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 June 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 August 3, 2000:  50,113,940


<PAGE>



                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                                      INDEX




                                                                            Page
PART I.        FINANCIAL INFORMATION

  Item 1.      Financial Statements.

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

               Consolidated Statements of Income - Three months and
                six months ended June 30, 1999 and 2000                      5

               Consolidated Statements of Comprehensive Income
                - Three months and six months ended June 30, 1999 and 2000   6

               Consolidated Statement of Shareholders' Equity
                - Six months ended June 30, 2000                             7

               Consolidated Statements of Cash Flows - Six months
                ended June 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 4.      Submission of Matters to a Vote of Security Holders           24

  Item 6.      Exhibits and Reports on Form 8-K                            24-25

                                      - 2 -

<PAGE>



                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                 (In thousands)


<TABLE>
<CAPTION>

                                                        December 31,   June 30,
              ASSETS                                       1999          2000
                                                        ------------  ----------

<S>                                                      <C>          <C>
Current assets:
    Cash and cash equivalents ........................   $  134,224   $  137,629
    Restricted cash equivalents ......................       17,565       17,105
    Accounts and notes receivable ....................      143,768      170,374
    Litigation settlement receivable .................         --         45,000
    Receivable from affiliates .......................          747          617
    Refundable income taxes ..........................        4,473        2,133
    Inventories ......................................      191,184      153,287
    Prepaid expenses .................................        2,492        3,727
    Deferred income taxes ............................       11,974       10,977
                                                         ----------   ----------

        Total current assets .........................      506,427      540,849
                                                         ----------   ----------

Other assets:
    Marketable securities ............................       15,055       25,664
    Investment in TiO2 manufacturing joint venture ...      157,552      152,302
    Prepaid pension cost .............................       23,271       21,685
    Other ............................................        5,410        4,287
                                                         ----------   ----------

        Total other assets ...........................      201,288      203,938
                                                         ----------   ----------

Property and equipment:
    Land .............................................       23,678       22,578
    Buildings ........................................      133,682      127,177
    Machinery and equipment ..........................      550,842      523,902
    Mining properties ................................       71,952       67,274
    Construction in progress .........................        6,805       11,779
                                                         ----------   ----------
                                                            786,959      752,710
    Less accumulated depreciation and depletion ......      438,501      427,180
                                                         ----------   ----------

        Net property and equipment ...................      348,458      325,530
                                                         ----------   ----------

                                                         $1,056,173   $1,070,317
                                                         ==========   ==========
</TABLE>


                                      - 3 -

<PAGE>



                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS (CONTINUED)

                                 (In thousands)


<TABLE>
<CAPTION>

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

<S>                                                 <C>             <C>
Current liabilities:
    Notes payable ..............................    $    57,076     $    36,418
    Current maturities of long-term debt .......            212             157
    Accounts payable and accrued liabilities ...        190,360         190,459
    Payable to affiliates ......................         11,240          10,946
    Income taxes ...............................          5,605          11,146
    Deferred income taxes ......................            326             767
                                                    -----------     -----------

        Total current liabilities ..............        264,819         249,893
                                                    -----------     -----------

Noncurrent liabilities:
    Long-term debt .............................        244,266         244,155
    Deferred income taxes ......................        108,226         128,779
    Accrued pension cost .......................         32,946          27,086
    Accrued postretirement benefits cost .......         37,105          29,618
    Other ......................................         93,821          78,958
                                                    -----------     -----------

        Total noncurrent liabilities ...........        516,364         508,596
                                                    -----------     -----------


Minority interest ..............................          3,903           4,075
                                                    -----------     -----------

Shareholders' equity:
    Common stock ...............................          8,355           8,355
    Additional paid-in capital .................        774,304         774,362
    Retained earnings ..........................         19,150          91,135
    Accumulated other comprehensive loss .......       (158,921)       (180,809)
    Treasury stock .............................       (371,801)       (385,290)
                                                    -----------     -----------

        Total shareholders' equity .............        271,087         307,753
                                                    -----------     -----------

                                                    $ 1,056,173     $ 1,070,317
                                                    ===========     ===========
</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         Six months ended
                                                 June 30,                 June 30,
                                          ---------------------    ---------------------
                                             1999        2000         1999        2000
                                          ---------   ---------    ---------   ---------

<S>                                       <C>         <C>          <C>         <C>
Revenues and other income:
    Net sales .........................   $ 232,568   $ 251,126    $ 434,137   $ 482,135
    Other, net ........................       9,660      53,946       16,073      58,446
                                          ---------   ---------    ---------   ---------

                                            242,228     305,072      450,210     540,581
                                          ---------   ---------    ---------   ---------

Costs and expenses:
    Cost of sales .....................     167,779     164,033      314,819     323,298
    Selling, general and administrative      33,079      36,832       65,641      70,222
    Interest ..........................       9,298       7,897       19,077      15,753
                                          ---------   ---------    ---------   ---------

                                            210,156     208,762      399,537     409,273
                                          ---------   ---------    ---------   ---------

       Income before income taxes and
        minority interest .............      32,072      96,310       50,673     131,308

Income tax benefit (expense) ..........      81,990     (32,762)      77,340     (43,961)
                                          ---------   ---------    ---------   ---------

       Income before minority interest      114,062      63,548      128,013      87,347

Minority interest .....................       2,239         110        2,250         201
                                          ---------   ---------    ---------   ---------

       Net income .....................   $ 111,823   $  63,438    $ 125,763   $  87,146
                                          =========   =========    =========   =========

Earnings per share:
    Basic .............................   $    2.16   $    1.26    $    2.43   $    1.72
                                          =========   =========    =========   =========
    Diluted ...........................   $    2.16   $    1.25    $    2.42   $    1.71
                                          =========   =========    =========   =========

Weighted average shares used in the
 calculation of earnings per share:
    Basic .............................      51,826      50,499       51,823      50,710
    Dilutive impact of stock options ..          57         351           48         290
                                          ---------   ---------    ---------   ---------

    Diluted ...........................      51,883      50,850       51,871      51,000
                                          =========   =========    =========   =========
</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        Six months ended
                                                 June 30,                 June 30,
                                         ----------------------    ----------------------
                                            1999         2000         1999         2000
                                         ---------    ---------    ---------    ---------

<S>                                      <C>          <C>          <C>          <C>
Net income ...........................   $ 111,823    $  63,438    $ 125,763    $  87,146
                                         ---------    ---------    ---------    ---------

Other comprehensive income (loss),
 net of tax:
    Marketable securities adjustment .         135          650         (805)         708
    Currency translation adjustment ..      (8,131)      (7,287)     (20,382)     (22,596)
                                         ---------    ---------    ---------    ---------

        Total other comprehensive loss      (7,996)      (6,637)     (21,187)     (21,888)
                                         ---------    ---------    ---------    ---------

    Comprehensive income .............   $ 103,827    $  56,801    $ 104,576    $  65,258
                                         =========    =========    =========    =========
</TABLE>



          See accompanying notes to consolidated financial statements.
                                      - 6 -


<PAGE>



                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

                         Six months ended June 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 ...........................        --          --        87,146         --           --           --

Other comprehensive income (loss), net        --          --          --        (22,596)        --            708

Dividends ............................        --          --       (15,161)        --           --           --

Tax benefit of stock options exercised        --            58        --           --           --           --

Treasury stock:
   Acquired (927 shares) .............        --          --          --           --           --           --
   Reissued (42 shares) ..............        --          --          --           --           --           --
                                         ---------   ---------   ---------    ---------    ---------    ---------

Balance at June 30, 2000 .............   $   8,355   $ 774,362   $  91,135    $(182,618)   $  (1,756)   $   3,565
                                         =========   =========   =========    =========    =========    =========

<CAPTION>

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

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

Net income ...........................        --         87,146

Other comprehensive income (loss), net        --        (21,888)

Dividends ............................        --        (15,161)

Tax benefit of stock options exercised        --             58

Treasury stock:
   Acquired (927 shares) .............     (13,959)     (13,959)
   Reissued (42 shares) ..............         470          470

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

Balance at June 30, 2000 .............   $(385,290)   $ 307,753
                                         =========    =========
</TABLE>



          See accompanying notes to consolidated financial statements.
                                      - 7 -


<PAGE>



                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                     Six months ended June 30, 1999 and 2000

                                 (In thousands)



<TABLE>
<CAPTION>

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

<S>                                                       <C>         <C>
Cash flows from operating activities:
    Net income .........................................  $ 125,763   $  87,146
    Depreciation, depletion and amortization ...........     17,024      15,361
    Deferred income taxes ..............................    (88,415)     25,023
    Distribution from TiO2 manufacturing joint venture .     11,150       5,250
    Net gains from securities transactions .............       --        (5,553)
    Litigation settlement gain, net ....................       --       (43,000)
    Other, net .........................................     (1,427)     (4,166)
                                                          ---------   ---------

                                                             64,095      80,061

    Change in assets and liabilities:
        Accounts and notes receivable ..................    (37,743)    (34,054)
        Inventories ....................................      8,485      29,340
        Prepaid expenses ...............................     (2,375)     (1,417)
        Accounts payable and accrued liabilities .......     (8,964)     (9,802)
        Income taxes ...................................      5,830       8,086
        Other, net .....................................    (13,119)       (696)
                                                          ---------   ---------

            Net cash provided by operating activities ..     16,209      71,518
                                                          ---------   ---------

Cash flows from investing activities:
    Capital expenditures ...............................    (17,235)    (12,598)
    Change in restricted cash equivalents, net .........    (12,516)        459
    Purchase of Tremont Corporation common stock .......       --        (9,520)
    Proceeds from disposition of property and equipment       2,128         108
                                                          ---------   ---------

            Net cash used by investing activities ......    (27,623)    (21,551)
                                                          ---------   ---------
</TABLE>


                                      - 8 -


<PAGE>



                      NL INDUSTRIES, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                     Six months ended June 30, 1999 and 2000

                                 (In thousands)



<TABLE>
<CAPTION>

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

<S>                                                      <C>          <C>
Cash flows from financing activities:
    Indebtedness:
       Borrowings ....................................   $  56,271    $    --
       Principal payments ............................     (71,563)     (16,830)
    Dividends paid ...................................      (3,628)     (15,161)
    Treasury stock purchased .........................        --        (13,959)
    Other, net .......................................         111          463
                                                         ---------    ---------

        Net cash used by financing activities ........     (18,809)     (45,487)
                                                         ---------    ---------

Cash and cash equivalents:
    Net change from:
        Operating, investing and financing activities      (30,223)       4,480
        Currency translation .........................      (2,274)      (1,075)
    Balance at beginning of period ...................     154,953      134,224
                                                         ---------    ---------

    Balance at end of period .........................   $ 122,456    $ 137,629
                                                         =========    =========


Supplemental disclosures - cash paid for:
    Interest .........................................   $  18,672    $  15,686
    Income taxes, net ................................       5,238       10,797

</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 June 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 June 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 73% 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 June 30, 2000 and the consolidated  statements of
income,  comprehensive  income,  shareholders'  equity  and cash  flows  for the
interim  periods ended June 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 or acquired 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 SEC is continuing to provide additional
informal guidance and clarification concerning the exact requirements of SAB No.
101. If the impact of adopting SAB No. 101 is material, the Company will

                                     - 10 -

<PAGE>



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.

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          Six months ended
                                                 June 30,                  June 30,
                                          ----------------------    ----------------------
                                            1999         2000         1999          2000
                                          ---------    ---------    ---------    ---------
                                                           (In thousands)

<S>                                       <C>          <C>          <C>          <C>
Net sales .............................   $ 232,568    $ 251,126    $ 434,137    $ 482,135
Other income, excluding corporate .....       6,909        2,444       10,602        4,114
                                          ---------    ---------    ---------    ---------
                                            239,477      253,570      444,739      486,249

Cost of sales .........................     167,779      164,033      314,819      323,298
Selling, general and administrative,
 excluding corporate ..................      27,562       26,794       54,823       53,973
                                          ---------    ---------    ---------    ---------

        Operating income ..............      44,136       62,743       75,097      108,978

General corporate income (expense):
    Securities earnings, net ..........       1,545        7,390        3,145        9,108
    Litigation settlement gain, net and
      other income ....................       1,206       44,112        2,326       45,224
    Corporate expenses ................      (5,517)     (10,038)     (10,818)     (16,249)
    Interest expense ..................      (9,298)      (7,897)     (19,077)     (15,753)
                                          ---------    ---------    ---------    ---------
        Income before income taxes and
         minority interest ............   $  32,072    $  96,310    $  50,673    $ 131,308
                                          =========    =========    =========    =========
</TABLE>

Note 4 - Inventories:

<TABLE>
<CAPTION>

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

<S>                                                  <C>                <C>
Raw materials ............................           $ 54,861           $ 40,616
Work in process ..........................              8,065              6,876
Finished products ........................            100,824             80,478
Supplies .................................             27,434             25,317
                                                     --------           --------

                                                     $191,184           $153,287
                                                     ========           ========
</TABLE>


                                     - 11 -

<PAGE>



Note 5 - Marketable securities:

<TABLE>
<CAPTION>
                                                        December 31,    June 30,
                                                           1999           2000
                                                        ------------   ---------
                                                              (In thousands)
<S>                                                       <C>          <C>
Available-for-sale marketable equity securities:
    Unrealized gains .................................    $  6,700     $  8,503
    Unrealized losses ................................      (2,304)      (3,018)
    Cost .............................................      10,659       20,179
                                                          --------     --------

        Aggregate fair value .........................    $ 15,055     $ 25,664
                                                          ========     ========
</TABLE>

        In March 2000 the Company  purchased  500,000 shares of Tremont's common
stock in market  transactions  for $9.5 million.  At June 30, 2000,  the Company
held  approximately 9% of Tremont's  outstanding  common stock and 1% of Valhi's
outstanding common stock.

Note 6 - Other noncurrent assets:

<TABLE>
<CAPTION>
                                                     December 31,      June 30,
                                                        1999             2000
                                                     ------------      --------
                                                           (In thousands)

<S>                                                     <C>               <C>
Deferred financing costs, net ..............            $2,278            $1,978
Other ......................................             3,132             2,309
                                                        ------            ------

                                                        $5,410            $4,287
                                                        ======            ======
</TABLE>

Note 7 - Accounts payable and accrued liabilities:

<TABLE>
<CAPTION>

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

<S>                                                   <C>               <C>
Accounts payable ...........................          $ 56,597          $ 48,560
                                                      --------          --------
Accrued liabilities:
    Environmental costs ....................            47,228            60,091
    Employee benefits ......................            35,243            29,981
    Interest ...............................             6,761             6,507
    Deferred income ........................             4,000             4,000
    Other ..................................            40,531            41,320
                                                      --------          --------

                                                       133,763           141,899
                                                      --------          --------

                                                      $190,360          $190,459
                                                      ========          ========
</TABLE>


                                     - 12 -

<PAGE>



Note 8 - Other noncurrent liabilities:

<TABLE>
<CAPTION>

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

<S>                                                      <C>             <C>
Environmental costs ............................         $64,491         $52,508
Insurance claims and expenses ..................          11,688          11,258
Employee benefits ..............................           7,816           7,913
Deferred income ................................           8,333           6,333
Other ..........................................           1,493             946
                                                         -------         -------

                                                         $93,821         $78,958
                                                         =======         =======
</TABLE>

Note 9 - Notes payable and long-term debt:

<TABLE>
<CAPTION>

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

<S>                                                          <C>        <C>
Notes payable - Kronos (euro 56,511 and euro 38,611,
 respectively) ...........................................   $ 57,076   $ 36,418
                                                             ========   ========

Long-term debt:
    NL Industries, Inc.  - 11.75% Senior Secured Notes ...   $244,000   $244,000
    Kronos ...............................................        478        312
                                                             --------   --------

                                                              244,478    244,312

Less current maturities ..................................        212        157
                                                             --------   --------

                                                             $244,266   $244,155
                                                             ========   ========
</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>
                                                            Six months ended
                                                                 June 30,
                                                           --------------------
                                                             1999        2000
                                                           --------    --------
                                                              (In thousands)

<S>                                                        <C>         <C>
Expected tax expense ...................................   $(17,736)   $(45,958)
Non-U.S. tax rates .....................................     (3,362)      2,900
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 .......      7,528       1,325
Incremental tax on income of companies not included
 in NL's consolidated U.S. federal income tax return ...     (1,169)       (634)
U.S. state income taxes ................................        803        (614)
Other, net .............................................      1,276        (980)
                                                           --------    --------

      Income tax benefit (expense) .....................   $ 77,340    $(43,961)
                                                           ========    ========
</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.


                                     - 14 -

<PAGE>



Note 11 - Other income, net:

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

<S>                                     <C>         <C>         <C>        <C>
Securities earnings:
  Interest and dividends ............   $  1,545    $  1,837    $  3,145   $  3,555
  Securities transactions ...........       --         5,553        --        5,553
                                        --------    --------    --------   --------
                                           1,545       7,390       3,145      9,108
Currency transaction gains, net .....      6,272       2,413       7,841      3,654
Litigation settlement gain, net .....       --        43,000        --       43,000
Noncompete agreement income .........      1,000       1,000       2,000      2,000
Disposition of property and equipment        (32)       (546)        947       (948)
Trade interest income ...............        357         470       1,305        827
Other, net ..........................        518         219         835        805
                                        --------    --------    --------   --------

                                        $  9,660    $ 53,946    $ 16,073   $ 58,446
                                        ========    ========    ========   ========
</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.  Cash held by the trust will be reported as restricted  cash on the
Company's balance sheet.

        In the second  quarter of 2000, the Company  received  389,691 shares of
MetLife,  Inc. common stock pursuant to MetLife's  demutualization.  The Company
recognized a $5.6 million  securities  gain based on  MetLife'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 MetLife  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 ($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 quarter ended March 31, 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

  Net sales and operating income

<TABLE>
<CAPTION>

                               Three months ended      %       Six months ended      %
                                   June  30,         Change       June  30,        Change
                               -------------------   ------   -------------------  ------
                                 1999       2000                1999       2000
                               --------   --------            --------   --------
                                   (In millions)                 (In millions)

<S>                            <C>        <C>        <C>      <C>        <C>        <C>
Net sales ................     $  232.6   $  251.1    +8%     $  434.1   $  482.1   +11%

Operating income .........     $   44.1   $   62.7   +42%     $   75.1   $  109.0   +45%

Percent changes in TiO2:
    Sales volume .........                            +9%                           +16%
    Average selling prices
      (in billing
      currencies) ........                            +5%                            +3%
</TABLE>

        Kronos'  operating  income in the second  quarter of 2000 increased from
the comparable  period in 1999 due to higher  average  selling prices in billing
currencies  (which  excludes the effects of foreign  currency  translation)  and
record sales volume,  partially offset by the previously reported second-quarter
1999 $5.3 million foreign currency transaction gain. Kronos' operating income in
the  first  half of 2000  increased  from the  comparable  period in 1999 due to
record sales volume,  higher average  selling  prices in billing  currencies and
higher  production  volume,  partially  offset by the  second-quarter  1999 $5.3
million foreign currency transaction gain.

        Average TiO2 selling prices in billing currencies for the second quarter
of 2000 were 5% higher  than the second  quarter of 1999 and were 3% higher than
the first quarter of 2000.  Average selling prices in billing  currencies at the
end of the second  quarter  were 1% higher  than the  average  for the  quarter.
Kronos'  prices were up in all major  regions  from the second  quarter of 1999.
Prices were higher in Europe and export  markets from the first  quarter of 2000
and were flat in North America. Average selling prices in billing currencies for
the first half of 2000 were 3% higher than the first half of 1999 with increases
in all major regions.  During the second quarter of 2000, Kronos announced price
increases of 7% in Europe and 4% in North America, both of which Kronos expects,
depending on market conditions, to implement during the second half of 2000.

        Kronos' second-quarter sales volume represents the highest-quarter sales
in Kronos'  history.  Sales volume  increased 9% from both the second quarter of
1999 and the first  quarter of 2000,  reflecting  sustained  demand in all major
regions.  Sales volume in the first half of 2000 was 16%, or 31,000 metric tons,
higher  than the first half of 1999.  Although  Kronos  believes  its TiO2 sales
volume for the second half of 2000 will be lower than the record sales volume in
the second half of 1999, Kronos  anticipates its TiO2 sales volume for full-year
2000 will be higher than that of 1999.


                                     - 16 -

<PAGE>



        The Company's  second-quarter 2000 production volume was slightly higher
than the comparable  1999 period with operating  rates in both periods near full
capacity. Kronos' production volume in the first half of 2000 was 8% higher than
the comparable 1999 period with operating  rates near full capacity  compared to
91% capacity  utilization  in the first half of 1999.  Kronos'  chloride-process
production  facility in Leverkusen,  Germany suffered a small fire in one of its
production lines in the second quarter of 2000, resulting in approximately 5,000
metric tons of lost production.  The production line has been fully repaired and
on stream since early June.  The Company has insurance  coverage for the loss of
production and damaged  property and, in the second quarter of 2000, the Company
accrued $4.1 million of expected insurance reimbursements as a reduction of cost
of sales to offset  unallocated  period costs that were  recorded as a result of
the lost production.  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 25,000  metric tons
primarily at its chloride  facilities,  with only modest  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,  Kronos'  cost  of  sales  as a
percentage of net sales  decreased in both the second  quarter and first half of
2000  primarily  due to higher  average  selling  prices in billing  currencies,
higher production  volume and $4.1 million of accrued insurance  reimbursements.
Excluding  the effects of foreign  currency  translation,  which  decreased  the
Company's  expenses in the second quarter and first half of 2000 compared to the
year-earlier  periods,  Kronos'  selling,  general and  administrative  expenses
increased  in  the  second  quarter  and  first  half  of  2000  due  to  higher
distribution expenses associated with higher sales volumes in these periods.

        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 second
quarter  and  first  half  of  2000  by a  net  $17  million  and  $30  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 price in U.S. dollars for
the second quarter and first half of 2000 were lower by 1% and 3%, respectively,
than the  comparable  periods  in 1999.  Kronos'  operating  costs  that are not
denominated in U.S.  dollars were also lower when translated to U.S.  dollars in
the second quarter and first half of 2000 compared to the  year-earlier  periods
and,  accordingly,  Kronos'  unit costs in U.S.  dollar  terms were lower in the
second quarter and first half 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  second   quarter  and  first  half  of  2000,   excluding   the
second-quarter  1999 $5.3 million gain described above, 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                Six months ended
                                         June 30,        Difference       June 30,        Difference
                                    ------------------   ----------  ------------------   ----------
                                      1999       2000                  1999      2000
                                    -------    -------               -------    -------
                                                            (In millions)

<S>                                 <C>        <C>        <C>        <C>        <C>        <C>
Securities earnings ...........     $   1.5    $   7.4    $   5.9    $   3.1    $   9.2    $   6.1
Litigation settlement gain, net
 and other corporate income ...         1.2       44.1       42.9        2.3       45.2       42.9
Corporate expenses ............        (5.4)     (10.0)      (4.6)     (10.7)     (16.3)      (5.6)
Interest expense ..............        (9.3)      (7.9)       1.4      (19.1)     (15.8)       3.3
                                    -------    -------    -------    -------    -------    -------

                                    $ (12.0)   $  33.6    $  45.6    $ (24.4)   $  22.3    $  46.7
                                    =======    =======    =======    =======    =======    =======
</TABLE>

        Securities  earnings  in the  second  quarter  of 2000  includes  a $5.6
million   securities   gain   related  to  common   stock   received   from  the
demutualization  of MetLife,  Inc., an insurance  company from which the Company
had  purchased  certain  insurance  policies.  See  Note 11 to the  Consolidated
Financial Statements.

        Corporate  income in the second  quarter of 2000  includes a $43 million
net gain from a June 2000  settlement  with one of the  Company's  two principal
former insurance carriers. See Note 11 to the Consolidated Financial Statements.
Corporate  expenses were higher in the second  quarter of 2000  primarily due to
higher environmental remediation accruals and legal expenses.

        Interest  expense in the second quarter and first half of 2000 decreased
15% and 17%, respectively,  from the comparable periods in 1999 primarily due to
reduced levels of outstanding  debt and lower European  borrowing  rates. At the
end of the second quarter of 2000, the Company repaid $16.7 million of its euro-
denominated  short-term debt with excess cash flow from operations.  The Company
expects its full-year  2000 interest  expense will be lower than 1999  primarily
due to reduced levels of outstanding debt and lower European borrowing rates.

  Provision for income taxes

        The Company reduced its deferred income tax valuation  allowance by $7.5
million  in the first  half of 1999 and $1.3  million  in the first half 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 six months ended June 30, 1999 and
2000 are presented below.

<TABLE>
<CAPTION>
                                                                Six months ended
                                                                     June 30,
                                                               ------------------
                                                                 1999       2000
                                                               -------    -------
                                                                  (In millions)

<S>                                                            <C>        <C>
Net cash provided (used) by:
    Operating activities:
        Before changes in assets and liabilities .........     $  64.1    $  80.1
        Changes in assets and liabilities ................       (47.9)      (8.6)
                                                               -------    -------
                                                                  16.2       71.5
    Investing activities .................................       (27.6)     (21.6)
    Financing activities .................................       (18.8)     (45.4)
                                                               -------    -------

       Net cash provided (used) by operating,
        investing, and financing activities ..............     $ (30.2)   $   4.5
                                                               =======    =======
</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 half of 2000 increased  from the  comparable  period in 1999 primarily
due to higher operating  income,  partially  offset by 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)  used $38.2  million and $14.5 million of cash in the first half of
1999 and 2000,  respectively,  primarily due to increases in receivables in each
period.  The cash used in the first half of 2000 was significantly less than the
first  half  of  1999  due to a  greater  amount  of cash  being  provided  from
reductions in inventory levels.

  Investing activities

        In the first quarter of 2000,  the Company  purchased  500,000 shares of
Tremont's common stock in market transactions for $9.5 million. See Note 1 and 5
to the Consolidated Financial Statements. In the first half of 1999, the Company
collateralized  letters of credit with $12.5 million of the Company's  cash, and
classified such amounts as current restricted cash equivalents.

  Financing activities

        At the end of the second  quarter of 2000,  the Company repaid euro 17.9
million ($16.7 million when paid) of its  euro-denominated  short-term debt with
excess cash flow from operations.

        In the second  quarter of 2000,  the  Company  paid a regular  quarterly
dividend of $.15 per share to shareholders  aggregating $7.6 million.  Dividends
paid  during  the first half of 2000  totaled  $15.2  million.  In July 2000 the
Company's Board of Directors  declared a regular quarterly  dividend of $.15 per
share to shareholders of record as of September 15, 2000 to be paid on September
27, 2000.


                                     - 19 -

<PAGE>



        In 1999 the Company's Board of Directors  authorized a 1.5 million share
repurchase program.  Pursuant to this program, the Company purchased in the open
market (i)  552,000  shares of its  common  stock at an  aggregate  cost of $7.2
million in 1999,  (ii) 927,000  shares at an aggregate  cost of $14.0 million in
the first  half of 2000 and (iii)  21,000  shares  at an  aggregate  cost of $.3
million in July 2000. In July 2000 the Company's  Board of Directors  authorized
the purchase of up to an  additional  1.5 million  shares and,  pursuant to this
authorization,  the Company  purchased 271,000 shares of its common stock in the
open market at an aggregate cost of $5.0 million through August 1, 2000.

  Cash, cash equivalents, restricted cash equivalents and borrowing availability

        At June 30, 2000, the Company had cash and cash equivalents  aggregating
$138 million ($41 million held by non-U.S.  subsidiaries)  and an additional $17
million of  restricted  cash  equivalents.  The Company's  subsidiaries  had $28
million available for borrowing at June 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.

        During 1997 the Company received a tax assessment from the Norwegian tax
authorities proposing tax deficiencies of NOK 51 million ($6 million at June 30,
2000)  relating  to  1994.  The  Company  appealed  the 1994  assessment  to the
Fredrikstad City Court, and in February 2000 the Court ruled in favor of the tax
authorities  on the  primary  issue,  but  asserted  that  the tax  authorities'
assessment  was  overstated by NOK 34 million ($4 million at June 30, 2000).  In
March  2000 the tax  authorities  agreed  with the  Court and  reduced  the 1994
assessment to NOK 17 million ($2 million at June 30, 2000).  The tax authorities
issued a NOK 13 million ($1 million at June 30, 2000)  assessment for 1996 which
has been computed on a similar basis as the revised 1994 assessment. The Company
has  appealed  the Court's  decision on the  primary  issue  related to the 1994
assessment to a higher 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 ($113 million at June 30, 2000) for

                                     - 20 -

<PAGE>



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  $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 with one of its two  principal  former
insurance  carriers a lawsuit that the Company  initiated to seek  reimbursement
from an 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 and expects to recover  additional
amounts,  although  there can be no assurance that any such  additional  amounts
will be received.

  Lead pigment litigation

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


                                     - 21 -

<PAGE>



  Other

        In the second quarter of 2000, a confederation of labor organizations in
Norway  implemented a work  stoppage  directed at various  Norwegian  employers,
including  the Company's  30,000  metric ton TiO2  facility and ilmenite  mining
operations. The work stoppage lasted only a few days and did not have a material
adverse  effect on the Company's  consolidated  financial  position,  results of
operations or liquidity.

        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;  modify its dividend policy;  restructure ownership
interests; sell interests in subsidiaries or other assets; or take a combination
of such steps or other steps to manage its liquidity and capital  resources.  In
the normal course of its business,  the Company may review opportunities for the
acquisition,  divestiture,  joint venture or other business  combinations in the
chemicals or other industries.  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 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  quarter  ended  March  31,  2000  for
descriptions of certain previously reported legal proceedings.

           City  of St.  Louis  v.  Lead  Industries  Association,  et al.  (No.
002-245,  Division  1). In May 2000  defendants  moved to  dismiss  all  claims.
Briefing is not yet complete.

           Brenner, et al. v. American Cyanamid, et al. (No. 12596-93).  In June
2000,  following  remand of the  appellate  court's  dismissal  of market  share
claims,  the trial court dismissed all remaining claims. The time for plaintiffs
to appeal has not yet run.

           Parker v. NL Industries,  et al. (No.  97085060 CC915). In June 2000,
following  a  two-week  trial,  the jury  returned  a verdict  for the  Company.
Plaintiffs have appealed.

           Thomas v. Lead Industries  Association,  et al. (No. 99-CV-6411).  In
June 2000 the trial  court  granted  defendants'  motion to dismiss  the product
defect and Wisconsin consumer protection statute claims.

           Smith,   et  al.  v.  Lead  Industries   Association,   et  al.  (No.
24-C-99-004490). In June 2000 defendants moved to dismiss all claims for lack of
product identification. Briefing is not yet complete.

           County of Santa  Clara v.  Atlantic  Richfield  Company,  et al. (No.
CV788657).  In June 2000  defendants  filed  demurrers  to dismiss  all  claims.
Briefing is not yet complete.

           In June 2000 two complaints  were filed in Texas state court,  Spring
Branch  Independent  School  District  v. Lead  Industries  Association,  et al.
(District  Court  of  Harris  County,   Texas,  No.  2000-31175),   and  Houston
Independent  School District v. Lead Industries  Association,  et al.  (District
Court of Harris County, Texas, No. 2000-33725).  The Company has not been served
in either case. The School  Districts seek past and future damages and exemplary
damages for costs they have allegedly incurred due to the presence of lead-based
paint in their  buildings  from the  Company,  the Lead  Industries  Association
("LIA") and seven other  companies  sued as former  manufacturers  of lead-based
paint.  Plaintiffs  allege  claims  for  design  defect  and  marketing  defect,
negligent  product  design and  failure to warn,  fraudulent  misrepresentation,
negligent  misrepresentation,  concert of action, conspiracy, and indemnity. The
Company  intends to deny all  allegations  of  wrongdoing  and  liability and to
defend the cases vigorously.

           In June 2000 a complaint  was filed in  Illinois  state  court,  Mary
Lewis,  et al. v. Lead  Industries  Association,  et al.  (Circuit Court of Cook
County, Illinois, County Department, Chancery Division, Case No. 00CH09800). The
Company has not been served.  Plaintiffs  seek to represent two classes,  one of
all  minors  between  ages six  months  and six years who  resided in housing in
Illinois  built before  1978,  and one of all  individuals  between ages six and
twenty years who lived between ages six months and six years in Illinois housing
built before 1978 and had blood lead levels of 10  micrograms/deciliter or more.
The complaint  seeks a medical  screening  fund for the first class to determine
blood lead levels, a medical  monitoring fund for the second class to detect the
onset  of  latent  diseases,  and a fund for a public  education  campaign.  The
complaint seeks to hold jointly and severally  liable the Company,  the LIA, and
seven other companies sued as former  manufacturers  of lead pigment and/or lead
paint. Plaintiffs allege claims for

                                     - 23 -

<PAGE>



negligent product design,  negligent failure to warn, strict products liability,
violation of the Illinois  Consumer Fraud Act,  fraud by omission,  market share
liability,  civil  conspiracy,  concert  of  action,  enterprise  liability  and
alternative liability. The Company intends to deny all allegations of wrongdoing
and liability and to defend the case vigorously.

           Cherokee County,  Kansas Site. In June 2000 the Company finalized the
previously  reported agreement in principle  allocating  remediation costs among
the PRPs at the Baxter Springs subsite in Cherokee County.

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

           The Company held its Annual Meeting of  Shareholders on May 10, 2000.
All the nominees for director  were elected with the voting  results for each as
follows:
<TABLE>
<CAPTION>

           Director                               Shares For     Shares Withheld
                                                  ----------     ---------------

<S>                                               <C>                    <C>
Mr. Joseph S. Compofelice ..............          49,623,888             381,790
Mr. J. Landis Martin ...................          49,616,672             389,006
Mr. Kenneth R. Peak ....................          49,627,069             378,609
Mr. Glenn R. Simmons ...................          49,608,473             397,205
Mr. Harold C. Simmons ..................          49,610,905             394,773
General Thomas P. Stafford .............          49,620,126             385,552
Dr. Lawrence A. Wigdor .................          49,627,164             378,514

</TABLE>


ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

           (a)  Exhibits

                10.1 - Amendment to NL Industries,  Inc. Retirement Savings Plan
                effective as of January 1, 2000.

                10.2 - Intercorporate  Services  Agreement by and between Valhi,
                Inc. and the Registrant effective as of January 1, 2000.

                10.3 - Intercorporate  Services Agreement by and between Contran
                Corporation and the Registrant effective as of January 1, 2000.

                10.4 - Intercorporate Services Agreement by and between Titanium
                Metals Corporation and the Registrant effective as of January 1,
                2000.

                10.5 - Intercorporate  Services Agreement by and between Tremont
                Corporation and the Registrant effective as of January 1, 2000.

                10.6 -  Intercorporate  Services  Agreement by and between CompX
                International,  Inc. and the Registrant  effective as of January
                1, 2000.

                27.1 - Financial  Data Schedule for the  six-month  period ended
                June 30, 2000.


                                     - 24 -

<PAGE>



           (b)  Reports on Form 8-K

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

                  April 18, 2000 - reported  Items 5 and 7.
                  May 11, 2000   - reported  Items 5 and 7.
                  July 18, 2000  - reported  Items 5 and 7.
                  July 18, 2000  - reported  Items 5 and 7.
                  July 19, 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:  August 3, 2000                      By    /s/ Susan E. Alderton
---------------------                            ------------------------------
                                                 Susan E. Alderton
                                                  Vice President and
                                                  Chief Financial Officer
                                                  (Principal Financial Officer)



Date:  August 3, 2000                      By    /s/ Robert D. Hardy
---------------------                            ------------------------------
                                                 Robert D. Hardy
                                                  Vice President and Controller
                                                  (Principal Accounting Officer)

                                     - 26 -