ 117,315
    Depreciation, depletion and amortization .........      25,343       22,790
    Deferred income taxes ............................     (88,574)      33,301
    Distribution from TiO2 manufacturing joint venture      12,050        7,550
    Pension cost, net ................................      (3,372)     (10,488)
    Other postretirement benefits, net ...............      (4,134)      (1,934)
    Net gains from securities transactions ...........        --         (5,630)
    Litigation settlement gain, net ..................        --        (43,000)
    Other, net .......................................       3,608        3,291
                                                         ---------    ---------

                                                            87,830      123,195

    Change in assets and liabilities:
        Accounts and notes receivable ................     (39,832)     (37,921)
        Inventories ..................................      40,027       27,740
        Prepaid expenses .............................      (4,646)      (4,123)
        Accounts payable and accrued liabilities .....       1,996        7,910
        Income taxes .................................      13,722        6,708
        Other, net ...................................     (17,022)      (4,347)
                                                         ---------    ---------

            Net cash provided by operating activities       82,075      119,162
                                                         ---------    ---------

Cash flows from investing activities:
    Capital expenditures .............................     (25,818)     (19,757)
    Change in restricted cash equivalents, net .......     (12,398)        (102)
    Purchase of Tremont Corporation common stock .....        --        (26,040)
    Proceeds from disposition of:
       Property and equipment ........................       2,160           91
       Marketable securities .........................        --            158
                                                         ---------    ---------


            Net cash used by investing activities ....     (36,056)     (45,650)
                                                         ---------    ---------
</TABLE>


                                      - 8 -


<PAGE>



                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                  Nine months ended September 30, 1999 and 2000

                                 (In thousands)



<TABLE>
<CAPTION>

                                                            1999         2000
                                                         ---------    ---------

<S>                                                      <C>          <C>
Cash flows from financing activities:
    Indebtedness:
       Borrowings ....................................   $  56,271    $    --
       Principal payments ............................     (93,278)     (29,034)
    Dividends paid ...................................      (5,442)     (22,721)
    Treasury stock purchased .........................        --        (29,180)
    Other, net .......................................         199        1,575
                                                         ---------    ---------

        Net cash used by financing activities ........     (42,250)     (79,360)
                                                         ---------    ---------

Cash and cash equivalents:
    Net change from:
        Operating, investing and financing activities        3,769       (5,848)
        Currency translation .........................      (2,022)      (3,312)
    Balance at beginning of period ...................     154,953      134,224
                                                         ---------    ---------

    Balance at end of period .........................   $ 156,700    $ 125,064
                                                         =========    =========


Supplemental disclosures - cash paid for:
    Interest .........................................   $  19,700    $  16,428
    Income taxes, net ................................       3,638       18,838

</TABLE>



          See accompanying notes to consolidated financial statements.
                                      - 9 -


<PAGE>



                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1 - Organization and basis of presentation:

        NL Industries,  Inc.  conducts its titanium  dioxide  pigments  ("TiO2")
operations  through its wholly owned subsidiary,  Kronos,  Inc. At September 30,
2000,  Valhi,  Inc.  and  Tremont   Corporation,   each  affiliates  of  Contran
Corporation,  held approximately 60% and 20%, respectively,  of NL's outstanding
common  stock.  At  September  30,  2000,  Contran  and  its  subsidiaries  held
approximately  93% of  Valhi's  outstanding  common  stock,  and Valhi and other
entities  related  to Harold C.  Simmons  held  approximately  79% of  Tremont's
outstanding common stock. See Note 5.

        The consolidated  balance sheet of NL Industries,  Inc. and Subsidiaries
(collectively,  the  "Company") at December 31, 1999 has been condensed from the
Company's  audited   consolidated   financial   statements  at  that  date.  The
consolidated balance sheet at September 30, 2000 and the consolidated statements
of income,  comprehensive  income,  shareholders'  equity and cash flows for the
interim  periods  ended  September  30, 1999 and 2000 have been  prepared by the
Company,  without  audit.  In  the  opinion  of  management,   all  adjustments,
consisting only of normal recurring adjustments, necessary to present fairly the
consolidated financial position,  results of operations and cash flows have been
made.  The results of  operations  for the interim  periods are not  necessarily
indicative of the operating results for a full year or of future operations.

        Certain  information  and  footnote  disclosures  normally  included  in
financial  statements  prepared in accordance with generally accepted accounting
principles  have  been  condensed  or  omitted.  The  accompanying  consolidated
financial  statements  should  be  read in  conjunction  with  the  consolidated
financial  statements  included in the Company's  Annual Report on Form 10-K for
the year ended December 31, 1999 (the "1999 Annual Report").

        The Company  will adopt  Statement  of  Financial  Accounting  Standards
("SFAS") No. 133, Accounting for Derivative  Instruments and Hedging Activities,
as amended,  no later than the first quarter of 2001.  SFAS No. 133  establishes
accounting  standards for derivative  instruments,  including certain derivative
instruments embedded in other contracts, and for hedging activities.  Under SFAS
No. 133, all derivatives  will be recognized as either assets or liabilities and
measured at fair value.  The accounting for changes in fair value of derivatives
will depend upon the intended use of the derivative. The impact of adopting SFAS
No. 133, if any, has not been  determined  but will be dependent upon the extent
to which the  Company  is then a party to  derivative  contracts  or  engaged in
hedging  activities,   including  derivatives  embedded  in  nonderivative  host
contacts.  As  permitted  by the  transition  requirements  of SFAS No.  133, as
amended,  the  Company  will  exempt  from the  scope  of SFAS No.  133 all host
contracts  containing  embedded  derivatives which were issued,  acquired or not
substantially modified prior to January 1, 1999.

        The Company will adopt the SEC's Staff  Accounting  Bulletin ("SAB") No.
101, Revenue Recognition, as amended, in the fourth quarter of 2000. SAB No. 101
provides  guidance on the  recognition,  presentation and disclosure of revenue,
including  specifying  basic  criteria  that must be met before  revenue  can be
recognized.  The impact on the Company of adopting  SAB No. 101, if any, has not
yet been determined, in part because the Company is studying additional guidance
on SAB No. 101 recently issued by the SEC. If

                                     - 10 -

<PAGE>



the impact of adopting SAB No. 101 is  material,  the Company will adopt SAB No.
101  retroactively to the beginning of 2000, and previously  reported results of
operations for the first three quarters of 2000 would be restated.

        The Company generally  undertakes  planned major maintenance  activities
several times each year.  Repair and maintenance  costs estimated to be incurred
in connection with planned major  maintenance  activities are accrued in advance
and are included in cost of goods sold.

Note 2 - Earnings per share:

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

Note 3 - Business segment information:

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

<TABLE>
<CAPTION>
                                           Three months ended          Nine months ended
                                              September 30,              September 30,
                                          ----------------------    ----------------------
                                             1999        2000         1999        2000
                                          ---------    ---------    ---------    ---------
                                                              (In thousands)

<S>                                       <C>          <C>          <C>          <C>
Net sales .............................   $ 242,621    $ 242,309    $ 676,758    $ 724,444
Other income, excluding corporate .....       1,146        1,404       11,748        5,518
                                          ---------    ---------    ---------    ---------
                                            243,767      243,713      688,506      729,962

Cost of sales .........................     181,745      159,021      496,564      482,319
Selling, general and administrative,
   excluding corporate ................      27,263       27,181       82,086       81,154
                                          ---------    ---------    ---------    ---------

        Operating income ..............      34,759       57,511      109,856      166,489

General corporate income (expense):
    Securities earnings, net ..........       1,696        2,494        4,841       11,602
    Litigation settlement gain, net and
      other income ....................       1,125        1,008        3,451       46,232
    Corporate expense .................      (4,856)      (6,791)     (15,674)     (23,040)
    Interest expense ..................      (9,060)      (7,717)     (28,137)     (23,470)
                                          ---------    ---------    ---------    ---------
        Income before income taxes and
          minority interest ...........   $  23,664    $  46,505    $  74,337    $ 177,813
                                          =========    =========    =========    =========

</TABLE>


                                     - 11 -

<PAGE>



Note 4 - Inventories:

<TABLE>
<CAPTION>

                                                    December 31,   September 30,
                                                       1999            2000
                                                    ------------   -------------
                                                          (In thousands)

<S>                                                  <C>                <C>
Raw materials ............................           $ 54,861           $ 38,738
Work in process ..........................              8,065              7,335
Finished products ........................            100,824             77,925
Supplies .................................             27,434             24,594
                                                     --------           --------

                                                     $191,184           $148,592
                                                     ========           ========
</TABLE>

Note 5 - Marketable securities:

<TABLE>
<CAPTION>
                                                      December 31,   September 30,
                                                          1999           2000
                                                      ------------   -------------
                                                             (In thousands)
<S>                                                     <C>              <C>
Available-for-sale marketable equity securities:
    Unrealized gains ...........................        $  6,700         $ 14,195
    Unrealized losses ..........................          (2,304)          (5,678)
    Cost .......................................          10,659           36,618
                                                        --------         --------

        Aggregate fair value ...................        $ 15,055         $ 45,135
                                                        ========         ========
</TABLE>

        The Company purchased 500,000 shares of Tremont's common stock in market
transactions  in each of the first and third  quarters of 2000 for $9.5  million
and $16.5  million,  respectively.  At  September  30,  2000,  the Company  held
approximately  17% of  Tremont's  outstanding  common  stock  and 1% of  Valhi's
outstanding  common  stock.  The  Company  accounts  for  investments  in parent
companies as "available-for-sale" marketable securities carried at fair value.

Note 6 - Other noncurrent assets:

<TABLE>
<CAPTION>

                                                     December 31,  September 30,
                                                        1999            2000
                                                     ------------  -------------
                                                           (In thousands)

<S>                                                     <C>               <C>
Deferred financing costs, net ..............            $2,278            $1,828
Other ......................................             3,132             2,402
                                                        ------            ------

                                                        $5,410            $4,230
                                                        ======            ======
</TABLE>


                                     - 12 -

<PAGE>



Note 7 - Accounts payable and accrued liabilities:

<TABLE>
<CAPTION>

                                                     December 31,  September 30,
                                                        1999           2000
                                                     ------------  -------------
                                                          (In thousands)

<S>                                                   <C>               <C>
Accounts payable ...........................          $ 56,597          $ 46,770
                                                      --------          --------
Accrued liabilities:
    Environmental costs ....................            47,228            62,007
    Employee benefits ......................            35,243            31,726
    Interest ...............................             6,761            13,339
    Deferred income ........................             4,000             4,000
    Other ..................................            40,531            45,078
                                                      --------          --------

                                                       133,763           156,150
                                                      --------          --------

                                                      $190,360          $202,920
                                                      ========          ========
</TABLE>

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

                                                     December 31,  September 30,
                                                        1999           2000
                                                     ------------  -------------
                                                          (In thousands)

<S>                                                      <C>             <C>
Environmental costs ............................         $64,491         $48,295
Insurance claims and expenses ..................          11,688          10,295
Employee benefits ..............................           7,816           7,801
Deferred income ................................           8,333           5,333
Other ..........................................           1,493             882
                                                         -------         -------

                                                         $93,821         $72,606
                                                         =======         =======
</TABLE>

Note 9 - Notes payable and long-term debt:

<TABLE>
<CAPTION>

                                                             December 31,  September 30,
                                                                1999           2000
                                                             ------------  -------------
                                                                     (In thousands)

<S>                                                           <C>             <C>
Notes payable - Kronos (euro 56,511 and
    euro 25,565, respectively) .......................        $ 57,076        $ 22,622
                                                              ========        ========

Long-term debt:
    NL Industries, Inc.  - 11.75% Senior Secured Notes        $244,000        $244,000
    Kronos ...........................................             478             256
                                                              --------        --------

                                                               244,478         244,256

Less current maturities ..............................             212             151
                                                              --------        --------

                                                              $244,266        $244,105
                                                              ========        ========
</TABLE>


                                     - 13 -

<PAGE>



Note 10 - Income taxes:

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

<TABLE>
<CAPTION>
                                                             Nine months ended
                                                               September 30,
                                                           ----------------------
                                                             1999          2000
                                                           --------      --------
                                                               (In thousands)

<S>                                                        <C>           <C>
Expected tax expense .................................     $(26,018)     $(62,235)
Non-U.S. tax rates ...................................       (5,674)        3,917
Resolution of German income tax audits ...............       36,490          --
Change in valuation allowance:
    Corporate restructuring in Germany and other .....       77,580          --
    Change in German income tax law ..................      (24,070)         --
    Recognition of certain deductible tax attributes
      which previously did not meet the
      "more-likely-than-not" recognition criteria ....       12,335         2,116
Incremental tax on income of companies not included in
  NL's consolidated U.S. federal income tax return ...       (2,049)       (1,015)
U.S. state income taxes ..............................          759          (691)
Other, net ...........................................        1,480          (935)
                                                           --------      --------

      Income tax benefit (expense) ...................     $ 70,833      $(58,843)
                                                           ========      ========

</TABLE>

        The Company  recognized a $90 million  noncash net income tax benefit in
1999 that  includes  (i) a $36 million  reduction  in deferred  tax  liabilities
related  to a  favorable  resolution  of a German  tax  contingency,  (ii) a $78
million decrease in the valuation  allowance to recognize the benefit of certain
deductible income tax attributes which the Company believes meet the recognition
criteria as a result of, among other things,  a corporate  restructuring  of the
Company's  German  subsidiaries,  offset by (iii) a $24 million  increase in the
valuation allowance to reduce the previously recognized benefit of certain other
deductible  income tax  attributes  which the  Company  believes do not meet the
recognition criteria due to a change in German tax law.

        A  reduction  in the German  "base"  income tax rate from 30% to 25% was
enacted in October 2000, to be effective  January 1, 2001.  The reduction in the
German  income tax rate is  expected  to result in  approximately  $5 million of
additional  income tax expense in the fourth  quarter of 2000 due to a reduction
of the  Company's  deferred  income  tax asset  related  to  certain  German tax
attributes. The Company does not expect its future current income tax expense to
be affected by the rate change in Germany.


                                     - 14 -

<PAGE>



Note 11 - Other income, net:

<TABLE>
<CAPTION>

                                           Three months ended           Nine months ended
                                               September 30,               September 30,
                                          ----------------------      ---------------------
                                            1999          2000          1999         2000
                                          --------      --------      --------     --------
                                                             (In thousands)

<S>                                       <C>           <C>           <C>          <C>
Securities earnings:
    Interest and dividends ..........     $  1,696      $  2,417      $  4,841     $  5,972
    Securities transactions .........         --              77          --          5,630
                                          --------      --------      --------     --------
                                             1,696         2,494         4,841       11,602
Currency transaction gains, net .....          894           602         8,735        4,256
Litigation settlement gain, net .....         --            --            --         43,000
Noncompete agreement income .........        1,000         1,000         3,000        3,000
Disposition of property and equipment         (242)         (271)          705       (1,219)
Trade interest income ...............          360           648         1,665        1,475
Other, net ..........................          259           433         1,094        1,238
                                          --------      --------      --------     --------

                                          $  3,967      $  4,906      $ 20,040     $ 63,352
                                          ========      ========      ========     ========
</TABLE>

        The  Company  recognized  a $43  million  net  gain  from  a  June  2000
settlement with one of the Company's two principal  former  insurance  carriers.
The gain is net of $2 million in commissions.  The settlement resolved with that
carrier a court proceeding that the Company initiated to seek  reimbursement for
legal  defense   expenditures   and  indemnity   coverage  for  certain  of  its
environmental  remediation  expenditures.   In  July  2000,  proceeds  from  the
settlement  were   transferred  by  the  carrier  to  a  special  purpose  trust
established to pay future  remediation and other  environmental  expenditures of
the Company.  At September 30, 2000,  restricted cash equivalents  include $45.6
million held by the special purpose trust.

        In the second  quarter of 2000, the Company  received  389,691 shares of
common stock pursuant to the  demutualization of an insurance company from which
the Company had purchased certain insurance  policies.  The Company recognized a
$5.6 million  securities  gain based on the insurance  company's  initial public
offering  price of $14-1/4  per share.  The shares  were  placed in a  Voluntary
Employees'  Beneficiary  Association trust, the assets of which may only be used
to pay for certain retiree benefits.  The Company accounted for the $5.6 million
contribution of the insurance company's common stock to the trust as a reduction
of its accrued postretirement  benefits cost liability.  The shares were sold by
the trust in the second quarter of 2000 for $7.8 million or $20 per share.

Note 12 - Commitments and contingencies:

        For  descriptions  of certain  legal  proceedings,  income tax and other
commitments and contingencies  related to the Company,  reference is made to (i)
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations,  (ii) Part II,  Item 1  -"Legal  Proceedings,"  (iii) the  Company's
Quarterly Report on Form 10-Q for the quarters ended March 31, 2000 and June 30,
2000, and (iv) the 1999 Annual Report.

                                     - 15 -

<PAGE>



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


RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                      Three months ended     %       Nine months ended    %
                                         September 30,     Change       September 30,   Change
                                      ------------------   ------    -----------------  -------
                                        1999      2000                1999      2000
                                        ----      ----                ----      ----
                                        (In millions)                  (In millions)

<S>                                     <C>      <C>        <C>      <C>       <C>       <C>
Net sales and operating income
  Net sales ........................    $242.6   $242.3      n/c     $676.8    $724.4     +7%
  Operating income .................     $34.8    $57.5     +65%     $109.9    $166.5    +52%
  Operating income margin percentage       14%      24%                 16%       23%

TiO2 operating statistics
  Percent change in average selling
    prices (in billing currencies) .                        +10%                          +5%

  Production volume (metric tons
    in thousands) ..................        99      113     +14%        299       329    +10%

  Production rate as a percent of
    capacity .......................       90%     Full                 91%      Full

  Sales volume (metric tons in
    thousands) .....................       117      113      -4%        317       343     +8%

</TABLE>

        Kronos'  operating  income in the third quarter of 2000 increased  $22.7
million or 65% from the comparable  period in 1999 due to higher average selling
prices in billing currencies and higher production  volume,  partially offset by
lower sales volume.  Kronos'  operating  income in the first nine months of 2000
increased  from the  comparable  period in 1999  primarily due to higher average
selling prices in billing currencies and higher production and sales volumes.

        Average TiO2 selling prices in billing  currencies  (which  excludes the
effects of foreign currency  translation)  during the third quarter of 2000 were
10%  higher  than in the third  quarter  of 1999 and were 3% higher  than in the
second quarter of 2000.  Average selling prices in billing currencies at the end
of the third quarter were slightly  higher than the average  during the quarter.
Kronos'  prices were up in all major regions from the third quarter of 1999 with
the greatest  improvement  being  realized in the  European and export  markets.
Compared to the second  quarter of 2000,  prices were 5% higher in Europe and 4%
higher in the  export  markets.  Prices  were flat in North  America  versus the
second quarter of 2000.  Average  selling  prices in billing  currencies for the
first nine months of 2000 were 5% higher than the first nine months of 1999 with
increases in all major  regions.  The Company  expects  average  selling  prices
during the  fourth  quarter of 2000 will be  slightly  higher  than in the third
quarter of 2000.

        Kronos' third-quarter 2000 sales volume was at near record third-quarter
levels and  decreased  4% from the third  quarter of 1999 and 6% from the second
quarter of 2000.  Sales  volume in the first  nine  months of 2000 was 8% higher
than the first nine  months of 1999.  Although  Kronos  believes  its TiO2 sales
volume for the fourth quarter of 2000 will be lower than the record sales volume
in the fourth  quarter of 1999,  Kronos  anticipates  its TiO2 sales  volume for
full-year 2000 will be higher than that of 1999.


                                     - 16 -

<PAGE>



        The Company's  third-quarter  2000 production volume was 14% higher than
the  comparable  1999 period  with  operating  rates near full  capacity in 2000
compared to 90% in the third quarter of 1999.  Kronos'  production volume in the
first nine  months of 2000 was 10% higher than the  comparable  1999 period with
operating rates near full capacity in 2000 compared to 91% capacity  utilization
in the first nine months of 1999.  Finished goods inventory levels at the end of
September  remained even with June 2000 levels  representing about 1.5 months of
sales in inventory.

        The Company's efforts to debottleneck  Kronos' production  facilities to
meet long-term demand continue to prove successful.  The Company expects Kronos'
production  capacity  will be  increased  by  approximately  25,000  metric tons
primarily at its chloride facilities,  with only moderate capital  expenditures,
bringing Kronos' capacity to approximately  465,000 metric tons by 2002.  Kronos
expects to produce more in 2000 than the record  434,000 metric tons it produced
in 1998.

        Kronos expects its full-year  2000 operating  income will be higher than
1999 primarily  because of higher average selling prices in billing  currencies,
higher  production  and sales  volumes and its  continued  focus on  controlling
costs.  The  extent  of the  improvement  will be  determined  primarily  by the
magnitude of realized price increases.

        Compared to the year-earlier  periods,  cost of sales as a percentage of
net sales  decreased in the three and nine months ended September 2000 primarily
due to higher average selling prices in billing currencies and higher production
volume.

        Excluding the effects of foreign currency translation, which reduced the
Company's selling, general and administrative expenses ("SG&A") in the three and
nine months ended  September 2000 compared to the  year-earlier  periods,  SG&A,
excluding  corporate  expenses,  increased  in the third  quarter of 2000 due to
higher variable  compensation  expense and increased in the first nine months of
2000 due to higher distribution  expenses associated with higher sales volume in
the first nine months of 2000.

        A  significant   amount  of  Kronos'  sales  and  operating   costs  are
denominated in currencies other than the U.S. dollar.  Fluctuations in the value
of the U.S.  dollar  relative to other  currencies,  primarily  a stronger  U.S.
dollar  compared to the euro,  decreased the dollar value of sales for the third
quarter  and first nine  months of 2000 by a net $16  million  and $47  million,
respectively,  when compared to the year-earlier  periods.  When translated from
billing  currencies to U.S.  dollars using currency  exchange  rates  prevailing
during the respective  periods,  Kronos' average selling prices in U.S.  dollars
for the third  quarter  of 2000  increased  4% from the third  quarter  of 1999.
Kronos' average selling prices in U.S. dollars for the first nine months of 2000
decreased 1% from the first nine months of 1999.  Kronos'  operating  costs that
are not  denominated  in U.S.  dollars were also lower when  translated  to U.S.
dollars in the third  quarter  and first  nine  months of 2000  compared  to the
year-earlier  periods and,  accordingly,  Kronos' average cost per metric ton in
U.S.  dollar terms were lower in the third quarter and first nine months of 2000
compared to the same periods last year. In addition, sales to export markets are
typically  denominated  in U.S.  dollars  and a stronger  U.S.  dollar  improves
margins at the Company's non-U.S. subsidiaries on their export sales. This helps
to offset the unfavorable  effect of translating  local currency profits to U.S.
dollars  when the dollar is  stronger.  As a result,  the net impact of currency
exchange rate  fluctuations  on operating  income in the third quarter and first
nine months of 2000,  excluding  the  second-quarter  1999 $5.3 million  foreign
currency transaction gain, was not significant when compared to the year-earlier
periods.


                                     - 17 -

<PAGE>



  General corporate

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

<TABLE>
<CAPTION>

                            Three months ended                     Nine months ended
                               September 30,        Difference       September 30,        Difference
                           --------------------     ----------     ------------------     ----------
                             1999         2000                     1999          2000
                             ----         ----                     ----          ----
                                                           (In millions)

<S>                        <C>          <C>          <C>          <C>          <C>          <C>
Securities earnings        $   1.7      $   2.5      $    .8      $   4.8      $  11.6      $   6.8
Corporate income ...           1.1          1.0          (.1)         3.5         46.2         42.7
Corporate expense ..          (4.8)        (6.8)        (2.0)       (15.8)       (23.0)        (7.2)
Interest expense ...          (9.1)        (7.7)         1.4        (28.1)       (23.5)         4.6
                           -------      -------      -------      -------      -------      -------

                           $ (11.1)     $ (11.0)     $    .1      $ (35.6)     $  11.3      $  46.9
                           =======      =======      =======      =======      =======      =======

</TABLE>

        Securities  earnings  in 2000  includes a  second-quarter  $5.6  million
securities gain related to common stock received from the  demutualization of an
insurance  company  from  which the  Company  had  purchased  certain  insurance
policies.  Corporate  income in 2000 includes a  second-quarter  $43 million net
gain  from a  settlement  with a former  insurance  carrier.  See Note 11 to the
Consolidated Financial Statements.

        Corporate  expense was higher in the third quarter of 2000 primarily due
to higher legal expenses.  Corporate expense was higher in the first nine months
of  2000  primarily  due to  higher  legal  expenses  and  higher  environmental
remediation accruals.

        Interest  expense in the third  quarter  and first  nine  months of 2000
decreased  15% and  17%,  respectively,  from  the  comparable  periods  in 1999
primarily due to reduced  levels of  outstanding  euro-  denominated  debt. As a
result,  the Company  expects its full-year 2000 interest  expense will be lower
than 1999.

  Provision for income taxes

        The Company reduced its deferred income tax valuation allowance by $12.3
million  in the first  nine  months of 1999 and $2.1  million  in the first nine
months of 2000  primarily as a result of  utilization  of certain tax attributes
for  which  the  benefit   had  not  been   previously   recognized   under  the
"more-likely-than-not"  recognition  criteria.  See Note 10 to the  Consolidated
Financial  Statements for a description of the Company's previously reported $90
million noncash net income tax benefit recognized in the second quarter of 1999.

  Other

        Minority  interest  primarily  relates to the  Company's  majority-owned
environmental management subsidiary,  NL Environmental Management Services, Inc.
("EMS").


                                     - 18 -

<PAGE>



LIQUIDITY AND CAPITAL RESOURCES

        The  Company's   condensed   consolidated  cash  flows  from  operating,
investing and financing  activities for the nine months ended September 30, 1999
and 2000 are presented below.

<TABLE>
<CAPTION>
                                                              Nine months ended
                                                                September 30,
                                                              ------------------
                                                               1999       2000
                                                               ----       ----
                                                                 (In millions)

<S>                                                           <C>        <C>
Net cash provided (used) by:
    Operating activities:
        Before changes in assets and liabilities .........    $ 87.8     $123.2
        Changes in assets and liabilities ................      (5.7)      (4.0)
                                                              ------     ------
                                                                82.1      119.2
    Investing activities .................................     (36.1)     (45.6)
    Financing activities .................................     (42.2)     (79.4)
                                                              ------     ------

       Net cash provided (used) by operating, investing,
        and financing activities .........................    $  3.8     $ (5.8)
                                                              ======     ======

</TABLE>

  Operating activities

        The TiO2 industry is cyclical and changes in economic  conditions within
the industry  significantly  affect the earnings and operating cash flows of the
Company. Cash flow from operations, before changes in assets and liabilities, in
the first  nine  months of 2000  increased  from the  comparable  period in 1999
primarily due to higher operating income, partially offset by higher current tax
expense and lower cash distributions from the Company's TiO2 manufacturing joint
venture.  Changes  in  the  Company's  inventories,   receivables  and  payables
(excluding the effect of currency  translation) provided $2.2 million of cash in
the first nine months of 1999  primarily due to  reductions in inventory  levels
and used $2.3 million of cash in the first nine months of 2000  primarily due to
increases in receivables.

  Investing activities

        The Company purchased 500,000 shares of Tremont's common stock in market
transactions  in each of the first and third  quarters of 2000 for $9.5  million
and $16.5 million, respectively. See Notes 1 and 5 to the Consolidated Financial
Statements. In the first nine months of 1999, the Company collateralized letters
of credit with $12.4 million of the Company's  cash, and classified such amounts
as current restricted cash equivalents.

  Financing activities

        In the second and third  quarters of 2000 the  Company  repaid euro 17.9
million  ($16.7  million  when paid) and euro 13.0 million  ($12.2  million when
paid), respectively, of its euro-denominated short-term debt with cash flow from
operations.

        In the  third  quarter  of 2000 the  Company  paid a  regular  quarterly
dividend  of $.15 per  share  to  shareholders  aggregating  $7.6  million,  and
dividends  paid during the first nine months of 2000  totaled  $.45 per share or
$22.7 million.  In October 2000, the Company's Board of Directors  increased the
regular

                                     - 19 -

<PAGE>



quarterly  dividend to $.20 per share and declared a dividend to shareholders of
record as of December 13, 2000 to be paid on December 27, 2000.

        Pursuant to its share repurchase programs, the Company purchased 668,000
shares of its common  stock at an aggregate  cost of $15.2  million in the third
quarter of 2000 and  1,595,000  shares at an aggregate  cost of $29.2 million in
the first nine months of 2000. An additional  87,000 shares at an aggregate cost
of $1.7 million were purchased in October 2000.

  Cash, cash equivalents, restricted cash equivalents and borrowing availability

        At  September  30,  2000,  the  Company  had cash  and cash  equivalents
aggregating  $125 million ($70  million  held by non-U.S.  subsidiaries)  and an
additional   $63  million  of  restricted   cash   equivalents.   The  Company's
subsidiaries had $38 million available for borrowing at September 30, 2000 under
existing non-U.S. credit facilities.

  Income tax contingencies

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

        The  Company  has  received  tax  assessments  from  the  Norwegian  tax
authorities  proposing  tax  deficiencies  of  NOK 30  million  ($3  million  at
September  30,  2000)  relating  to 1994 and  1996.  The  Company  is  currently
litigating  the  primary  issue  related to the 1994  assessment  in a Norwegian
appeals  court,  and the Company  believes  that the outcome of the 1996 case is
dependent  on the eventual  outcome of the 1994 case.  The Company has granted a
lien for the 1994 and 1996 tax assessments on its Fredrikstad, Norway TiO2 plant
in favor of the Norwegian tax authorities.

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

  Environmental matters and litigation

        The Company has been named as a defendant, potentially responsible party
("PRP"), or both, in a number of legal proceedings associated with environmental
matters,  including  waste  disposal  sites,  mining  locations  and  facilities
currently or previously owned, operated or used by the Company, certain of which
are on the U.S.  Environmental  Protection  Agency's (the "U.S.  EPA") Superfund
National  Priorities  List or similar  state lists.  On a quarterly  basis,  the
Company  evaluates  the  potential  range of its liability at sites where it has
been  named  as  a  PRP  or  defendant,   including  sites  for  which  EMS  has
contractually  assumed the  Company's  obligation.  The Company  believes it has
adequate accruals ($110 million at September 30, 2000) for reasonably  estimable
costs of such matters, but the Company's ultimate liability may be affected by a
number of factors,  including changes in remedial alternatives and costs and the
allocations  of such costs among PRPs.  It is not possible to estimate the range
of costs for certain  sites.  The upper end of the range of reasonably  possible
costs to the Company for sites for which it is possible to estimate costs is

                                     - 20 -

<PAGE>



approximately $170 million. The Company's estimates of such liabilities have not
been  discounted  to present  value,  and the  Company  has not  recognized  any
potential  insurance  recoveries  other than the June 2000 settlement  discussed
below.  No  assurance  can be given that  actual  costs  will not exceed  either
accrued amounts or the upper end of the range for sites for which estimates have
been made,  and no assurance  can be given that costs will not be incurred  with
respect to sites as to which no estimate  presently can be made.  The imposition
of  more  stringent  standards  or  requirements  under  environmental  laws  or
regulations,  new  developments or changes with respect to site cleanup costs or
allocation  of such costs among  PRPs,  or a  determination  that the Company is
potentially  responsible for the release of hazardous  substances at other sites
could result in  expenditures  in excess of amounts  currently  estimated by the
Company to be required for such matters. Furthermore,  there can be no assurance
that additional environmental matters will not arise in the future.

        In June 2000 the Company settled a lawsuit with one of its two principal
former  insurance  carriers.  The  Company  had  sought  reimbursement  from the
insurance  carrier for legal defense  expenditures  and  indemnity  coverage for
certain of its environmental remediation expenditures.  In July 2000 proceeds of
$45 million from the  settlement  were  transferred  by the carrier to a special
purpose trust  established  to pay future  remediation  and other  environmental
expenditures of the Company.  The Company is continuing to pursue similar claims
with other insurance carriers.

  Lead pigment litigation

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

  Other

        The  Company   periodically   evaluates  its   liquidity   requirements,
alternative uses of capital, capital needs and availability of resources in view
of, among other things,  its debt service and capital  expenditure  requirements
and estimated  future  operating  cash flows.  As a result of this process,  the
Company  in the  past  has  sought,  and in the  future  may  seek,  to  reduce,
refinance,  repurchase or restructure  indebtedness;  raise additional  capital;
issue additional  securities;  repurchase shares of its common stock; modify its
dividend

                                     - 21 -

<PAGE>



policy; restructure ownership interests; sell interests in subsidiaries or other
assets;  or take a  combination  of such  steps or other  steps  to  manage  its
liquidity  and capital  resources.  In the normal  course of its  business,  the
Company may review opportunities for the acquisition, divestiture, joint venture
or other business combinations in the chemicals or other industries,  as well as
the  acquisition  of  interests  in  related  companies.  In  the  event  of any
acquisition  or joint  venture  transaction,  the  Company  may  consider  using
available cash,  issuing equity securities or increasing its indebtedness to the
extent permitted by the agreements governing the Company's existing debt.

  Special note regarding forward-looking statements

        The  statements  contained  in  this  Report  on Form  10-Q  ("Quarterly
Report")  which  are  not  historical  facts,  including,  but not  limited  to,
statements  found under the captions  "Results of Operations" and "Liquidity and
Capital  Resources"  above,  are   forward-looking   statements  that  represent
management's  beliefs and assumptions based on currently available  information.
Forward-looking  statements  can be  identified  by the  use of  words  such  as
"believes,"  "intends,"  "may," "will," "should,"  "anticipates,"  "expects," or
comparable  terminology or by  discussions  of strategy or trends.  Although the
Company  believes  that  the  expectations  reflected  in  such  forward-looking
statements are reasonable, it cannot give any assurances that these expectations
will prove to be correct.  Such  statements  by their nature  involve  risks and
uncertainties,  including,  but not limited to, the  cyclicality of the titanium
dioxide  industry,  global  economic  conditions,  global  productive  capacity,
customer inventory levels,  changes in raw material,  energy and other operating
costs, changes in product pricing,  competitive technology positions,  operating
interruptions  (including,  but not limited to, labor  disputes,  leaks,  fires,
explosions, unscheduled downtime and transportation interruptions), the ultimate
resolution of pending or possible future lead pigment litigation and legislative
developments  related  to the  lead  paint  litigation,  the  outcome  of  other
litigation,  and other risks and uncertainties included in this Quarterly Report
and in the 1999 Annual Report, and the uncertainties set forth from time to time
in the Company's  other public reports and filings.  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  assumes no duty to
update any forward-looking statements.




                                     - 22 -

<PAGE>



                           PART II. OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

           Reference  is made  to the  1999  Annual  Report  and  the  Company's
Quarterly Report on Form 10-Q for the quarters ended March 31, 2000 and June 30,
2000 for descriptions of certain previously reported legal proceedings.

           City of New York, et al. v. Lead Industries Association,  et al. (No.
89-4617).  In September 2000 the First Department denied  plaintiffs'  appeal of
the trial  court's  denial of  plaintiffs'  motion for  summary  judgment on the
market share issue.

           Brenner,  et  al.  v.  American  Cyanamid,  et  al.  (No.  12596-93).
Plaintiffs have filed a notice of appeal.

           Sabater,  et  al.  v.  Lead  Industries  Association,   et  al.  (No.
25533/98).  In October 2000 defendants filed a third-party complaint against the
Federal Home Loan Mortgage  Corporation  (FHLMC),  and FHLMC removed the case to
federal court in the Southern District of New York.

           Cofield,  et  al.  v.  Lead  Industries  Association,   et  al.  (No.
24-C-99004491).   In  August  2000  the  federal  court   dismissed  the  fraud,
indemnification,  and nuisance  claims,  and remanded the case to Maryland state
court.

           Spring  Branch   Independent   School  District  v.  Lead  Industries
Association, et al. (No. 2000- 31175) and Houston Independent School District v.
Lead  Industries  Association,  et al.  (No.  2000-33725).  In October  2000 the
Company filed answers in both cases denying all  allegations  of wrongdoing  and
liability.

           Lewis et al. v. Lead Industries Association,  et al. (No. 00CH09800).
In October  2000  defendants  moved to dismiss all  claims.  Briefing is not yet
completed.

           In October  2000 the Company  was served  with a  complaint  filed in
California state court. Carletta Justice, et al. v. Sherwin-Williams Company, et
al.  (Superior  Court of  California,  County  of San  Francisco,  No.  314686).
Plaintiffs  are two minors who seek  general,  special and punitive  damages for
injuries  alleged  to be due to  ingestion  of  paint  containing  lead in their
residence. Defendants are the Company, the Lead Industries Association, and nine
other companies sued as former  manufacturers of lead paint.  Plaintiffs  allege
claims for negligence,  strict  products  liability,  concert of action,  market
share  liability,  and  intentional  tort.  The  Company  intends  to  deny  all
allegations of wrongdoing and liability and to defend the case vigorously.

           Batavia,  New York Landfill.  In September 2000 the Company finalized
the previously  reported  consent decree  allocating  cleanup costs at this site
among the PRPs. The Company's  expected costs pursuant to the consent decree are
within previously accrued amounts.

        In August and  September  2000 the Company and one of its  subsidiaries,
NLO, Inc.  ("NLO"),  were named as defendants in four lawsuits  filed in federal
court in the  western  district of Kentucky  against  the  Department  of Energy
("DOE") and a number of other defendants alleging that nuclear material supplied
by, among others, the Feed Material Production Center ("FMPC") in Fernald, Ohio,
owned by the DOE and

                                     - 23 -

<PAGE>



formerly managed under contract by NLO, caused injury to employees and others at
the DOE's Paducah,  Kentucky Gaseous  Diffusion Plant ("PGDP").  With respect to
each of the cases listed below,  the Company  believes that the DOE is obligated
to provide  defense and  indemnification  pursuant to its contract with NLO, and
pursuant to its  statutory  obligation  to do so, as it has in several  previous
cases relating to management of the FMPC, and has so advised the DOE. Answers in
the four  cases  have not been  filed;  the  Company  and NLO intend to deny all
allegations of wrongdoing and liability and to defend the cases vigorously.

*       In Rainer,  et al. v. E.I. du Pont de Nemours,  et al., ("Rainer I") No.
        5:00CV-223-J,   plaintiffs  purport  to  represent  a  class  of  former
        employees  at the PGDP and members of their  households  and seek actual
        and  punitive  damages  of  $5  billion  each  for  alleged  negligence,
        infliction  of  emotional  distress,   ultra-hazardous   activity/strict
        liability and strict products liability.

*       In  Rainer,  et al.  v.  Bill  Richardson,  et  al.,  No.  5:00CV-220-J,
        plaintiffs  purport to  represent  the same classes  regarding  the same
        matters  alleged in Rainer I, and allege a violation  of  constitutional
        rights and seek the same recovery sought in Rainer I.

*       In Dew, et al. v. Bill Richardson, et al., No. 5:00CV00221R,  plaintiffs
        purport  to  represent  classes  of all  PGDP  employees  who  sustained
        pituitary tumors or cancer as a result of exposure to radiation and seek
        actual and punitive damages of $2 billion each for alleged  violation of
        constitutional rights, assault and battery, fraud and misrepresentation,
        infliction   of   emotional   distress,   negligence,    ultra-hazardous
        activity/strict  liability,   strict  products  liability,   conspiracy,
        concert of action, joint venture and enterprise liability, and equitable
        estoppel.

*       In  Shaffer,   et  al.  v.  Atomic  Energy   Commission,   et  al.,  No.
        5:00CV00307M,  plaintiffs purport to represent classes of PGDP employees
        and household  members,  subcontractors at PGDP, and landowners near the
        PGDP and seek actual and punitive damages of $1 billion each and medical
        monitoring for the same counts alleged in Dew.

        In October 2000 the Company was served with a complaint  in Pulliam,  et
al. v. NL  Industries,  Inc., et al., No.  49DO20010CT001423,  filed in superior
court in Marion  County,  Indiana,  on behalf of an alleged class of all persons
and  entities who own or have owned  property or have resided  within a one-mile
radius of an industrial  facility formerly owned by the Company in Indianapolis,
Indiana.  Plaintiffs  allege that they and their  property  have been injured by
lead dust and  particulates  from the facility and seek  unspecified  actual and
punitive damages and a removal of all alleged lead  contamination.  The time for
the Company to file its answer has not yet expired.  The Company intends to deny
all allegations of wrongdoing and liability and to defend the case vigorously.




                                     - 24 -

<PAGE>



ITEM 6.         EXHIBITS AND REPORTS ON FORM 8-K

        (a)     Exhibits

                27.1 - Financial Data Schedule for the  nine-month  period ended
                September 30, 2000.

        (b)     Reports on Form 8-K

                Reports on Form 8-K for the quarter ended September 30, 2000 and
                through the date of this report:

                  July 18,  2000 - reported  Items 5 and 7.
                  October  18, 2000 - reported Items 5 and 7.

                                     - 25 -

<PAGE>



                                   SIGNATURES


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




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



Date:  November 10, 2000                By   /s/ Susan E. Alderton
------------------------                     -----------------------------------
                                             Susan E. Alderton
                                              Vice President and
                                              Chief Financial Officer
                                               (Principal Financial Officer)



Date:  November 10, 2000                By   /s/ Robert D. Hardy
------------------------                     -----------------------------------
                                             Robert D. Hardy
                                              Vice President and Controller
                                              (Principal Accounting Officer)

                                     - 26 -