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 March 31, 1997

                                      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 May 14, 1997:  51,144,014


<PAGE>



                     NL INDUSTRIES, INC. AND SUBSIDIARIES

                                     INDEX




                                                                         Page
PART I.     FINANCIAL INFORMATION

  Item 1.   Financial Statements.

            Consolidated Balance Sheets - December 31, 1996
             and March 31, 1997                                           3-4

            Consolidated Statements of Operations - Three
             months ended March 31, 1996 and 1997                          5

            Consolidated Statement of Shareholders' Deficit
             - Three months ended March 31, 1997                           6

            Consolidated Statements of Cash Flows - Three
             months ended March 31, 1996 and 1997                         7-8

            Notes to Consolidated Financial Statements                   9-13

  Item 2.   Management's Discussion and Analysis of Financial
             Condition and Results of Operations                         14-17


PART II.    OTHER INFORMATION

  Item 1.   Legal Proceedings                                            17-18

  Item 6.   Exhibits and Reports on Form 8-K                              19


                                   - 2 -

<PAGE>



                     NL INDUSTRIES, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

                                (In thousands)


<TABLE>
<CAPTION>


                                                     December 31,      March 31,
              ASSETS                                     1996            1997
                                                     ------------     ----------

<S>                                                    <C>            <C>       
Current assets:
  Cash and cash equivalents, including
   restricted cash of $10,895 and $9,343 .........     $  114,115     $   77,662
  Accounts and notes receivable ..................        138,538        162,547
  Refundable income taxes ........................          9,267          3,761
  Inventories ....................................        232,510        194,033
  Prepaid expenses ...............................          4,219          5,485
  Deferred income taxes ..........................          1,597          1,234
                                                       ----------     ----------

      Total current assets .......................        500,246        444,722
                                                       ----------     ----------


Other assets:
  Marketable securities ..........................         23,718         25,297
  Investment in joint ventures ...................        181,479        179,347
  Prepaid pension cost ...........................         24,821         24,898
  Deferred income taxes ..........................            223            223
  Other ..........................................         24,825         25,634
                                                       ----------     ----------

      Total other assets .........................        255,066        255,399
                                                       ----------     ----------

Property and equipment:
  Land ...........................................         21,963         20,589
  Buildings ......................................        165,479        157,246
  Machinery and equipment ........................        660,333        628,269
  Mining properties ..............................         95,891         94,062
  Construction in progress .......................         13,231         13,360
                                                       ----------     ----------
                                                          956,897        913,526
  Less accumulated depreciation and depletion ....        490,851        472,279
                                                       ----------     ----------

      Net property and equipment .................        466,046        441,247
                                                       ----------     ----------

                                                       $1,221,358     $1,141,368
                                                       ==========     ==========
</TABLE>




                                   - 3 -

<PAGE>



                     NL INDUSTRIES, INC. AND SUBSIDIARIES

                    CONSOLIDATED BALANCE SHEETS (CONTINUED)

                                (In thousands)

<TABLE>
<CAPTION>



                                                    December 31,       March 31,
   LIABILITIES AND SHAREHOLDERS' DEFICIT                1996             1997
                                                   -------------    ------------

<S>                                                 <C>             <C>        
Current liabilities:
  Notes payable ................................    $    25,732     $    23,776
  Current maturities of long-term debt .........         91,946          31,626
  Accounts payable and accrued liabilities .....        153,904         150,733
  Payable to affiliates ........................         10,204           9,619
  Income taxes .................................          5,664           5,860
  Deferred income taxes ........................          2,895           2,892
                                                    -----------     -----------

      Total current liabilities ................        290,345         224,506
                                                    -----------     -----------

Noncurrent liabilities:
  Long-term debt ...............................        737,100         746,605
  Deferred income taxes ........................        151,221         143,239
  Accrued pension cost .........................         57,941          54,093
  Accrued postretirement benefits cost .........         55,935          54,822
  Other ........................................        132,048         155,061
                                                    -----------     -----------

      Total noncurrent liabilities .............      1,134,245       1,153,820
                                                    -----------     -----------

Minority interest ..............................            249             237

Shareholders' deficit:
  Common stock .................................          8,355           8,355
  Additional paid-in capital ...................        759,281         759,281
  Adjustments:
    Currency translation .......................       (118,629)       (117,879)
    Pension liabilities ........................         (1,822)         (1,822)
    Marketable securities ......................          1,278           2,304
  Accumulated deficit ..........................       (485,948)       (521,669)
  Treasury stock ...............................       (365,996)       (365,765)
                                                    -----------     -----------

      Total shareholders' deficit ..............       (203,481)       (237,195)
                                                    -----------     -----------

                                                    $ 1,221,358     $ 1,141,368
                                                    ===========     ===========
</TABLE>

Commitments and contingencies (Note 13)

         See accompanying notes to consolidated financial statements.
                                   - 4 -

<PAGE>



                     NL INDUSTRIES, INC. AND SUBSIDIARIES

                    CONSOLIDATED STATEMENTS OF OPERATIONS

                  Three months ended March 31, 1996 and 1997

                     (In thousands, except per share data)


<TABLE>
<CAPTION>


                                                         1996           1997
                                                       ---------      ---------

<S>                                                    <C>            <C>      
Revenues and other income:
  Net sales ......................................     $ 240,440      $ 239,476
  Other, net .....................................        10,548          2,242
                                                       ---------      ---------

                                                         250,988        241,718
                                                       ---------      ---------

Costs and expenses:
  Cost of sales ..................................       169,816        185,035
  Selling, general and administrative ............        42,891         71,146
  Interest .......................................        19,139         18,958
                                                       ---------      ---------

                                                         231,846        275,139
                                                       ---------      ---------

      Income (loss) before income taxes and
       minority interest .........................        19,142        (33,421)

Income tax expense ...............................         5,740          2,292
                                                       ---------      ---------

      Income (loss) before minority interest .....        13,402        (35,713)

Minority interest ................................           (42)             8
                                                       ---------      ---------

      Net income (loss) ..........................     $  13,444      $ (35,721)
                                                       =========      =========

Net income (loss) per share of common stock ......     $     .26      $    (.70)
                                                       =========      =========

Weighted average common and common equivalent
 shares outstanding ..............................        51,510         51,144
                                                       =========      =========
</TABLE>


         See accompanying notes to consolidated financial statements.
                                   - 5 -

<PAGE>



                     NL INDUSTRIES, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT

                       Three months ended March 31, 1997

                                (In thousands)




<TABLE>
<CAPTION>

                                                                   Adjustments
                                          Additional  -------------------------------------
                                 Common    paid-in     Currency      Pension     Marketable  Accumulated   Treasury
                                  stock    capital    translation  liabilities   securities    deficit      stock         Total
                               ---------  ----------  -----------  -----------   ----------  -----------  ----------   ----------

<S>                            <C>         <C>         <C>          <C>          <C>         <C>          <C>          <C>       
Balance at December 31, 1996   $   8,355   $ 759,281   $(118,629)   $  (1,822)   $   1,278   $(485,948)   $(365,996)   $(203,481)

Net loss ...................           -           -           -            -            -     (35,721)           -      (35,721)

Adjustments ................           -           -         750            -        1,026           -            -        1,776

Treasury stock reissued ....           -           -           -            -            -           -          231          231
                               ---------   ---------   ---------    ---------    ---------   ---------    ---------    ---------

Balance at March 31, 1997 ..   $   8,355   $ 759,281   $(117,879)   $  (1,822)   $   2,304   $(521,669)   $(365,765)   $(237,195)
                               =========   =========   =========    =========    =========   =========    =========    =========

</TABLE>



         See accompanying notes to consolidated financial statements.
                                   - 6 -

<PAGE>



                     NL INDUSTRIES, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                  Three months ended March 31, 1996 and 1997

                                (In thousands)



<TABLE>
<CAPTION>

                                                           1996          1997
                                                         --------      --------

<S>                                                      <C>           <C>      
Cash flows from operating activities:
  Net income (loss) ................................     $ 13,444      $(35,721)
  Depreciation, depletion and amortization .........       10,125         9,786
  Noncash interest expense .........................        5,026         5,483
  Deferred income taxes ............................       (4,065)         (198)
  Change in accounting for environmental
   remediation liabilities .........................            -        30,000
  Other, net .......................................       (4,155)       (1,990)
                                                         --------      --------

                                                           20,375         7,360
  Change in assets and liabilities:
    Accounts and notes receivable ..................      (24,052)      (30,706)
    Inventories ....................................      (10,213)       28,377
    Prepaid expenses ...............................       (3,433)       (1,478)
    Accounts payable and accrued liabilities .......      (14,573)           57
    Income taxes ...................................        3,153         6,335
    Other, net .....................................       (2,514)       (2,633)
                                                         --------      --------

      Net cash provided (used) by operating
       activities ..................................      (31,257)        7,312
                                                         --------      --------

Cash flows from investing activities:
  Capital expenditures .............................      (12,250)       (8,868)
  Purchase of minority interest ....................       (5,168)            -
  Investment in joint ventures, net ................        1,379         2,379
  Other, net .......................................           82            64
                                                         --------      --------

      Net cash used by investing activities ........      (15,957)       (6,425)
                                                         --------      --------
</TABLE>



                                   - 7 -

<PAGE>



                     NL INDUSTRIES, INC. AND SUBSIDIARIES

               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                  Three months ended March 31, 1996 and 1997

                                (In thousands)


<TABLE>
<CAPTION>


                                                           1996         1997
                                                         ---------    ---------

<S>                                                      <C>          <C>      
Cash flows from financing activities:
  Indebtedness:
    Borrowings .......................................   $  35,079    $ 140,000
    Principal payments ...............................     (10,002)    (172,577)
    Deferred financing costs .........................           -       (3,434)
  Dividends ..........................................      (5,109)           -
  Other, net .........................................        (406)         231
                                                         ---------    ---------

      Net cash provided (used) by financing
       activities ....................................      19,562      (35,780)
                                                         ---------    ---------

Cash and cash equivalents:
  Net change from:
    Operating, investing and financing activities ....     (27,652)     (34,893)
    Currency translation .............................        (623)      (1,560)
  Balance at beginning of period .....................     141,333      114,115
                                                         ---------    ---------

  Balance at end of period ...........................   $ 113,058    $  77,662
                                                         =========    =========


Supplemental disclosures - cash paid (received) for:
  Interest, net of amounts capitalized ...............   $   6,557    $   7,153
  Income taxes, net ..................................       6,637       (4,385)


</TABLE>


         See accompanying notes to consolidated financial statements.
                                   - 8 -

<PAGE>



                     NL INDUSTRIES, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Note 1 - Organization and basis of presentation:

      NL Industries,  Inc. conducts its operations primarily through its wholly-
owned  subsidiaries,  Kronos,  Inc.  (titanium dioxide pigments,  or "TiO2") and
Rheox, Inc. (specialty  chemicals).  Valhi, Inc. and Tremont  Corporation,  each
affiliates of Contran Corporation, hold approximately 56% and 18%, respectively,
of NL's  outstanding  common  stock,  and  together may be deemed to control NL.
Contran and its  subsidiaries  and other  entities  related to Harold C. Simmons
hold approximately 91% of Valhi's and 45% of Tremont's outstanding common stock.

      The  consolidated  balance sheet of NL Industries,  Inc. and  Subsidiaries
(collectively,  the  "Company") at December 31, 1996 has been condensed from the
Company's  audited   consolidated   financial   statements  at  that  date.  The
consolidated balance sheet at March 31, 1997 and the consolidated  statements of
operations,  shareholders'  deficit and cash flows for the interim periods ended
March 31, 1996 and 1997 have been prepared by the Company, without audit. In the
opinion  of  management,   all  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, 1996 (the "1996 Annual Report").

      The Company  adopted a new method of accounting as required by the AICPA's
Statement of Position ("SOP") No. 96-1, "Environmental Remediation Liabilities,"
in the first quarter of 1997. The SOP, among other things,  expands the types of
costs  which  must  be  considered  in  determining   environmental  remediation
accruals.  As a result of adopting  the SOP,  the Company  recognized  a noncash
cumulative charge of $30 million in the first quarter of 1997. The charge is not
expected to materially  change the Company's 1997 income tax expense because the
Company  believes the  resulting  deferred  income tax asset does not  currently
satisfy the  more-likely-than-not  realization  criteria and,  accordingly,  the
Company  has  established  an  offsetting  valuation  allowance.  Such charge is
comprised  primarily of estimated future  undiscounted  expenditures  associated
with managing and  monitoring  existing  environmental  remediation  sites.  The
expenditures  consist  principally  of legal and  professional  fees, but do not
include litigation defense costs with respect to situations in which the Company
asserts that no liability exists. Previously, such expenditures were expensed as
incurred.


                                   - 9 -

<PAGE>



Note 2 - Net income (loss) per share of common stock:

      Net  income  (loss)  per  share of common  stock is based on the  weighted
average  number of common  shares  and  equivalents  outstanding.  Common  stock
equivalents,  consisting of  nonqualified  stock options,  are excluded from the
computation  when their effect is antidilutive.  The Company will  retroactively
adopt Statement of Financial  Accounting  Standards  ("SFAS") No. 128, "Earnings
Per Share,"  effective  December 31, 1997.  Basic earnings per share pursuant to
SFAS No. 128 will not be materially  different from earnings per share presented
herein and diluted  earnings per share  pursuant to SFAS No. 128 is not expected
to be materially different from basic earnings per share.

Note 3 - Business segment information:

      The Company's  operations  are  conducted in two business  segments - TiO2
conducted by Kronos and specialty chemicals conducted by Rheox.

<TABLE>
<CAPTION>

                                                        Three months ended
                                                             March 31,
                                                     --------------------------
                                                       1996             1997
                                                     ---------        ---------
                                                           (In thousands)
<S>                                                  <C>              <C>      
Net sales:
  Kronos .....................................       $ 206,368        $ 204,389
  Rheox ......................................          34,072           35,087
                                                     ---------        ---------

                                                     $ 240,440        $ 239,476
                                                     =========        =========

Operating income:
  Kronos .....................................       $  29,472        $   8,689
  Rheox ......................................          12,466           10,136
                                                     ---------        ---------
                                                        41,938           18,825
General corporate income (expense):
  Securities earnings, net ...................           1,307              699
  Expenses, net ..............................          (4,964)         (33,987)
  Interest expense ...........................         (19,139)         (18,958)
                                                     ---------        ---------

                                                     $  19,142        $ (33,421)
                                                     =========        =========
</TABLE>

      Corporate expenses,  net increased in the first quarter of 1997 due to the
$30 million noncash charge related to the adoption of a new method of accounting
for certain environmental remediation costs, as described in Note 1.

Note 4 - Inventories:
<TABLE>
<CAPTION>


                                                    December 31,       March 31,
                                                        1996             1997
                                                    ------------       ---------
                                                           (In thousands)

<S>                                                  <C>                <C>     
Raw materials ............................           $ 43,284           $ 28,529
Work in process ..........................             10,356             10,088
Finished products ........................            142,091            121,149
Supplies .................................             36,779             34,267
                                                     --------           --------

                                                     $232,510           $194,033
                                                     ========           ========
</TABLE>


                                   - 10 -

<PAGE>



Note 5 - Marketable securities:

<TABLE>
<CAPTION>

                                                        December 31,   March 31,
                                                           1996          1997
                                                        ------------   ---------
                                                             (In thousands)
<S>                                                       <C>          <C>    
Available-for-sale securities - 
 noncurrent marketable equity securities:
  Unrealized gains                                        $ 3,516      $ 4,933
  Unrealized losses                                        (1,550)      (1,388)
  Cost                                                     21,752       21,752
                                                          -------      -------

      Aggregate market                                    $23,718      $25,297
                                                          =======      =======
</TABLE>

Note 6 - Investment in joint ventures:

<TABLE>
<CAPTION>

                                                      December 31,     March 31,
                                                           1996          1997
                                                      ------------     ---------
                                                            (In thousands)

<S>                                                     <C>             <C>     
TiO2 manufacturing joint venture ...............        $179,195        $176,816
Other ..........................................           2,284           2,531
                                                        --------        --------

                                                        $181,479        $179,347
                                                        ========        ========
</TABLE>

Note 7 - Other noncurrent assets:
<TABLE>
<CAPTION>


                                                       December 31,    March 31,
                                                           1996           1997
                                                       ------------    ---------
                                                             (In thousands)

<S>                                                      <C>             <C>    
Intangible assets, net .........................         $ 7,939         $ 6,683
Deferred financing costs, net ..................           9,791          12,144
Other ..........................................           7,095           6,807
                                                         -------         -------

                                                         $24,825         $25,634
                                                         =======         =======
</TABLE>

Note 8 - Accounts payable and accrued liabilities:

<TABLE>
<CAPTION>

                                                    December 31,       March 31,
                                                        1996              1997
                                                    ------------       ---------
                                                           (In thousands)

<S>                                                  <C>                <C>     
Accounts payable .........................           $ 60,648           $ 52,390
                                                     --------           --------
Accrued liabilities:
  Employee benefits ......................             34,618             31,437
  Environmental costs ....................              6,000              9,000
  Interest ...............................              9,429             14,890
  Miscellaneous taxes ....................              4,073              3,736
  Other ..................................             39,136             39,280
                                                     --------           --------

                                                       93,256             98,343
                                                     --------           --------

                                                     $153,904           $150,733
                                                     ========           ========
</TABLE>


                                   - 11 -

<PAGE>



Note 9 - Other noncurrent liabilities:
<TABLE>
<CAPTION>


                                                    December 31,       March 31,
                                                        1996              1997
                                                    ------------       ---------
                                                           (In thousands)

<S>                                                    <C>              <C>     
Environmental costs ..........................         $106,849         $130,918
Employee benefits ............................           11,960           11,087
Insurance claims and expenses ................           11,673           11,603
Other ........................................            1,566            1,453
                                                       --------         --------

                                                       $132,048         $155,061
                                                       ========         ========
</TABLE>

Note 10 - Notes payable and long-term debt:
<TABLE>
<CAPTION>


                                                        December 31,   March 31,
                                                           1996           1997
                                                        ------------   ---------
                                                               (In thousands)

<S>                                                       <C>           <C>     
Notes payable - Kronos (DM 40,000) .................      $ 25,732      $ 23,776
                                                          ========      ========

Long-term debt:
  NL Industries:
    11.75% Senior Secured Notes ....................      $250,000      $250,000
    13% Senior Secured Discount Notes ..............       149,756       154,493
                                                          --------      --------

                                                           399,756       404,493
                                                          --------      --------
  Kronos:
    DM bank credit facility (DM 539,971 and
     DM 288,322, respectively) .....................       347,362       171,379
    Joint venture term loan ........................        57,858        54,000
    Other ..........................................         9,125         8,111
                                                          --------      --------

                                                           414,345       233,490
                                                          --------      --------

  Rheox:
    Bank term loan .................................        14,659       140,000
    Other ..........................................           286           248
                                                          --------      --------

                                                            14,945       140,248
                                                          --------      --------

                                                           829,046       778,231

Less current maturities ............................        91,946        31,626
                                                          --------      --------

                                                          $737,100      $746,605
                                                          ========      ========
</TABLE>

                                   - 12 -

<PAGE>



Note 11 - Income taxes:

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

<TABLE>
<CAPTION>

                                                            Three months ended
                                                                  March 31,
                                                           --------------------
                                                              1996       1997
                                                           --------    --------
                                                               (In thousands)

<S>                                                        <C>         <C>      
Expected tax expense (benefit) .........................   $  6,700    $(11,697)
Non-U.S. tax rates .....................................     (1,462)       (207)
Incremental tax on income of companies not included
 in NL's consolidated U.S. federal income tax return ...        114         500
Valuation allowance ....................................       (709)     12,942
U.S. state income taxes ................................        364         450
Other, net .............................................        733         304
                                                           --------    --------

      Income tax expense ...............................   $  5,740    $  2,292
                                                           ========    ========
</TABLE>

Note 12 - Other income, net:

<TABLE>
<CAPTION>

                                                           Three months ended
                                                                 March 31,
                                                         -----------------------
                                                           1996           1997
                                                         -------         -------
                                                             (In thousands)

<S>                                                      <C>             <C>    
Interest and dividends .........................         $ 1,307         $   699
Pension curtailment gain .......................           4,554               -
Technology fee income ..........................           3,081               -
Currency transaction gains, net ................           1,046             517
Other, net .....................................             560           1,026
                                                         -------         -------

                                                         $10,548         $ 2,242
                                                         =======         =======
</TABLE>

Note 13 - Commitments and contingencies:

      For  descriptions  of  certain  legal  proceedings,  income  tax and other
commitments and contingencies  related to the Company,  reference is made to (i)
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations,  (ii) Part II, Item 1 -"Legal Proceedings" and (iii) the 1996 Annual
Report.

                                   - 13 -

<PAGE>



MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION AND RESULTS OF
OPERATIONS

RESULTS OF OPERATIONS

      The Company's chemical operations are conducted in two business segments -
TiO2 conducted by Kronos and specialty chemicals conducted by Rheox.

<TABLE>
<CAPTION>

                                                 Three months ended         %
                                                      March 31,           Change
                                                --------------------      ------
                                                 1996          1997
                                                ------        ------         
                                                    (In millions)
<S>                                             <C>           <C>           <C>
Net sales:
  Kronos ...............................        $206.3        $204.4        -1%
  Rheox ................................          34.1          35.1        +3%
                                                ------        ------         

                                                $240.4        $239.5        N/C
                                                ======        ======

Operating income:
  Kronos ...............................        $ 29.5        $  8.7        -70%
  Rheox ................................          12.4          10.1        -19%
                                                ------        ------         

                                                $ 41.9        $ 18.8        -55%
                                                ======        ======


Percent changes in TiO2:
  Sales volume .........................                                    +22%
  Average selling prices 
   (in billing currencies)..............                                    -16%
</TABLE>

      Kronos' TiO2 operating  income in the first quarter of 1997 decreased from
the first  quarter of 1996 as lower  average  selling  prices were only slightly
offset by higher  production  and sales  volumes.  Kronos'  record first quarter
sales volumes improved 22% from the first quarter of 1996,  reflecting  improved
demand for TiO2 in each of Kronos' major  markets.  Average TiO2 selling  prices
for the first quarter of 1997 were 16% lower than the first quarter of 1996, and
average  prices for the quarter  were 2% lower than the fourth  quarter of 1996.
The Company expects TiO2 prices will begin to increase during the second quarter
of 1997 as the  impact of  previously-announced  price  increases  begin to take
effect. Kronos anticipates its TiO2 sales volume will exceed year-earlier levels
through  the  second  quarter  of 1997 and  Kronos  expects  sales  volumes  for
full-year 1997 to be slightly higher than full-year 1996.

      Kronos expects its full-year  1997 operating  income will be below that of
1996,  primarily  because  of lower  anticipated  average  TiO2  prices for 1997
compared to 1996. Kronos' selling, general and administrative expenses decreased
in the first  quarter  of 1997 due to  favorable  effects  of  foreign  currency
translation,  partially offset by higher  distribution  expenses associated with
higher first-quarter 1997 sales volume. Kronos' cost of sales as a percentage of
net sales  increased in the first quarter of 1997 due to lower average prices in
the first quarter of 1997.

      Rheox's  operating results for the first quarter of 1997 improved slightly
compared  to the  first  quarter  of  1996 on  slightly  higher  sales  volumes,
excluding

                                   - 14 -

<PAGE>



a  first-quarter  1996 $2.7 million gain related to the  curtailment  of certain
U.S.  employee  pension  benefits.  Rheox's cost of sales increased in the first
quarter of 1997 over the  prior-year  period  primarily  due to slightly  higher
sales volume,  and cost of sales as a percentage of net sales was  comparable to
the 1996 period.  Selling,  general and administrative expenses increased in the
first  quarter of 1997  compared to the first  quarter of 1996  primarily due to
higher variable compensation expense.

      A significant amount of sales are denominated in currencies other than the
U.S. dollar,  and fluctuations in the value of the U.S. dollar relative to other
currencies  decreased the dollar value of sales for the first quarter of 1997 by
$8 million compared to the first quarter of 1996.

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

<TABLE>
<CAPTION>

                                               Three months ended
                                                    March 31,         Difference
                                              ---------------------   ----------
                                               1996          1997
                                              ------        ------ 
                                                  (In millions)

<S>                                           <C>           <C>          <C>    
Securities earnings ..................        $  1.3        $   .7       $  (.6)
Corporate expenses, net ..............          (5.0)        (34.0)       (29.0)
Interest expense .....................         (19.1)        (19.0)          .1
                                              ------        ------       ------

                                              $(22.8)       $(52.3)      $(29.5)
                                              ======        ======       ======
</TABLE>

      Securities  earnings declined due to lower average balances  available for
investment.  Corporate expense, net in the first quarter of 1997 was higher than
the comparable  period in 1996 due to the $30 million  noncash charge related to
the Company's adoption of SOP No. 96-1, "Environmental Remediation Liabilities."
See Note 1 to the Consolidated Financial Statements.  This charge is included in
selling,  general  and  administrative  expense  in the  Company's  consolidated
statements of operations.

LIQUIDITY AND CAPITAL RESOURCES

      The  Company's  consolidated  cash flows  from  operating,  investing  and
financing  activities  for the three  months  ended  March 31, 1996 and 1997 are
presented below.

<TABLE>
<CAPTION>

                                                              Three months ended
                                                                    March 31,
                                                              ------------------
                                                                1996      1997
                                                              -------   -------
                                                                (In millions)
<S>                                                           <C>       <C>    
Net cash provided (used) by:
  Operating activities .................................      $ (31.3)  $   7.3
  Investing activities .................................        (16.0)     (6.4)
  Financing activities .................................         19.6     (35.8)
                                                              -------   -------

      Net cash used by operating, investing and
       financing activities ............................      $ (27.7)  $ (34.9)
                                                              =======   =======
</TABLE>


                                   - 15 -

<PAGE>



      The TiO2  industry is cyclical and changes in economic  conditions  within
the industry  significantly  impact the earnings and operating cash flows of the
Company.  Cash flows from operations  before change in assets and liabilities in
the  1997  period  declined  from  the  comparable  period  in 1996 due to lower
operating income. Changes in the Company's inventories, receivables and payables
(excluding  the  effect  of  currency  translation)  used cash in both the first
quarter of 1996 and 1997;  however,  the cash used in the first  quarter of 1997
was significantly  less than the first quarter of 1996 due to cash provided from
reductions in inventory levels in the 1997 period.

      Certain of the  Company's  income tax returns in various U.S. and non-U.S.
jurisdictions  are being  examined  and tax  authorities  have  proposed  or may
propose tax deficiencies.  The Company has previously  reached an agreement with
the German tax  authorities,  and paid certain tax deficiencies of approximately
DM 44 million  ($28  million  when paid),  including  interest,  which  resolved
significant tax contingencies for years through 1990.  Certain other significant
German tax contingencies  remain  outstanding and will continue to be litigated.
The Company has received certain tax assessments aggregating DM 130 million ($77
million),  including interest, for years through 1996 and expects to receive tax
assessments  for an  additional  DM 20 million  ($12  million)  related to these
remaining tax contingencies. No payments of tax or interest deficiencies related
to these  assessments  will be required until the litigation is resolved,  which
the Company  anticipates may take approximately two to five years.  Although the
Company believes that it will ultimately  prevail,  the Company has granted a DM
100 million ($59 million at March 31, 1997) lien on its Nordenham,  Germany TiO2
plant in favor of the German tax  authorities  until the litigation is resolved.
No assurance can be given that this litigation will be resolved in the Company's
favor in view of the inherent uncertainties  involved in court proceedings.  The
Company believes that it has adequately  provided accruals for additional income
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.

      In order to improve its near-term  liquidity,  the Company  refinanced its
Rheox  subsidiary  during  January  1997,  obtaining  a net $125  million of new
long-term  financing.  The net proceeds,  along with other available funds, were
used to prepay DM 207 million  ($127 million when paid) of the Company's DM term
loan and to repay DM 43 million  ($26  million  when paid) of the  Company's  DM
revolving  credit facility.  As a result of the refinancing and prepayment,  the
Company's  aggregate scheduled debt payments for 1997 and 1998 decreased by $103
million ($64 million in 1997 and $39 million in 1998).  In  connection  with the
prepayment,  the Company and its lenders modified certain financial covenants of
the DM credit  agreement and NL guaranteed the facility.  At March 31, 1997, the
Company  was in  compliance  with all  financial  covenants  governing  its debt
agreements.

      In addition to the above  refinancing and  prepayment,  the Company repaid
$3.9 million of the joint venture term loan in the first quarter of 1997.

      At March 31, 1997, the Company had cash and cash  equivalents  aggregating
$78 million (51% held by non-U.S. subsidiaries), including restricted cash and

                                   - 16 -

<PAGE>



cash  equivalents of $9 million.  The Company's  subsidiaries had $9 million and
$94 million  available for  borrowing at March 31, 1997 under  existing U.S. and
non-U.S. credit facilities, respectively.

      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.  The Company believes it has adequate accruals
($140 million at March 31, 1997) 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  approximately  $185
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.  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.

      The Company is also a defendant in a number of legal  proceedings  seeking
damages for personal  injury and property  damage  arising from the sale of lead
pigments and lead-based paints.  There is no assurance that the Company will not
incur  future  liability in respect of this  pending  litigation  in view of the
inherent  uncertainties  involved  in court  and jury  rulings  in  pending  and
possible  future cases.  However,  based on, among other things,  the results of
such litigation to date, the Company  believes that the pending lead pigment and
paint  litigation is without merit.  The Company has not accrued any amounts for
such pending litigation. Liability that may result, if any, cannot be reasonably
estimated. In addition, various legislation and administrative regulations have,
from  time to time,  been  enacted  or  proposed  that  seek to  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 to effectively  overturn  court  decisions in which the Company and
other pigment manufacturers have been successful. 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.

      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,

                                   - 17 -

<PAGE>



modify its dividend policy,  restructure ownership interests,  sell interests in
subsidiaries or other assets, or take a combination of such steps or other steps
to manage its  liquidity  and  capital  resources.  In the normal  course of its
business, the Company may review opportunities for the acquisition, divestiture,
joint venture or other business  combinations in the chemicals industry.  In the
event of any such  transactions,  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.

      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  involve  a number  of risks  and
uncertainties.  The  actual  results  of the  future  events  described  in such
forward-looking statements in this Quarterly Report could differ materially from
those stated in such  forward-looking  statements.  Among the factors that could
cause  actual  results  to differ  materially  are the  risks and  uncertainties
discussed in this  Quarterly  Report and in the 1996 Annual  Report,  including,
without  limitation,  the portions of such reports under the captions referenced
above, and the  uncertainties set forth from time to time in the Company's other
public reports and filings and public statements.

                          PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         Reference is made to the 1996 Annual Report for descriptions of certain
previously-reported legal proceedings.

         In April  1997 the  Quebec  Court of  Appeals  dismissed  the  Canadian
Fisheries  Act case  (previously  reported at page 9 of the 1996 Annual  Report)
against one of the individual defendants.  In May 1997 the Crown's counsel filed
an order of nolle prosequi effectively  terminating the matter as against Kronos
Canada, Inc. and the remaining individual defendant. In May 1998 the matter will
be expunged from the records as if it had never been brought.  Kronos Canada and
the  individual  defendant  have  agreed not to seek  damages for  malicious  or
improper prosecution.

         Ritchie  v. NL  Industries,  et al.  (No.  5:96-CV-166).  The  case was
remanded to state court in April 1997.

         In April 1997 the Company  was served with a complaint  in Parker v. NL
Industries,  et al.  (Circuit  Court,  Baltimore  City,  Maryland,  No. 97085060
CC915).  Plaintiff,  now an adult, and his wife, seek  compensatory and punitive
damages from the Company,  another former manufacturer of lead paint and a local
paint retailer,  based on claims of negligence,  strict liability and fraud, for
plaintiff's  alleged ingestion of lead paint as a child. In May 1997 the Company
removed the case to federal court.

         In March 1997 the  Company  was served  with a  complaint  filed in the
Fifth Judicial District Court of Cass County,  Texas, on behalf of approximately
4,000  plaintiffs and their spouses  alleging injury due to exposure to asbestos
and

                                   - 18 -

<PAGE>



seeking  compensatory  and  punitive  damages.  The  Company has filed an answer
denying  the  material  allegations.  (Ernest  Hughes,  et al. v.  Owens-Corning
Fiberglass, Corporation, et al., No. 97-C-051).

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a) Exhibits

             10.1 - Executive severance agreement  effective as of July 24, 1996
             by and between the Registrant and J. Landis Martin.

             10.2 -  Intercorporate  Services  Agreement by and between  Contran
             Corporation and the Registrant effective as of January 1, 1997.

             10.3 - Intercorporate Services Agreement by and between Valhi, Inc.
             and the Registrant effective as of January 1, 1997.

             10.4 -  Intercorporate  Services  Agreement by and between  Tremont
             Corporation and the Registrant effective as of January 1, 1997.

             10.5 -  Intercorporate  Services  Agreement by and between Titanium
             Metals  Corporation  and the Registrant  effective as of January 1,
             1997.

             27.1 - Financial Data Schedule for the three-month period ended
             March 31, 1997.

         (b) Reports on Form 8-K

             Reports  on Form  8-K for the  quarter  ended  March  31,  1997 and
             through the date of this report:

               January 30, 1997 - reported Items 5 and 7.

               April 22, 1997 - reported Items 5 and 7.

                                   - 19 -

<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:  May 14, 1997                       By   /s/ Joseph S. Compofelice
-------------------                            ------------------------------
                                               Joseph S. Compofelice
                                                Vice President and
                                                Chief Financial Officer



Date:  May 14, 1997                       By   /s/ Dennis G. Newkirk
-------------------                            ------------------------------
                                               Dennis G. Newkirk
                                                Vice President and Controller
                                                (Principal Accounting Officer)

                                   - 20 -

<PAGE>