Exhibit 99.1



                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549


                                  FORM 11-K


                Annual Report Pursuant to Section 15(d) of the
                       Securities Exchange Act of 1934


|X|   Annual report pursuant to Section 15(d) of the Securities  Exchange Act of
      1934 - for the year ended December 31, 1996

                                      OR

|_|   Transition report pursuant to Section 15(d) of the Securities Exchange
      Act of 1934

      For the transition period from       to

                         Commission file number 1-640


      A.  Full title of the plan and the address of the plan, if different
from that of the issuer named below:

                             NL INDUSTRIES, INC.
                           RETIREMENT SAVINGS PLAN

      B.  Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:

                             NL INDUSTRIES, INC.
                      16825 Northchase Drive, Suite 1200
                          Houston, Texas 77060-2544





<PAGE>



                             NL INDUSTRIES, INC.
                           RETIREMENT SAVINGS PLAN

                                    INDEX



                                                                    Page

Signature Page                                                        2

Financial Statements and Supplemental Schedules
 with Report of Independent Accountants                          F-1 to F-16

Exhibit 1 - Consent of Independent Accountants


                                   - 1 -

<PAGE>



                                   SIGNATURE


      Pursuant  to  the   requirements  of  the  Securities  Act  of  1934,  the
Administrator has duly caused this Annual Report to be signed by the undersigned
thereunto duly authorized.


                              NL INDUSTRIES, INC.
                              RETIREMENT SAVINGS PLAN

                        By:   NL INDUSTRIES, INC.
                              PENSION AND EMPLOYEE
                              BENEFITS COMMITTEE,
                              Administrator of
                              NL Industries, Inc.
                              Retirement Savings Plan


                        By:   /s/ Edward J. Zadzora
                              Edward J. Zadzora
                              Chairman


June 20, 1997


                                   - 2 -

<PAGE>



                             NL INDUSTRIES, INC.
                           RETIREMENT SAVINGS PLAN



      FINANCIAL STATEMENTS, FUND INFORMATION AND SUPPLEMENTAL SCHEDULES
                    WITH REPORT OF INDEPENDENT ACCOUNTANTS

                              December 31, 1996



<PAGE>



                              NL INDUSTRIES INC.
                           RETIREMENT SAVINGS PLAN


                                     INDEX



                                                                      Page

Report of Independent Accountants                                      F-2

Financial Statements:

 Statements of Net Assets Available for Benefits, with
  Fund Information - December 31, 1995 and 1996                    F-3 to F-5

 Statements of Changes in Net Assets Available for
  Benefits, with Fund Information - Years ended
  December 31, 1995 and 1996                                       F-6 to F-8

 Notes to Financial Statements                                     F-9 to F-14

Supplemental Schedules:

 Item 27a - Schedule of Assets Held for Investment Purposes
  - December 31, 1996                                                 F-15

 Item 27d - Schedule of Reportable Transactions
  - Year ended December 31, 1996                                      F-16

All other schedules are omitted because they are not applicable or not required.

                                    F-1

<PAGE>






                       REPORT OF INDEPENDENT ACCOUNTANTS


To the Pension and Employee Benefits Committee of
NL Industries, Inc.:

      We have audited the  accompanying  statements of net assets  available for
benefits of the NL Industries,  Inc.  Retirement Savings Plan as of December 31,
1995 and 1996, and the related statements of changes in net assets available for
benefits  for  the  years  then  ended.  These  financial   statements  are  the
responsibility   of  NL's  Pension  and   Employee   Benefits   Committee.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

      We conducted our audits in accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting  principles used and significant estimates made by NL's
Pension and  Employee  Benefits  Committee,  as well as  evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

      In our opinion, the financial statements referred to above present fairly,
in all  material  respects,  the net assets  available  for  benefits  of the NL
Industries,  Inc.  Retirement Savings Plan as of December 31, 1995 and 1996, and
the changes in net assets  available  for  benefits  for the years then ended in
conformity with generally accepted accounting principles.

      Our audits  were  performed  for the  purpose of forming an opinion on the
basic financial  statements  taken as a whole. The  supplemental  schedules,  as
listed on the  accompanying  index,  are presented for the purpose of additional
analysis and are not a required part of the basic  financial  statements but are
supplementary  information  required  by the  Department  of  Labor's  Rules and
Regulations for Reporting and Disclosure  under the Employee  Retirement  Income
Security  Act of 1974.  The fund  information  in the  statements  of net assets
available for benefits and the statements of changes in net assets available for
benefits is presented for purposes of additional analysis rather than to present
the net assets  available  for benefits and changes in net assets  available for
benefits of each fund. The supplemental schedules and fund information have been
subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, are fairly stated, in all material respects,  in
relation to the basic financial statements taken as a whole.






                                          COOPERS & LYBRAND L.L.P.
Houston, Texas
June 12, 1997

                                    F-2

<PAGE>



                             NL INDUSTRIES, INC.
                           RETIREMENT SAVINGS PLAN

               STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS,
                            WITH FUND INFORMATION

                              December 31, 1995
<TABLE>
<CAPTION>


                                                         Fund Information
                                ---------------------------------------------------------------------
                                ML Federal   ML Capital      ML Basic      ML Retirement    ML Global  
                                Securities      Fund,         Value        Preservation     Holdings,  
                                   Trust        Inc.           Fund            Trust           Inc.    
                                ----------   ----------      ---------     -------------    ---------  

<S>                          <C>           <C>           <C>           <C>           <C>         
Investments at fair value:
  Common stock ...........   $      --     $      --     $      --     $      --     $      --   
  Other securities .......       635,644     4,182,517     2,290,572    24,364,863       726,896
Employer contributions
 receivable ..............        22,516       143,211       148,455       289,062        59,397
Cash .....................          --            --            --            --            --   
                             -----------   -----------   -----------   -----------   -----------
  Net assets available for
   plan benefits .........   $   658,160   $ 4,325,728   $ 2,439,027   $24,653,925   $   786,293
                             ===========   ===========   ===========   ===========   ===========

<CAPTION>

                                         Fund Information
                             ------------------------------------
                                 Common Stock Funds                             
                             -------------------------
                                              Dresser/     Cash              
                                  NL          Tremont      Fund          Total 
                             -----------   -----------   ---------     ----------- 

<S>                          <C>           <C>           <C>           <C>        
Investments at fair value:
  Common stock ...........   $ 2,966,120   $   392,019   $      --     $ 3,358,139
  Other securities .......          --            --            --      32,200,492
Employer contributions
 receivable ..............        96,019          --            --         758,660
Cash .....................          --            --           4,029         4,029
                             -----------   -----------   -----------   -----------
  Net assets available for
   plan benefits .........   $ 3,062,139   $   392,019   $     4,029   $36,321,320
                             ===========   ===========   ===========   ===========

</TABLE>


                                    F-3


<PAGE>



                             NL INDUSTRIES, INC.
                           RETIREMENT SAVINGS PLAN

               STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS,
                      WITH FUND INFORMATION (CONTINUED)

                              December 31, 1996
<TABLE>
<CAPTION>


                                                     Fund Information
                                   --------------------------------------------------
                                                                  AIM                     
                                   MFS Emerging  Templeton   International  AIM Value     
                                   Growth Fund   World Fund   Equity Fund     Fund        
                                   -----------   ----------  -------------  ---------        

<S>                                 <C>          <C>          <C>          <C>        
Investments at fair value:
  Common stock ..................   $     --     $     --     $     --     $     --   
  Other securities ..............    1,053,576      476,472      405,674      725,427
Employer contributions receivable       51,737       34,693       23,202       33,185
Cash ............................         --           --           --           --   
                                    ----------   ----------   ----------   ----------
  Net assets available for plan 
   benefits .....................   $1,105,313   $  511,165   $  428,876   $  758,612
                                    ==========   ==========   ==========   ==========

<CAPTION>
  
                                             Fund Information
                                 -----------------------------------------
                                                                ML Global   
                                  MFS Government  ML Equity    Allocation  
                                 Securities Fund  Index Trust   Fund, Inc.  
                                 ---------------  -----------  -----------

<S>                                 <C>          <C>          <C>     
Investments at fair value:
  Common stock ..................   $     --     $     --     $     --
  Other securities ..............      215,693      346,379      477,894
Employer contributions receivable       11,014       21,451       25,031
Cash ............................         --           --           --
                                    ----------   ----------   ----------
  Net assets available for plan
   benefits ......................  $  226,707   $  367,830   $  502,925
                                    ==========   ==========   ==========
   
</TABLE>





                                    F-4


<PAGE>



                             NL INDUSTRIES, INC.
                           RETIREMENT SAVINGS PLAN

               STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS,
                      WITH FUND INFORMATION (CONTINUED)

                        December 31, 1996 (Continued)

<TABLE>
<CAPTION>


                                                Fund Information (Continued)
                             ---------------------------------------------------------------------
                             ML Federal    ML Capital     ML Basic    ML Retirement   ML Global  
                             Securities       Fund,        Value      Preservation    Holdings,  
                                Trust         Inc.          Fund          Trust          Inc.    
                             ----------    -----------   -----------  -------------  -----------  
<S>                          <C>           <C>           <C>           <C>           <C>         
Investments at fair value:
  Common stock ...........   $      --     $      --     $      --     $      --     $      --   
  Other securities .......       645,236     4,531,774     3,057,100    22,758,005       601,585
Employer contributions
 receivable ..............        15,144       110,550       107,977       235,826          --   
Cash .....................          --            --            --            --            --   
                             -----------   -----------   -----------   -----------   -----------
  Net assets available for
   plan benefits .........   $   660,380   $ 4,642,324   $ 3,165,077   $22,993,831   $   601,585
                             ===========   ===========   ===========   ===========   ===========

<CAPTION>

                                 Fund Information (Continued)
                             ------------------------------------
                                 Common Stock Funds                             
                             -------------------------
                                              Dresser/     Cash              
                                  NL          Tremont      Fund          Total 
                             -----------   -----------   ---------     ----------- 

<S>                          <C>           <C>           <C>           <C>        
Investments at fair value:
  Common stock ...........   $ 2,388,253   $   491,385   $      --     $ 2,879,638
  Other securities .......          --            --            --      35,294,815
Employer contributions
 receivable ..............        46,967          --            --         716,777
Cash .....................          --            --           5,608         5,608
                             -----------   -----------   -----------   -----------
  Net assets available for
   plan benefits .........   $ 2,435,220   $   491,385   $     5,608   $38,896,838
                             ===========   ===========   ===========   ===========

 
</TABLE>
                See accompanying notes to financial statements.
                                    F-5


<PAGE>



                             NL INDUSTRIES, INC.
                           RETIREMENT SAVINGS PLAN

           STATEMENTS OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS,
                            WITH FUND INFORMATION

                         Year ended December 31, 1995


<TABLE>
<CAPTION>

                                                                          Fund Information
                                           ---------------------------------------------------------------------------
                                           ML Federal     ML Capital        ML Basic      ML Retirement    ML Global  
                                           Securities        Fund,           Value        Preservation     Holdings,  
                                              Trust          Inc.             Fund            Trust           Inc.    
                                           ----------     ------------    ------------    -------------   ------------  
<S>                                       <C>             <C>             <C>             <C>             <C>          
Investment income:
  Dividend income:
    Dresser Corporation ...............   $       --      $       --      $       --      $       --      $       --   
    Other .............................         30,096         428,859         101,067            --            38,299
  Interest income .....................           --              --              --         1,518,710            --   
                                          ------------    ------------    ------------    ------------    ------------

  Total investment income .............         30,096         428,859         101,067       1,518,710          38,299
                                          ------------    ------------    ------------    ------------    ------------

Net appreciation (depreciation) in               
 the fair value of investments ........         30,007         591,021         420,509            --            58,011
                                          ------------    ------------    ------------    ------------    ------------

Contributions:
  Participants ........................         51,497         238,841         192,109         544,341          91,965
  Employer ............................         22,516         143,211         148,455         289,062          59,397
                                          ------------    ------------    ------------    ------------    ------------

  Total contributions .................         74,013         382,052         340,564         833,403         151,362
                                          ------------    ------------    ------------    ------------    ------------

  Total income and
   contributions ......................        134,116       1,401,932         862,140       2,352,113         247,672
                                          ------------    ------------    ------------    ------------    ------------

Net interfund transfers ...............        198,320          27,097         139,605        (893,413)         27,659
                                          ------------    ------------    ------------    ------------    ------------

Distributions:
  Benefit payments ....................         12,096         281,081          69,324       2,615,395          67,623
  Less forfeitures ....................           (182)           (494)           (815)         (2,135)           (631)
                                          ------------    ------------    ------------    ------------    ------------

  Total distributions .................         11,914         280,587          68,509       2,613,260          66,992
                                          ------------    ------------    ------------    ------------    ------------

Net change in net assets
 available for plan benefits ..........        320,522       1,148,442         933,236      (1,154,560)        208,339

Net assets available for plan benefits:
  Beginning of year ...................        337,638       3,177,286       1,505,791      25,808,485         577,954
                                          ------------    ------------    ------------    ------------    ------------

  End of year .........................   $    658,160    $  4,325,728    $  2,439,027    $ 24,653,925    $    786,293
                                          ============    ============    ============    ============    ============

<PAGE>
<CAPTION>


                                                          Fund Information
                                          --------------------------------------------
                                                Common Stock Funds                             
                                          ----------------------------
                                                            Dresser/          Cash              
                                               NL           Tremont           Fund           Total 
                                          -----------     ------------    ------------   ------------ 

<S>                                       <C>             <C>             <C>            <C>         
Investment income:
  Dividend income:
    Dresser Corporation ...............   $       --      $      9,868    $       --     $      9,868
    Other .............................           --              --              --          598,321
  Interest income .....................           --              --             1,705      1,520,415
                                          ------------    ------------    ------------   ------------

  Total investment income .............           --             9,868           1,705      2,128,604
                                          ------------    ------------    ------------   ------------

Net appreciation (depreciation) in
 the fair value of investments ........       (167,245)         90,951            --        1,023,254
                                          ------------    ------------    ------------   ------------

Contributions:
  Participants ........................        160,265            --              --        1,279,018
  Employer ............................         96,019            --              --          758,660
                                          ------------    ------------    ------------   ------------

  Total contributions .................        256,284            --              --        2,037,678
                                          ------------    ------------    ------------   ------------

  Total income and
   contributions ......................         89,039         100,819           1,705      5,189,536
                                          ------------    ------------    ------------   ------------

Net interfund transfers ...............        512,367         (11,635)           --             --
                                          ------------    ------------    ------------   ------------

Distributions:
  Benefit payments ....................        107,149          23,074            --        3,175,742
  Less forfeitures ....................           (229)           --              --           (4,486)
                                          ------------    ------------    ------------   ------------

  Total distributions .................        106,920          23,074            --        3,171,256
                                          ------------    ------------    ------------   ------------

Net change in net assets
 available for plan benefits ..........        494,486          66,110           1,705      2,018,280

Net assets available for plan benefits:
  Beginning of year ...................      2,567,653         325,909           2,324     34,303,040
                                          ------------    ------------    ------------   ------------

  End of year .........................   $  3,062,139    $    392,019    $      4,029   $ 36,321,320
                                          ============    ============    ============   ============
</TABLE>

                                    F-6


<PAGE>



                             NL INDUSTRIES, INC.
                           RETIREMENT SAVINGS PLAN

           STATEMENTS OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS,
                      WITH FUND INFORMATION (CONTINUED)

                         Year ended December 31, 1996


<TABLE>
<CAPTION>

                                                             Fund Information
                                         -------------------------------------------------------
                                                                          AIM                     
                                         MFS Emerging   Templeton    International    AIM Value     
                                         Growth Fund    World Fund    Equity Fund       Fund        
                                         ------------   ----------   -------------   -----------        
<S>                                       <C>            <C>           <C>           <C>         
Investment income:
  Dividend income:
    NL Industries, Inc. ...............   $      --      $      --     $      --     $      --   
    Dresser Corporation ...............          --             --            --            --   
    Other .............................        12,370         31,535        10,357        34,248
  Interest income .....................          --             --            --            --   
                                          -----------    -----------   -----------   -----------

  Total investment income .............        12,370         31,535        10,357        34,248
                                          -----------    -----------   -----------   -----------

Net appreciation (depreciation) in the
 fair value of investments ............       (20,966)        10,822        20,990        38,049
                                          -----------    -----------   -----------   -----------

Contributions:
  Participants ........................        66,794         41,172        36,106        50,186
  Employer ............................        51,737         34,693        23,202        33,185
                                          -----------    -----------   -----------   -----------

  Total contributions .................       118,531         75,865        59,308        83,371
                                          -----------    -----------   -----------   -----------

  Total income and contributions ......       109,935        118,222        90,655       155,668
                                          -----------    -----------   -----------   -----------

Net interfund transfers ...............     1,001,104        393,871       338,741       606,950
                                          -----------    -----------   -----------   -----------

Distributions:
  Benefit payments ....................         5,726            928           520         4,006
  Less forfeitures ....................          --             --            --            --   
                                          -----------    -----------   -----------   -----------

  Total distributions .................         5,726            928           520         4,006
                                          -----------    -----------   -----------   -----------

Net change in net assets available for
 plan benefits ........................     1,105,313        511,165       428,876       758,612

Net assets available for plan benefits:
  Beginning of year ...................          --             --            --            --   
                                          -----------    -----------   -----------   -----------

  End of year .........................   $ 1,105,313    $   511,165   $   428,876   $   758,612
                                          ===========    ===========   ===========   ===========


<PAGE>
<CAPTION>



                                                       Fund Information
                                        -----------------------------------------
                                                                      ML Global   
                                        MFS Government  ML Equity     Allocation  
                                       Securities Fund  Index Trust   Fund, Inc.  
                                       ---------------  -----------  ------------

<S>                                       <C>           <C>           <C>      
Investment income:
  Dividend income:
    NL Industries, Inc. ...............   $      --     $      --     $      --
    Dresser Corporation ...............          --            --            --
    Other .............................         7,284          --          39,571
  Interest income .....................          --            --            --
                                          -----------   -----------   -----------

  Total investment income .............         7,284          --          39,571
                                          -----------   -----------   -----------

Net appreciation (depreciation) in the
 fair value of investments ............         4,759        37,376        (3,987)
                                          -----------   -----------   -----------

Contributions:
  Participants ........................        22,970        30,581        30,082
  Employer ............................        11,014        21,451        25,031
                                          -----------   -----------   -----------

  Total contributions .................        33,984        52,032        55,113
                                          -----------   -----------   -----------

  Total income and contributions ......        46,027        89,408        90,697
                                          -----------   -----------   -----------

Net interfund transfers ...............       181,284       282,463       413,140
                                          -----------   -----------   -----------

Distributions:
  Benefit payments ....................           604         4,041           912
  Less forfeitures ....................          --            --            --
                                          -----------   -----------   -----------

  Total distributions .................           604         4,041           912
                                          -----------   -----------   -----------

Net change in net assets available for
 plan benefits ........................       226,707       367,830       502,925

Net assets available for plan benefits:
  Beginning of year ...................          --            --            --
                                          -----------   -----------   -----------

  End of year .........................   $   226,707   $   367,830   $   502,925
                                          ===========   ===========   ===========

</TABLE>



                                    F-7


<PAGE>



                             NL INDUSTRIES, INC.
                           RETIREMENT SAVINGS PLAN

           STATEMENTS OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS,
                      WITH FUND INFORMATION (CONTINUED)

                   Year ended December 31, 1996 (Continued)

<TABLE>
<CAPTION>


                                                               Fund Information (Continued)
                                           ---------------------------------------------------------------------------
                                           ML Federal     ML Capital        ML Basic      ML Retirement    ML Global  
                                           Securities        Fund,           Value        Preservation     Holdings,  
                                              Trust          Inc.             Fund            Trust           Inc.    
                                           ----------     ------------    ------------    -------------   ------------  



<S>                                       <C>             <C>             <C>             <C>             <C>          
Investment income:
  Dividend income:
    NL Industries, Inc. ...............   $       --      $       --      $       --      $       --      $       --   
    Dresser Corporation ...............           --              --              --              --              --   
    Other .............................         43,822         433,519         207,450            --            36,615
  Interest income .....................           --              --              --         1,416,181            --   
                                          ------------    ------------    ------------    ------------    ------------

  Total investment income .............         43,822         433,519         207,450       1,416,181          36,615
                                          ------------    ------------    ------------    ------------    ------------

Net appreciation (depreciation) in
 the fair value of investments ........        (13,887)         75,626         235,047            --            51,115
                                          ------------    ------------    ------------    ------------    ------------

Contributions:
  Participants ........................         44,756         265,066         267,891         423,904          44,852
  Employer ............................         15,144         110,550         107,977         235,826            --   
                                          ------------    ------------    ------------    ------------    ------------

  Total contributions .................         59,900         375,616         375,868         659,730          44,852
                                          ------------    ------------    ------------    ------------    ------------

  Total income and
   contributions ......................         89,835         884,761         818,365       2,075,911         132,582
                                          ------------    ------------    ------------    ------------    ------------

Net interfund transfers ...............        (52,291)       (280,470)        (46,618)     (1,865,472)       (310,057)
                                          ------------    ------------    ------------    ------------    ------------

Distributions:
  Benefit payments ....................         35,324         287,695          45,697       1,874,490           7,233
  Less forfeitures ....................           --              --              --            (3,957)           --   
                                          ------------    ------------    ------------    ------------    ------------

  Total distributions .................         35,324         287,695          45,697       1,870,533           7,233
                                          ------------    ------------    ------------    ------------    ------------

Net change in net assets
 available for plan benefits ..........          2,220         316,596         726,050      (1,660,094)       (184,708)

Net assets available for plan benefits:
  Beginning of year ...................        658,160       4,325,728       2,439,027      24,653,925         786,293
                                          ------------    ------------    ------------    ------------    ------------

  End of year .........................   $    660,380    $  4,642,324    $  3,165,077    $ 22,993,831    $    601,585
                                          ============    ============    ============    ============    ============

<PAGE>
<CAPTION>


                                                  Fund Information (Continued)
                                          --------------------------------------------
                                                Common Stock Funds                             
                                          ----------------------------
                                                            Dresser/          Cash              
                                               NL           Tremont           Fund           Total 
                                          -----------     ------------    ------------   ------------ 

<S>                                       <C>             <C>             <C>            <C>         
Investment income:
  Dividend income:
    NL Industries, Inc. ...............   $     68,389    $       --      $       --     $     68,389
    Dresser Corporation ...............           --             8,595            --            8,595
    Other .............................           --              --              --          856,771
  Interest income .....................           --              --             1,579      1,417,760
                                          ------------    ------------    ------------   ------------

  Total investment income .............         68,389           8,595           1,579      2,351,515
                                          ------------    ------------    ------------   ------------

Net appreciation (depreciation) in 
 the fair value of investments ........       (180,690)        142,421            --          396,675
                                          ------------    ------------    ------------   ------------

Contributions:
  Participants ........................        138,757            --              --        1,463,117
  Employer ............................         46,967            --              --          716,777
                                          ------------    ------------    ------------   ------------

  Total contributions .................        185,724            --              --        2,179,894
                                          ------------    ------------    ------------   ------------

  Total income and
   contributions ......................         73,423         151,016           1,579      4,928,084
                                          ------------    ------------    ------------   ------------

Net interfund transfers ...............       (621,540)        (41,105)           --             --
                                          ------------    ------------    ------------   ------------

Distributions:
  Benefit payments ....................         78,802          10,545            --        2,356,523
  Less forfeitures ....................           --              --              --           (3,957)
                                          ------------    ------------    ------------   ------------

  Total distributions .................         78,802          10,545            --        2,352,566
                                          ------------    ------------    ------------   ------------

Net change in net assets 
 available for plan benefits ..........       (626,919)         99,366           1,579      2,575,518

Net assets available for plan benefits:
  Beginning of year ...................      3,062,139         392,019           4,029     36,321,320
                                          ------------    ------------    ------------   ------------

  End of year .........................   $  2,435,220    $    491,385    $      5,608   $ 38,896,838
                                          ============    ============    ============   ============
</TABLE>



                See accompanying notes to financial statements.
                                    F-8

<PAGE>



                             NL INDUSTRIES, INC.
                           RETIREMENT SAVINGS PLAN

                        NOTES TO FINANCIAL STATEMENTS


Note 1 - Summary of significant accounting policies:

      The financial  statements of the NL Industries,  Inc.  Retirement  Savings
Plan  formerly the "Savings  Plan for  Employees of NL  Industries,  Inc.") (the
"Plan") have been  prepared in accordance  with  generally  accepted  accounting
principles.  The following is a summary of the significant  accounting  policies
followed by the Plan.

Investments

      Investments  are recorded at fair value based upon the quoted market price
reported on the last trading day of the period for those securities  listed on a
national securities  exchange.  Listed securities for which no sale was reported
on that  date are  valued  at the mean  between  the last  reported  bid and ask
prices.  Short-term investments are stated at fair value.

      Purchases and sales of  investments  are reflected on a trade-date  basis.
Gains or  losses on sales of  securities  are based on  average  cost.  The Plan
presents in the statements of changes in net assets  available for plan benefits
the net appreciation  (depreciation)  in the fair value of its investments which
consists  of the  realized  gains  or  losses  and the  unrealized  appreciation
(depreciation) on those investments.

Contributions

      Contributions from employees are recorded in the period the employer makes
payroll deductions from Plan participants. Employer contributions are accrued at
the end of each year and are received in the subsequent year.

Investment income

      Income  from  investments  is  recorded  as  earned on an  accrual  basis.
Dividend income is recorded at the ex-dividend date.

Termination of Plan

      Although it has not expressed any intent to do so, NL Industries, Inc. has
the right under the Plan to discontinue  contributions and to terminate the Plan
at any time subject to penalties  set forth in the  Employee  Retirement  Income
Security  Act of  1974  ("ERISA").  In the  event  of such a  discontinuance  or
termination  of the Plan,  the net assets of the Plan would be  allocated to the
Plan  participants as prescribed by the Plan document,  ERISA,  and the Internal
Revenue Code.


                                    F-9

<PAGE>



Note 2 - Plan description:

      The Plan's  principal  objective  is to provide  eligible  employees of NL
Industries,  Inc. and its Subsidiaries  (the "Company") with a convenient way to
save on a regular  and  long-term  basis.  The  majority of the  Company's  U.S.
employees are eligible to  voluntarily  participate in the Plan after six months
of employment.  At December 31, 1996 there were 222 active  participants and 656
total  participants.  Participants  currently  employed by the Company  ("Active
Participants")  may  make  basic  contributions  of  between  1% and 8% of their
eligible  compensation.  Basic  contributions  may consist of a  combination  of
pre-tax and after-tax earnings.  Generally,  pre-tax  contributions are excluded
from  the  employee's  taxable  income  until  they  are  distributed.  Eligible
employees  that have elected to make the maximum  basic  contribution  of 8% may
also make a supplemental pre-tax or after-tax  contribution of between 1% and 4%
of their eligible compensation.

      In accordance with the Tax Reform Act of 1986, participants are limited in
the  amount of salary  reduction  contributions  which they may make to the Plan
under Section  402(g) of the Internal  Revenue Code ($9,500  annual  maximum for
1996).  Highly compensated  participants may be required to adjust the amount of
their contributions in order to permit the Plan to satisfy the nondiscrimination
requirements of Sections 401(k) and 401(m) of the Internal Revenue Code.

      The Company contributes a discretionary amount of matching  contributions,
determined  annually,  based upon the  attainment  of certain  operating  income
target levels approved by the Management, Development and Compensation Committee
of the Board of Directors of the Company. The employer match applies only to the
employee's basic contributions.

      On March 31, 1996, the defined  benefit plan for salaried  employees of NL
Industries, Inc. was amended and the pension benefits frozen for the majority of
the Company's U.S.  employees.  Effective  April 1, 1996,  every employee who is
eligible to  participate  in the Plan will receive an annual  contribution  into
their investment  account of 3% of their eligible  compensation,  subject to IRS
limitations on eligible  compensation,  which currently is $150,000. The Company
will make this contribution for each eligible employee regardless of whether the
employee elects to otherwise  participate in the Plan.  This  contribution is in
addition to the Company's discretionary matching contribution described above.

      Employer  contributions  are  fully  vested  upon  death,  retirement,  or
disability, as provided in the Plan. A participant with less than three years of
service is 0% vested in employer contributions, 50% vested following three years
of service,  75% vested  following four years of service and fully vested in all
employer contributions following five years of service.  Forfeitures of employer
contributions may occur if a participant terminates employment prior to the full
vesting period or if a participant  or  beneficiary,  to whom a distribution  is
payable,  cannot  be  located  within  five  years  of the  date on  which  such
distribution became payable.  Amounts forfeited are used in the following order:
(i) to restore the  accounts  of  reemployed  participants,  (ii) to restore the
accounts of participants or beneficiaries who apply for forfeited benefits,  and
(iii) to reduce employer contributions.


                                    F-10

<PAGE>



      Merrill  Lynch Trust Company  ("Merrill  Lynch" or "ML") serves as trustee
for the Plan.

      Employees  may elect to have their own  contributions  invested  in one or
more funds, whose investment objectives are as follows:


                                                                   Number of
                                                                participants at
                                                                  December 31,
                                                               ----------------
                                                               1995        1996
                                                               ----        ----

Merrill Lynch Retirement Preservation Trust - managed           381        368
with the objective of providing preservation of capital,
liquidity and current income through investments
primarily in Guaranteed Investment Contracts.

Merrill Lynch Basic Value Fund, Inc. - Class A Shares -         141        163
managed with the objective of seeking capital
appreciation and, secondarily, income.

Merrill Lynch Federal Securities Trust - Class D Shares -        85         82
managed with the objective of seeking a high current
return through investments in U.S. government and
government agency securities.

Merrill Lynch Capital Fund, Inc. - Class A Shares -             189        184
managed with the objective of seeking the highest total
investment return consistent with prudent risk, investing
in equity, debt and convertible securities.

Merrill Lynch Global Holdings, Inc. - Class A Shares -           77         59
managed with the objective of seeking the highest total
investment return consistent with prudent risk through 
world-wide  investment in an internationally diversified 
portfolio of securities.

NL Stock Fund - invested in NL common stock.                    530        500


     Effective April 1, 1996,  seven additional  mutual fund investments  became
available to participants.


MFS Emerging Growth Fund - Class A Shares - managed with          -        104
the objective of providing long-term growth of capital by
investing primarily in common stocks of small and medium-
sized companies that are early in their life cycle but
which have the potential to become major enterprises.

Templeton World Fund - Class I Shares - managed with the          -         78
objective of seeking long-term capital growth by
investing in securities of companies or governments
located throughout the world.  The fund's portfolio is
invested in securities of both U.S. and foreign issuers.



                                    F-11

<PAGE>



                                                                   Number of
                                                                participants at
                                                                  December 31,
                                                               -----------------
                                                               1995        1996
                                                               ----        ----

AIM International Equity Fund - Class A Shares - managed          -         70
with the objective of seeking long-term return of capital
by investing in a diversified portfolio of international
equity securities.

AIM Value Fund - Class A Shares - managed with the                -         90
objective of achieving long-term growth of capital by
investing primarily in equity securities judged to be
undervalued relative to appraisals of the current or
projected earnings of the companies issuing the
securities, or relative to current market values of
assets owned by the companies issuing the securities or
relative to the equity market generally.  Income is a
secondary objective.

MFS Government Securities Fund - Class A Shares - managed         -         49
with the objective of providing current income and
preservation of principal by investing in Government
Securities and by investing in obligations that are fully
collateralized or otherwise fully secured by Government
Securities.

Merrill Lynch Equity Index Trust - managed with the               -         67
objective of approximating the total return of the
Standard & Poor's 500 Composite Stock Index.  This index
is a means to measure the performance of a broad base of
large U.S. corporations.

Merrill Lynch Global Allocation Fund, Inc. - Class A              -         75
Shares - managed with the objective of seeking a high
total  investment   return,   consistent  with  the  
prudent  risk,   through  a fully-managed investment 
policy utilizing United States and foreign equity, debt
and money market securities the combination of which 
will be varied from time to time both with  respect  
to types of  securities  and  markets  in  response  
to changing market and economic trends.

      In addition to the funds  listed  above,  the  Dresser/Tremont  Stock Fund
holds  investments  in  Dresser  Industries  for  50  participants  and  Tremont
Corporation  common stock for 43  participants.  Contributions or transfers into
the  Dresser/Tremont  Stock  Fund are no  longer  allowed.  On March  31,  1996,
investments  in the  Merrill  Lynch  Global  Holdings  fund were frozen and only
transfers  out of this fund are  permitted.  Prior to March 31,  1996,  employee
contributions  to  the  fund  were  permitted;  however,  no  employer  matching
contributions were made in 1996 to this fund.


                                    F-12

<PAGE>



      Prior  to the  investment  in  securities  of a type  consistent  with the
objectives of any fund,  cash may be  temporarily  invested in  securities  with
maturities of less than one year issued or guaranteed by the U.S.  government or
any agency or instrumentality thereof or deposited in a bank savings account.

      Interfund  transfers may be made daily,  except that only one transfer per
participant  per  quarter  may  affect  amounts in the NL Stock  Fund.  Only one
transfer  is  permitted  out of the  Dresser/Tremont  Stock Fund which must be a
transfer of the total value of the participant's account in that fund.

      Distributions  to  employees  may  occur  during  active  service  or upon
termination and under prescribed circumstances, may be in the form of lump sums,
installments, annuities or combinations thereof or employer securities.

      The Company bears the responsibility of all administrative expenses of the
Plan.

Note 3 - Investments:

      The historical  cost and fair value of each of the investments at December
31, 1995 and 1996 were as follows:

<TABLE>
<CAPTION>

                                                       1995                       1996
                                            -------------------------   -------------------------
                                             Historical                 Historical
Fund description                               cost       Fair value       cost       Fair value
----------------                            -----------   -----------   -----------   -----------

<S>                                         <C>           <C>           <C>           <C>        
Merrill Lynch Retirement Preservation
 Trust ..................................   $24,364,863   $24,364,863   $22,758,005   $22,758,005

Merrill Lynch Basic Value Fund, Inc. -
 Class A Shares .........................     1,886,249     2,290,572     2,564,065     3,057,100

Merrill Lynch Federal Securities Trust -
 Class D Shares .........................       626,884       635,644       648,231       645,236

Merrill Lynch Capital Fund, Inc. -
 Class A Shares .........................     3,671,102     4,182,517     4,043,712     4,531,774

Merrill Lynch Global Holdings, Inc. -
 Class A Shares .........................       685,081       726,896       550,799       601,585

MFS Emerging Growth Fund - Class A Shares          --            --       1,059,235     1,053,576

Templeton World Fund - Class I Shares ...          --            --         465,233       476,472

AIM International Equity Fund - Class A
 Shares .................................          --            --         386,506       405,674

AIM Value Fund - Class A Shares .........          --            --         686,839       725,427

MFS Government Securities Fund - Class A
 Shares .................................          --            --         210,926       215,693

Merrill Lynch Equity Index Trust ........          --            --         309,021       346,379

Merrill Lynch Global Allocation Fund,
 Inc. - Class A Shares ..................          --            --         481,896       477,894

NL Stock Fund ...........................     2,986,130     2,966,120     2,790,711     2,388,253

Dresser/Tremont Stock Fund:
  Dresser Common Stock ..................       145,727       339,796       138,847       392,719
  Tremont Common Stock ..................        25,816        52,223        22,601        98,666
                                            -----------   -----------   -----------   -----------

                                            $34,391,852   $35,558,631   $37,116,627   $38,174,453
                                            ===========   ===========   ===========   ===========

</TABLE>



                                    F-13

<PAGE>



      At June 12,  1997,  the  market  value of the  shares of NL,  Dresser  and
Tremont  stock held at December 31, 1996 was  $3,047,076,  $443,393 and $118,807
respectively.

Concentration of credit risk

      During 1995 and the first quarter of 1996, the Plan's assets were invested
principally  with investment  funds managed by Merrill Lynch and common stock of
NL,  Dresser  and  Tremont.  Beginning  April 1, 1996 seven new funds were added
including  two that are managed by Merrill  Lynch.  Each of the other five funds
are  managed by either i)  Massachusetts  Financial  Services  ("MFS"),  ii) AIM
Advisors, Inc., or iii) Templeton Global Advisors Limited. At December 31, 1996,
85% of the Plan's investments were managed by Merrill Lynch.

Note 4 - Related party transactions:

      The NL Stock Fund and the Dresser/Tremont  Stock Fund invest in the common
stock of NL and Tremont.  The activity of these  securities  for the years ended
December 31, 1995 and 1996 was as follows:

<TABLE>
<CAPTION>

                                                       Sales and
                                                     distributions,     Realized
                                         Purchases       at cost          gain
                                         ---------   --------------     --------

<S>                                         <C>           <C>           <C>     
Year ended December 31, 1995:
  NL common stock ....................      $958,290      $251,364      $ 57,786
  Tremont common stock ...............          --           2,829         1,519

Year ended December 31, 1996:
  NL common stock ....................      $554,224      $749,643      $201,758
  Tremont common stock ...............          --           3,215         8,893

</TABLE>

Note 5 - Tax status:

      The Plan, as amended in 1994, is designed to constitute a qualified  trust
under  Sections  401(a)  and 401(k) of the  Internal  Revenue  Code of 1986,  as
amended (the  "Code");  as such the Plan is exempt from federal  income tax, and
amounts  contributed by the Company will not be taxed to the  participant  until
the participant receives a distribution from the Plan.

      The Plan has  received a favorable  determination  as of  September  1995,
indicating it is a "Qualified  Plan" under the  requirements  of Sections 401(a)
and 401(k) of the Code and is qualified for favorable tax treatment. The Company
intends  to  file  an  application  with  the  Internal  Revenue  Service  for a
determination  of the qualified  status of the Plan under Section  401(a) of the
Code for all amendments made to the Plan since the last determination letter.



                                    F-14

<PAGE>



                            SUPPLEMENTAL SCHEDULES


<PAGE>



                 NL INDUSTRIES, INC. RETIREMENT SAVINGS PLAN

          ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES

                              December 31, 1996

                    Employer Identification No. 13-5267260

                                 Plan No. 003


<TABLE>
<CAPTION>


                                                        Cost       Fair value
                                                     -----------   -----------

<S>                                                  <C>           <C>        
   Merrill Lynch Retirement Preservation Trust       $22,758,005   $22,758,005

   Merrill Lynch Basic Value Fund, Inc. -
    Class A shares                                     2,564,065     3,057,100

   Merrill Lynch Federal Securities Trust - Class
    D Shares                                             648,231       645,236

   Merrill Lynch Capital Fund, Inc. -
    Class A shares                                     4,043,712     4,531,774

   Merrill Lynch Global Holdings, Inc. -
    Class A shares                                       550,799       601,585

   MFS Emerging Growth Fund - Class A Shares           1,059,235     1,053,576

   Templeton World Fund - Class I Shares                 465,233       476,472

   AIM International Equity Fund - Class A Shares        386,506       405,674

   AIM Value Fund - Class A Shares                       686,839       725,427

   MFS Government Securities Fund - Class A Shares       210,926       215,693

   Merrill Lynch Equity Index Trust                      309,021       346,379

   Merrill Lynch Global Allocation Fund, Inc.-
    Class A Shares                                       481,896       477,894

*  NL Stock Fund - Common Stock                        2,790,711     2,388,253

   Dresser/Tremont Stock Fund - Common Stock:
     Dresser Industries                                  138,847       392,719
*    Tremont Corporation                                  22,601        98,666
                                                     -----------   -----------

                                                     $37,116,627   $38,174,453
                                                     ===========   ===========
</TABLE>

Note: Cost is determined based on historical cost.  Gains and losses on sales of
      investments are calculated based on average cost.

*  Investment in a "Party-in-interest" entity, as defined by ERISA.

                                    F-15

<PAGE>



                             NL INDUSTRIES, INC.

                           RETIREMENT SAVINGS PLAN

                ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS

                         Year ended December 31, 1996

                    Employer Identification No. 13-5267260

                                 Plan No. 003



<TABLE>
<CAPTION>

                                                                                            Fair value
                                                                                            of asset on
                                    Number of     Purchase      Selling       Cost of       transaction    Net gain
Description of Asset              Transactions     price         price         asset           date         (loss)
--------------------              ------------  ----------     ----------     -------       -----------    --------

<S>                                     <C>     <C>            <C>            <C>            <C>            <C>   
Merrill Lynch Retirement
 Preservation Trust:
  Purchases ................            136     $3,209,340     $     --       $3,209,340     $3,209,340     $   --
  Sales ....................            131           --        4,816,180      4,816,180      4,816,180         --

Merrill Lynch Capital Fund
 Inc. - Class A Shares
  Purchases ................             80      1,234,657           --        1,234,657      1,234,657         --
  Sales ....................             79           --          961,025        862,047        961,025       98,978

Merrill Lynch Basic Value
 Fund, Inc. - Class A Shares
  Purchases ................             85      1,387,579           --        1,387,579      1,387,579         --
  Sales ....................             50           --          853,095        706,759        853,095      146,336

</TABLE>



                                    F-16

<PAGE>


                                                                     EXHIBIT I




                      CONSENT OF INDEPENDENT ACCOUNTANTS



We consent to the incorporation by reference in the:

  (i)    Registration Statement No. 2-98713 on Form S-8 and related Prospectus
         with respect to the 1985 Long Term Performance Incentive Plan of NL
         Industries, Inc.;

  (ii)   Registration Statement No. 33-25913 on Form S-8 and related Prospectus
         with respect to the Savings Plan for Employees of NL Industries, Inc.;

  (iii)  Registration Statement No. 33-29287 on Form S-8 and related Prospectus,
         as amended, with respect to the 1989 Long Term Performance Incentive
         Plan of NL Industries, Inc.; and

  (iv)   Registration Statement No. 33-48145 on Form S-8 and related Prospectus
         with respect to the 1992 Non-Employee Director Stock Option Plan of NL
         Industries, Inc.

of our report which is dated June 12, 1997,  on our audits of the  statements of
net assets available for benefits of the NL Industries,  Inc. Retirement Savings
Plan as of December 31, 1995 and 1996 and the related  statements  of changes in
net assets  available  for  benefits  for the years then ended,  which report is
included in this Annual Report on Form 11-K.







                                    Coopers & Lybrand L.L.P.





Houston, Texas
June 20, 1997




<PAGE>