SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-K

     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
     ACT OF 1934 - FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996


                        COMMISSION FILE NUMBER 33-63044




                                  VALCOR, INC.

             (Exact name of registrant as specified in its charter)


           DELAWARE                                             74-2678674

(State or other jurisdiction of                               (IRS Employer
 incorporation or organization)                            Identification No.)


5430 LBJ FREEWAY, SUITE 1700, DALLAS, TEXAS                     75240-2697

 (Address of principal executive offices)                       (Zip Code)


REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:           (972) 233-1700




SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

          None.


SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

          None.


INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR
THE PAST 90 DAYS.  YES  X   NO



THE REGISTRANT IS A WHOLLY-OWNED SUBSIDIARY OF VALHI, INC. (FILE NO. 1-5467) AND
MEETS THE CONDITIONS SET FORTH IN THE GENERAL INSTRUCTIONS OF FORM 10-K FOR
REDUCED DISCLOSURE FORMAT.


DOCUMENTS INCORPORATED BY REFERENCE:

          None.
                              [INSIDE FRONT COVER]

     Chart showing (i) Valhi's 100% ownership of Valcor, 56% ownership of NL
Industries, Inc. and 50% ownership of Waste Control Specialists LLC and (ii)
Valcor's 100% ownership of CompX International Inc. and Sybra. Inc.
                                     PART I


ITEM 1.   BUSINESS

GENERAL

     Valcor, Inc. is based in Dallas, Texas with continuing operations in the
component products and fast food industries.  Information regarding the
Company's business segments and the wholly-owned operating subsidiaries
conducting such businesses is set forth below.  Business and geographic segment
financial information is included in Note 3 to the Consolidated Financial
Statements, which information is incorporated herein by reference.



Component Products             CompX International is a leading North
  CompX International Inc.     American manufacturer of ergonomic office
   (formerly National Cabinet  workstation components, mechanical locks and
     Lock, Inc.)               precision ball bearing drawer slides for
                               furniture and other markets.

Fast Food                      Sybra is the third-largest franchisee of
  Sybra, Inc.                  Arby's restaurants with 150 stores clustered
                               principally in Texas, Michigan, Pennsylvania
                               and Florida.

     Valcor, a Delaware corporation formed in 1993, is a wholly-owned subsidiary
of Valhi, Inc. (NYSE: VHI).  Contran Corporation holds, directly or through
subsidiaries, approximately 91% of Valhi's outstanding common stock.
Substantially all of Contran's outstanding voting stock is held by trusts
established for the benefit of the children and grandchildren of Harold C.
Simmons, of which Mr. Simmons is the sole trustee.  Mr. Simmons is Chairman of
the Board and Chief Executive Officer of the Company, Valhi and Contran, and may
be deemed to control each of such companies.

     In September 1996, Medite Corporation, the Company's wholly-owned building
products subsidiary, signed three separate letters of intent involving the sale
of substantially all of its assets.  The first transaction, involving the sale
of Medite's timber and timberlands, closed in October 1996 for approximately
$118 million cash consideration, of which approximately $53 million of the cash
proceeds were used to pay off and terminate Medite's U.S. bank credit
facilities.  The second transaction, involving the sale of Medite's Irish medium
density fiberboard ("MDF") subsidiary, closed in November 1996 for approximately
$61.5 million cash consideration plus the assumption of approximately $21
million of Irish bank debt.  The third transaction, involving the sale of
Medite's Oregon MDF facility, closed in February 1997 for approximately $36
million cash consideration plus the assumption of approximately $3.7 million of
Medite indebtedness.  These three transactions generated total consideration to
Medite of approximately $240 million.  Medite has also determined to permanently
close its two small Oregon timber conversion facilities.  The stud lumber
facility, closed in December 1996, is being dismantled and Medite will sell the
salvageable machinery and equipment.  Medite continues to operate the veneer
facility on a short-term basis and expects to either sell or close this facility
in 1997.  See Note 14 to the Consolidated Financial Statements.

     The Company has executed agreements involving the sale of its fast food
operations conducted by Sybra.  The proposed sale would be accomplished in
simultaneous transactions that would include the sale of certain restaurant real
estate owned by Sybra to one party for $45 million cash consideration, and
Valcor's sale of 100% of the stock of Sybra to another party for approximately
$39.7 million cash consideration, of which approximately $23.7 million would be
used to repay Sybra bank indebtedness.  These transactions are subject to, among
other things, completion of customary due diligence procedures, the purchaser of
Sybra's stock obtaining necessary financing for the transaction and certain
consents from third parties.  If completed, the transactions are expected to
close in the second quarter of 1997, at which time the Company estimates it
would report a pre-tax gain on disposal in excess of $24 million.  There can be
no assurance that any such transactions will be completed.

COMPONENT PRODUCTS - COMPX INTERNATIONAL INC.

     Products, operations and properties.  CompX International Inc. (formerly
National Cabinet Lock, Inc.) manufactures ergonomic office workstation
components, precision ball bearing drawer slides and low and medium-security
mechanical locks for furniture and a variety of other applications.  In 1996,
ergonomic workstation products accounted for 34% of the Company's total
component products sales, with drawer slides at 38% and locks at 28%.  Drawer
slides and office workstation components are produced in two separate facilities
in Kitchener, Ontario under the Waterloo Furniture Components, Limited name.
Locks are produced in Mauldin, South Carolina under the National Cabinet Lock
name.  The Company believes its component products compete in relatively well-
defined niche markets and believes that it is (i) the largest supplier of
ergonomic office workstation components to the North American office furniture
manufacturing market, (ii) the largest Canadian producer of drawer slides and
(iii) the largest U.S. cabinet lock producer.

     Strip steel is the major raw material used in the manufacture of drawer
slides and office workstation products.  Purchased components, including zinc
castings, are the principal raw materials used in the manufacture of latching
and security products.  These raw materials, purchased from several suppliers
and readily available, are machined, electroplated, assembled and packaged for
shipment to customers.  One of the Kitchener facilities and the Mauldin facility
are ISO 9001-registered.
     Strategy.  CompX's strategy is to continue to improve manufacturing
efficiency and cost control, to develop specialty, patented products focused on
niche markets and to capitalize on future opportunities which may emerge with
targeted original equipment manufacturers.  The Company will also search for
synergistic acquisitions or product licensing to expand its product base and
seek to expand its established market positions by emphasizing customer service,
promoting its distribution programs and seeking greater penetration of current
markets.

     Competition and customer base.  CompX competes primarily on the basis of
product features, customer service, quality, distribution channels, consumer
brand preferences and price.  The primary market for drawer slides and
workstation products is office furniture manufacturers in the United States and
Canada.  Approximately 30% of lock sales are made through the Company's STOCK
LOCKS distribution program, a program believed to offer a competitive advantage
because delivery generally is made within 48 hours.  Most remaining lock sales
are to original equipment manufacturers' specifications.  Component products are
marketed primarily through the Company's own sales organization as well as
select manufacturers' representatives.

     Major competitors include Weber Knapp (workstations), Accuride and Knape &
Vogt (drawer slides) and Chicago Lock, Hudson Lock and Fort Lock (locks).  CompX
also competes with a large number of other manufacturers, and the variety of
relatively small competitors generally makes significant price increases
difficult.  The Company does not believe it is dependent upon one or a few
customers, the loss of which would have a material adverse effect on its
component products operations.  The ten largest customers accounted for about
one-third of component products sales in each of the past three years, with the
largest customer less than 10% in each year.  In 1996, six of the ten largest
customers were located in the U.S. with four located in Canada.  Of such
customers, all were primarily purchasers of Waterloo Furniture Components'
products.

     Patents and trademarks.  CompX holds a number of patents relating to its
component products operations, none of which by itself is considered
significant, and owns a number of trademarks, including National Cabinet Lock,
STOCK LOCKS and Waterloo Furniture Components, Limited,  which the Company
believes are well recognized in the component products industry.

     Employees.  As of December 31, 1996, CompX employed approximately 820
persons, of which 260 were in the United States and 560 were in Canada.
Approximately two-thirds of Canadian employees are covered by a new three-year
collective bargaining agreement expiring February 2000.  CompX believes that its
labor relations are satisfactory.

     Regulatory and environmental matters.  CompX's operations are subject to
various federal, state, provincial and local provisions regulating, among other
things, worker and product safety and protection, the discharge of materials
into the environment and other environmental protection matters.  CompX believes
it is in substantial compliance with existing permits and regulations and does
not believe future expenditures to comply with these regulations will be
material.

FAST FOOD - SYBRA, INC.

     Products and operations.  Sybra (Arby's spelled backwards) operated 150
Arby's restaurants at December 31, 1996 clustered in four regions, principally
in Michigan (46 stores), Texas (57), Pennsylvania (27) and Florida (20),
pursuant to licenses with Arby's, Inc.  According to information provided by
Arby's, Sybra is the third-largest franchisee in the Arby's restaurant system
based upon the number of restaurants operated and gross sales.  Arby's is a
well-established fast food restaurant chain and features a menu that highlights
roast beef sandwiches along with a variety of chicken sandwiches and products,
deli sandwiches, potato products and soft drinks.  Sybra's menu selections have
expanded over the past few years whereby roast beef accounts for approximately
two-thirds of sandwich sales compared to 80% five years ago.

     Sybra's 150 Arby's restaurants at the end of 1996 represent a net decrease
of ten stores in the past three years (17 opened; 27 closed), during which
period Sybra also remodeled several of its older stores.  The stores closed in
the past three years all represented underperforming leased units which
generally were closed at the end of their respective lease terms.  Sybra
currently expects a net increase of about three stores in 1997, as it plans to
open six new restaurants and close at least three more underperforming stores.

     The Company has executed agreements involving the sale of Sybra's fast food
operations.  See "Business-General" and Note 13 to the Consolidated Financial
Statements.

     Strategy.  Given the extremely competitive environment in which Sybra
operates, Sybra will continue its strong emphasis on operational details and
routinely review the profit contribution of each restaurant with a view toward
closing those stores which do not meet expectations.

     Properties.  At the end of 1996, approximately 80% of Sybra's 150 Arby's
restaurants were free-standing stores with the remainder located within shopping
malls or strip shopping centers.  Approximately 60% of total locations are
leased, with most leases being on a long-term basis and providing for base
monthly rents plus contingent rents based on sales.  In most cases, Sybra
expects that leases could be renewed or replaced by other leases, although
rental rates may increase.  Contingent rentals based upon various percentages of
gross sales of individual restaurants were less than 10% of Sybra's total rent
expense in each of the past three years.  Sybra also leases corporate or
regional office space in five states.
     Under the terms of Sybra's current Development Agreement with Arby's, Sybra
has been given the exclusive right to open new Arby's units within certain
counties in Pennsylvania, in return for which Sybra has agreed to open a minimum
of 25 new stores during 1997 through 2001 in its existing regions (four in 1997,
six in 1998 and five each in 1999, 2000 and 2001), of which ten must be located
in Pennsylvania.  Sybra currently plans to open six new units in 1997, or two
more than the minimum required.  Sybra does not have any other exclusive
territorial or development agreements which would prohibit others from operating
an Arby's restaurant in the general geographic markets in which Sybra now
operates, although each store is given certain narrow geographical protection
(generally a one to four mile radius) from other Arby's units.

     Food products and supplies.  Sybra and other Arby's franchisees are members
of ARCOP, Inc., a non-profit cooperative purchasing organization which
facilitates negotiations of national contracts for food and distribution, taking
advantage of the larger purchasing requirements of the member franchisees.
Since Arby's franchisees are not required to purchase any food products or
supplies from Arby's, Inc., ARCOP facilitates control over food supply costs and
avoids franchisor conflicts of interest.

     License terms and royalty fees.  Generally, franchise agreements relating
to each restaurant location require that Sybra comply with certain requirements
as to business operations and facility maintenance.  Currently, Sybra pays an
initial franchise fee of $25,000 and a royalty rate equal to 4% of sales for a
standard 20-year license.  Because some of Sybra's licenses were issued at times
when license terms were perpetual and lower royalty rates were in effect, 43% of
Sybra's franchise agreements have no fixed termination date and royalties for
all locations aggregated 2.8% to 2.9% of sales in each of the past three years.
Sybra's average royalty rate would be expected to increase over time if new
stores are opened, older stores are closed and existing 20-year licenses are
renewed at then-prevailing higher royalty rates.  The first of Sybra's 20-year
licenses expires in 2003.

     Advertising and marketing.  Sybra directs about 8% of sales towards
marketing.  All franchisees of Arby's, Inc. must belong to AFA Service
Corporation ("AFA"), a non-profit association of Arby's restaurant operators,
and must contribute a specified portion (currently .7%) of their gross revenues
as dues to AFA.  In return, AFA provides franchisees with creative materials
such as television and radio commercials, ad mats for newspapers, point-of-
purchase graphics and other advertising materials.  Sybra also devotes
approximately 3% of sales to coupon sales promotions, including the direct cost
of discounted food, and newspaper and direct mail inserts, and approximately 4%
of its restaurant sales to local advertising.

     Competition and seasonality.  The fast food industry is extremely
competitive and subject to pressures from major business cycles and competition
from many established and new restaurant concepts.  According to industry data,
there is a significant disparity in the revenues and number of restaurants
operated by the largest restaurant systems and the Arby's system.  As a result,
some organizations and franchised restaurant systems have significantly greater
resources for advertising and marketing than the Arby's restaurant system or
Sybra, which is an important competitive factor.  Sybra's response to these
competitive factors has been to cluster its stores in certain geographic areas
where it can achieve economies of scale in advertising and other activities.

     Operating results of Sybra's restaurants have been affected by both retail
shopping patterns and weather conditions.  Accordingly, Sybra has experienced
its most favorable results during the fourth calendar quarter (which includes
the holiday shopping season) and its least favorable results during the first
calendar quarter (which includes winter weather that can be adverse in certain
markets).
     Employees.  As of December 31, 1996, Sybra had approximately 3,700
employees, of which 3,100 were part-time employees.  Approximately 3,600
employees work in Sybra's restaurants with the remainder in its corporate  or
regional offices.  Employees are not covered by collective bargaining agreements
and Sybra believes that its employee relations are satisfactory.

     Governmental regulation.  A significant portion of Sybra's restaurant
employees work on a part-time basis and are paid at rates related to the minimum
wage rate.  Restaurant labor costs currently approximate 29% of sales.  The two-
step, 90-cent increase in the minimum wage rate which became effective October
1, 1996 increased Sybra's labor costs.  Sybra concurrently implemented certain
price increases to offset the impact of the first step of the October 1, 1996
wage rate increase.  Any further increase in the minimum wage rate or
legislation requiring mandatory medical insurance benefits to part-time
employees would further increase Sybra's labor costs.  Although Sybra's
competitors would likely experience similar increases, there can be no assurance
that further increases in sales prices can be implemented to offset future
increases in these costs.

     Various federal, state and local laws affect Sybra's restaurant business,
including laws and regulations relating to minimum wages, overtime and other
working conditions, health, sanitation, employment and safety standards and
local zoning ordinances.  Sybra has not experienced and does not anticipate
unusual difficulties in complying with such laws and regulations.

DISCONTINUED OPERATIONS - MEDITE CORPORATION

     In September 1996, Medite determined to dispose of substantially all of its
assets in three separate transactions.  Medite sold its U.S. timber and
timberlands in October 1996, its Irish MDF subsidiary in November 1996 and its
Oregon MDF facility in February 1997.  Medite has also determined to permanently
close its two small Oregon timber conversion facilities.  The stud lumber
facility, closed in December 1996, is being dismantled and Medite will sell the
salvageable machinery and equipment.  Medite continues to operate the veneer
facility on a short-term basis and expects to either sell or close this facility
in 1997.  After the sale of the Oregon MDF facility and the sale or closure of
the two Oregon timber conversion facilities, Medite will have no remaining
operating assets.  See Note 14 to the Consolidated Financial Statements.

     At December 31, 1996, Medite employed approximately 270 persons in the U.S.
Following the sale of the Oregon MDF facility and the sale or closure of the
veneer facility, Medite will have a nominal number of employees remaining.

FOREIGN OPERATIONS:

     CompX currently has certain operations and assets located in Canada.  Prior
to November 1996, Medite had certain operations and assets located in Ireland.
See Note 3 to the Consolidated Financial Statements.  Foreign operations are
subject to, among other things, currency exchange rate fluctuations and the
Company's results of operations have in the past been both favorably and
unfavorably affected by fluctuations in currency exchange rates.  See Item 7 -
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

     CompX's Canadian subsidiary has, from time-to-time, entered into short-term
forward currency contracts to mitigate exchange rate fluctuation risk for a
portion of its sales denominated in various currencies.  No such contracts were
outstanding during 1996.

ITEM 2.   PROPERTIES

     The principal properties used in the operations of the Company are
described in the applicable business sections of Item 1 - "Business."  The
Company believes that its facilities are adequate and suitable for their
respective uses.

ITEM 3.   LEGAL PROCEEDINGS

     The information required by this Item is contained in Note 13 to the
Consolidated Financial Statements ("Commitments and contingencies -- Legal
proceedings and -- Environmental matters,"), which information is incorporated
herein by reference.

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

     Omitted pursuant to the General Instructions of Form 10-K.


                                    PART II


ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     All of Valcor's common stock is held by Valhi.  The Indenture governing
Valcor's 9 5/8% Senior Notes Due 2003 generally limits dividends or other
distributions to Valhi to 50% of the Company's consolidated net income, as
defined.  Valcor currently expects to continue to pay the dividends as permitted
by the Indenture, however declaration and payment of future dividends and the
amount thereof is dependent upon the Company's results of operations, financial
condition, cash requirements for its businesses and other factors deemed
relevant by the Company's Board of Directors.  See Note 5 to the Consolidated
Financial Statements.  At December 31, 1996, no amounts were available for
dividends to Valhi.

ITEM 6.  SELECTED FINANCIAL DATA

     The following selected consolidated financial data should be read in
conjunction with the Consolidated Financial Statements and Item 7 -
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."  Discontinued operations represent the results of operations of
Medite Corporation.  See Note 14 to the Consolidated Financial Statements.
<TABLE>
<CAPTION>
                                                                       YEARS ENDED DECEMBER 31,

                                                                      1992     1993     1994     1995     1996

                                                                            (IN MILLIONS)
<S>                                                                 <C>        <C>      <C>     <C>      <C>
INCOME STATEMENT DATA:
  Net sales:
    Component products                                              $ 54.0     $ 64.4  $ 70.0   $ 80.2   $ 88.7
    Fast food                                                        103.8      111.6   115.5    115.4    116.0


                                                                    $157.8     $176.0  $185.5   $195.6   $204.7



  Operating income:
    Component products                                              $ 10.7     $ 17.5  $ 20.9   $ 19.9   $ 22.1
    Fast food                                                          8.5        9.7     9.0      7.5      8.9


                                                                      19.2       27.2    29.9     27.4     31.0
  Other, net                                                            .1        (.1)    (.1)     (.3)     1.2
  Interest expense                                                    (2.0)      (3.3)  (11.1)   (11.8)   (11.7)


      Income before income taxes                                      17.3       23.8    18.7     15.3     20.5
  Income taxes                                                         6.8       10.4     5.9      6.4      8.5


  Income from continuing operations                                   10.5       13.4    12.8      8.9     12.0
  Discontinued operations                                             14.6       14.9    18.3     10.6     39.0
  Accounting changes                                                    .9        -       -        -        -

      Net income                                                    $ 26.0     $ 28.3  $ 31.1   $ 19.5   $ 51.0




  Cash dividends (1)                                                $ 21.1     $148.9  $  9.6   $  8.3   $   .4





BALANCE SHEET DATA (AT YEAR END):
  Current assets                                                    $ 69.0     $ 70.6  $ 90.6   $ 94.0   $177.8
  Total assets                                                       256.0      272.5   320.7    327.6    289.0
  Current liabilities                                                 50.4       46.7    54.8     56.1     73.1
  Long-term debt                                                      45.1      185.7   201.8    198.6    108.5
  Stockholder's equity                                               134.7       13.9    34.9     44.2     94.4

</TABLE>

[FN]
(1)  Dividends in 1993 include $135 million paid from proceeds of new long-term
    borrowings.
ITEM 7.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION AND
       RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

OVERVIEW

     The Company reported income from continuing operations of $12.7 million in
1994, $8.9 million in 1995 and $12 million in 1996.  Discontinued operations
represent the results of operations of Medite Corporation, and in 1996 includes
(i) an aggregate fourth quarter $49 million after-tax gain on disposal ($75
million pre-tax) related principally to the sale of Medite's U.S. timber and
timberland assets and its Irish MDF subsidiary and (ii) a $15 million first
quarter after-tax charge ($24 million pre-tax) related to closure of its New
Mexico MDF operations.  See Note 14 to the Consolidated Financial Statements.

     The statements in this Annual Report on Form 10-K relating to matters that
are not historical facts including, but not limited to, matters found in this
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," are forward-looking statements that involve risks and
uncertainties.  Factors that could cause actual future results to differ
materially from those expressed in such forward-looking statements include, but
are not limited to, future supply and demand for the Company's products
(including cyclicality thereof), general economic conditions, competitive
products, customer and competitor strategies, the impact of pricing and
production decisions, environmental matters, government regulations and possible
changes therein, the ultimate resolution of pending litigation and possible
future litigation, completion of pending asset/business unit dispositions and
other risks and uncertainties discussed elsewhere herein.

COMPONENT PRODUCTS
<TABLE>
<CAPTION>
                                                YEARS ENDED DECEMBER 31,                    % CHANGE

                                           1994           1995           1996          1994-95         1995-96

                                               (IN MILLIONS)
<S>                                        <C>            <C>           <C>             <C>             <C>
Net sales                                  $70.0         $80.2          $88.7           +15%            +11%
Operating income                            20.9          19.9           22.1           - 5%            +11%

Operating income margin                      30%           25%            25%

</TABLE>


     Sales increased in both 1995 and 1996 compared to the respective prior year
due primarily to higher volumes in the office workstation component and drawer
slide lines.  Drawer slide sales increased 18% in 1996 compared to 1995 and
workstation component products were up 14%.  Both office workstation components
and drawer slide lines reported new highs in sales in each of the past three
years.  Lock volumes from a government contract completed in early 1995 have
only been partially replaced, and consequently lock sales declined about 5% in
1996 compared to 1995.  The Company signed a new $650,000 contract with the same
government agency in December 1996, with shipments scheduled to be delivered in
the first nine months of 1997.  Operating income margins in 1995 were impacted
by higher raw material costs, as competitive pressures prevented full recovery
through higher selling prices, as well as costs associated with integrating the
operations of a Canadian competitor acquired in August 1995.

     The new three-year collective bargaining agreement effective February 1997
covering CompX's Canadian employees provides for, among other things, wage rate
increases of 2.5% to 3% per year.

     About 60% of the Company's component products sales are generated by its
Canadian operations.  About two-thirds of these Canadian-produced sales are
denominated in U.S. dollars while substantially all of the related costs are
incurred in Canadian dollars.  Consequently, relative changes in the U.S.
dollar/Canadian dollar exchange rate impact operating results.  Fluctuations in
the value of the U.S. dollar relative to the Canadian dollar favorably impacted
operating results in 1995 compared with 1994 and unfavorably impacted 1996
operating results compared with 1995.

FAST FOOD
<TABLE>
<CAPTION>
                                                YEARS ENDED DECEMBER 31,                    % CHANGE

                                           1994           1995           1996          1994-95         1995-96

                                               (IN MILLIONS)
<S>                                        <C>            <C>           <C>              <C>           <C>
Net sales                                  $115.5        $115.4         $116.0          - 0%           + 1%
Operating income                              9.0           7.5            8.9          -17%           +18%

Operating income margin                        8%            7%             8%

Arby's units operated:
  At end of year                              162            158            150         - 2%           - 5%
  Average during the year                     159            158            152         - 1%           - 4%

</TABLE>

     Comparable store sales increased 2% in 1996 compared to 1995.  Operating
income and margins improved due to successful marketing promotions, reduced
training and recruiting costs associated with the slower rate of opening new
stores in 1996 and closure of certain under-performing units.  Excluding the
effect of a 53rd week in 1994, comparable store sales were relatively flat in
1995 compared to 1994, and margins in 1995 were adversely impacted by higher
labor costs and discounts associated with competitive promotions.

     A significant portion of Sybra's restaurant employees work on a part-time
basis and are paid at rates related to the minimum wage rate.  Restaurant labor
costs currently approximate 29% of sales. The two-step, 90-cent increase in the
minimum wage rate which became effective October 1, 1996 increased Sybra's labor
costs.  Sybra concurrently implemented certain price increases to offset the
impact of the first step of the October 1, 1996 wage rate increase.  Any further
increase in the minimum wage rate or legislation requiring mandatory medical
insurance benefits to part-time employees would further increase Sybra's labor
costs.  Although Sybra's competitors would likely experience similar increases,
there can be no assurance that further increases in sales prices can be
implemented to offset future increases in these costs.

     Sybra opened 17 new stores during the past three years (one in 1996).
Sybra continually evaluates the profitability of its individual restaurants,
closed 27 stores during the past three years (9 in 1996) and intends to continue
to close unprofitable stores when appropriate.  Costs associated with store
closings were $1.4 million in 1994, $.9 million in 1995 and $1.2 million in
1996.  Sybra currently expects a net increase of about three stores in 1997 as
it plans to open six new stores and close at least three underperforming units.
The first new unit for 1997 is currently under construction and is scheduled to
open by the end of the first quarter.
     The Company has executed agreements involving the sale of its fast food
operations conducted by Sybra.  See Note 13 to the Consolidated Financial
Statements.  If completed, the transactions are expected to close in the second
quarter of 1997, at which time the Company estimates it would report a pre-tax
gain on disposal in excess of $24 million.  There can be no assurance that any
such transactions will be completed.

OTHER

     Interest expense charged to continuing operations was $11.1 million in
1994, $11.8 million in 1995 and $11.7 million in 1996.   At December 31, 1996,
approximately $109 million of the Company's indebtedness (principally the Valcor
Senior Notes) bears interest at fixed rates averaging 9.6%.  The average
interest rate on approximately $1 million of floating rate subsidiary borrowings
outstanding at December 31, 1996 was 6.9%, compared to average variable interest
rates of 7.5% at December 31, 1995 and 7.8% at December 31, 1994.

     Income tax rates vary by jurisdiction (country and/or state), and relative
changes in the geographic source of the Company's pre-tax earnings, and in the
related availability and usage of foreign tax credits, can result in
fluctuations in the Company's consolidated effective income tax rate.  In
addition, in 1995 the effective income tax rate was favorably impacted by a $1
million reduction in accumulated deferred income taxes resulting from enactment
of a new U.S./Canadian tax treaty.  See Note 11 to the Consolidated Financial
Statements.

     Discontinued operations represent the results of operations of Medite
Corporation.  See Note 14 to the Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES:

     Cash flows from operating activities. Cash flow from operating activities
attributable to continuing operations before changes in assets and liabilities
was $21 million in 1994, $18 million in 1995 and $21 million in 1996.  Changes
in assets and liabilities used cash in each of the past three years and resulted
primarily from the timing of production, sales and purchases.

     Cash flows from investing activities.  Capital expenditures during the past
three years aggregated $36.6 million.  Capital expenditures in 1996 were lower
than in 1995 and 1994 due primarily to lower spending by Sybra for new stores.
Capital expenditures for CompX and Sybra are estimated to increase to
approximately $14 million in 1997 due primarily to higher spending by Sybra for
new stores, and are expected to be financed primarily from the respective
subsidiary's operations or credit facilities.

     CompX acquired the assets of a Canadian workstation and drawer slide
competitor for approximately $6 million in 1995.  The Company continues to
explore additional expansion and/or acquisition opportunities for its component
products business.

     Cash flows from financing activities.  Net borrowings (repayments) of
indebtedness in each of the past three years relate primarily to changes in the
outstanding balance of Sybra's revolving bank credit facilities, primarily in
relation to Valcor's overall cash management activities.  At December 31, 1996,
unused credit available under existing CompX and Sybra credit facilities
approximated $5 million and $28 million, respectively.

     Cash flows from discontinued operations.  Condensed cash flow data for
Medite is presented in Note 14 to the Consolidated Financial Statements.  Under
the terms of the Internal Revenue Code and similar state regulations regarding
the timing of estimated tax payments, the Company is not required to pay income
taxes related to Medite's 1996 sales of its timber and timberlands and Irish MDF
subsidiary to such authorities until 1997.  At that time, the payment of such
income taxes (approximately $38 million) will be shown as a reduction in cash
flows from operating activities even though the pre-tax proceeds from
dispositions of such assets are shown as part of cash flows from investing
activities.

     Medite has made certain representations and warranties to the purchasers of
its timber and timberlands, Irish MDF subsidiary  and Oregon MDF facility
concerning, among other things, the assets sold.  Such representations are
customary in transactions of these types.  Medite has agreed to indemnify the
three purchasers for up to an aggregate of $6.5 million for certain breaches of
these representations and warranties.  As part of the transactions, Valhi has
agreed to guarantee Medite's indemnification obligations.  The Company does not
currently expect to be required to perform under any of these indemnification
obligations.

     Other.  At December 31, 1996, assets held for sale consist principally of
the land, property and equipment from Medite's stud lumber facility closed in
December 1996 and land from another former Medite facility.  The stud lumber
facility is being dismantled, and Medite will sell the salvageable machinery and
equipment in 1997.  Medite also currently expects to dispose of the land from
the other former facility in 1997 for cash consideration approximating its net
carrying value.

     Valcor's continuing operations are conducted through its subsidiaries
(CompX and Sybra).  Accordingly, Valcor's long-term ability to meet its parent
company level obligations (principally debt service on the Senior Notes) is
largely dependent on the receipt of dividends or other distributions from its
subsidiaries.  Various subsidiary credit agreements contain customary
limitations on the payment of dividends, typically a percentage of net income or
cash flow.  Valcor has not guaranteed any indebtedness of its subsidiaries.  See
Note 5 to the Consolidated Financial Statements.  The Company believes that
future distributions from its subsidiaries, together with the after-tax proceeds
of the Medite asset sales, will be sufficient to enable Valcor to meet its
obligations.  Valcor dividends to Valhi are generally limited to 50% of
consolidated net income, as defined in the Senior Notes Indenture.  At December
31, 1996, no amounts were available for dividends to Valhi.

     The Company routinely compares its liquidity requirements and alternative
uses of capital against the estimated future cash flows to be received from its
subsidiaries and the estimated sales value of those units.  As a result of this
process, the Company may in the future seek to raise additional capital,
refinance or restructure indebtedness, repurchase indebtedness in the market or
otherwise, modify its dividend policy, consider the sale of interests in
subsidiaries, business units or other assets, or take a combination of such
steps or other steps, to increase liquidity, reduce indebtedness and fund future
activities.  The Company may also evaluate acquisitions of interests in, or
combinations with, companies related to its current businesses.  The Company and
its subsidiaries intend to consider such acquisition activities in the future
and, in connection with this activity, may consider issuing additional equity
securities and increasing the indebtedness of the Company and its subsidiaries.
In this regard, the Valcor Senior Notes Indenture contains limitations on the
ability of the Company and its subsidiaries to incur indebtedness or hold
noncontrolling interests in business units.  See Note 5 to the Consolidated
Financial Statements.

     The after-tax proceeds from the disposition of Medite (including amounts to
be received in 1997 following the disposition of Medite's remaining operating
assets), net of repayments of Medite's debt, is available for Valcor's general
corporate purposes, subject to compliance with certain covenants contained in
the Valcor Senior Note Indenture.  At December 31, 1996, Valcor had cash, cash
equivalents and demand loans to subsidiaries of approximately $140 million, a
portion of which will be used to pay cash income taxes in 1997 related to
Medite's 1996 asset disposals as discussed above.  Also under the terms of the
Indenture, Valcor is required to tender for a portion of the Valcor Notes, at
par, to the extent that a specified amount of these proceeds is not used to
either permanently paydown senior indebtedness of Valcor or its subsidiaries or
invest in related businesses, both as defined in the Indenture, within one year
of disposition.  While Valcor is not yet required to execute a tender offer
related to Medite's asset dispositions, on March 20, 1997, Valcor announced it
had initiated a tender offer whereby Valcor would purchase up to $86.7 million
principal amount of Valcor Notes on a pro-rata basis, at par value, in
satisfaction of the covenant contained in the Indenture.  Pursuant to its terms,
the tender offer will expire on April 24, 1997, unless extended by Valcor.  The
amount of Valcor Notes which will ultimately be purchased by Valcor pursuant to
the tender offer is dependent upon the amount of Valcor Notes properly tendered.
Consequently, there can be no assurance as to the amount of Valcor Notes which
will ultimately be purchased by Valcor.  The net proceeds from any disposition
of the Company's fast food operations, net of repayments of Sybra's bank
indebtedness, would similarly be available for Valcor's general corporate
purposes.  If the disposition of the Company's fast food operations is completed
and none of those net proceeds are used as provided by the Indenture, a portion
of the Notes would be subject to a subsequent tender offer.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The information called for by this Item is contained in a separate section
of this Annual Report.  See "Index of Financial Statements and Schedules" on
page F-1.

ITEM 9.   CHANGES  IN AND  DISAGREEMENTS WITH  ACCOUNTANTS ON  ACCOUNTING  AND
          FINANCIAL DISCLOSURE

          None.
                                    PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Omitted pursuant to the General Instructions of Form 10-K.

ITEM 11.  EXECUTIVE COMPENSATION

     Omitted pursuant to the General Instructions of Form 10-K.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Omitted pursuant to the General Instructions of Form 10-K.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Omitted pursuant to the General Instructions of Form 10-K.



                                    PART IV


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

 (a) and (d)Financial Statements and Schedules

               The consolidated financial statements and schedules listed on the
               accompanying Index of Financial Statements and Schedules (see
               page F-1) are filed as part of this Annual Report.
 (b)           Reports on Form 8-K

               Reports on Form 8-K filed for the quarter ended December 31,
               1996.

               October 25, 1996    - Reported Items 5 and 7.
               October 31, 1996    - Reported Items 5 and 7.
               November 20, 1996   - Reported Items 5 and 7.
               December 31, 1996   - Reported Items 2 and 7.

 (c)           Exhibits

               Included as exhibits are the items listed in the Exhibit Index.
               Valcor will furnish a copy of any of the exhibits listed below
               upon payment of $4.00 per exhibit to cover the costs to Valcor of
               furnishing the exhibits.  Instruments defining the rights of
               holders of long-term debt issues which do not exceed 10% of
               consolidated total assets will be furnished to the Commission
               upon request.


ITEM NO.                                 EXHIBIT INDEX


 3.1               Certificate of Incorporation of the Registrant -
                   incorporated by reference to Exhibit 3.1 to a
                   Registration Statement on Form S-1 (No. 33-63044)
                   filed by the Registrant.

 3.2               By-Laws of the Registrant - incorporated by reference
                   to Exhibit 3.2 to a Registration Statement on Form S-1
                   (No. 33-63044) filed by the Registrant.

 4.1               Indenture dated November 1, 1993 governing the Valcor,
                   Inc. 9 5/8% Senior Notes Due 2003, including form of
                   Note - incorporated by reference to Exhibit 4.1 of a
                   Quarterly Report on Form 10-Q  for the quarter ended
                   September 30, 1993 filed by the Registrant (File No.
                   33-63044).

10.1               Form of Intercorporate Services Agreement between the
                   Registrant and Valhi - incorporated by reference to
                   Exhibit 10.1 to a Registration Statement on Form S-1
                   (No. 33-63044) filed by the Registrant.

10.2               Form of License Agreement between Arby's, Inc. and
                   Sybra, Inc. - incorporated by reference to Exhibit
                   10.5 to a Registration Statement on Form S-1 (No. 33-
                   63044) filed by the Registrant.

10.3               Development Agreement dated November 13, 1996 between
                   Arby's, Inc. and Sybra, Inc.

10.4               Asset Purchase Agreement between Medite Corporation
                   and Rogue Resources LLC dated October 7, 1996 -
                   incorporated by reference to Exhibit 10.1 of the
                   Registrant's Quarterly Report on Form 10-Q (File No.
                   33-63044) for the quarter ended September 30, 1996.

10.5               Share Subscription and Redemption Agreement among
                   Medite Corporation, Willamette Industries, Inc. and
                   Medford International Holdings dated November 4, 1996
                   - incorporated by reference to Exhibit 10.1 of the
                   Registrant's Quarterly Report on Form 10-Q (File No.
                   33-63044) for the quarter ended September 30, 1996.

10.6               Asset Purchase Agreement between Medite Corporation
                   and SierraPine, a California limited partnership,
                   dated January 31, 1997.

10.7               Asset Purchase Agreement between Sybra, Inc., Valcor,
                   Inc. and U.S. Restaurant Properties Master L.P. dated
                   December 23, 1996.

10.8               Stock Purchase Agreement between Valcor, Inc. and
                   I.C.H. Corporation dated February 7, 1997.

27.1               Financial Data Schedule for the year ended December
                   31, 1996.



                                   SIGNATURES


     Pursuant to the requirements of Section 13 or 15(d) 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.

                                   VALCOR, INC.
                                   (Registrant)


                                   By: /s/ Harold C. Simmons

                                   Harold C. Simmons, March 20, 1997
                                   (President)



     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:



 /s/ Harold C. Simmons                    /s/ Glenn R. Simmons

Harold C. Simmons, March 20, 1997       Glenn R. Simmons, March 20, 1997
(Chairman of the Board, President and   (Vice Chairman of the Board)
 Chief Executive Officer)


 /s/ Robert W. Singer                    /s/ Bobby D. O'Brien

Robert W. Singer, March 20, 1997        Bobby D. O'Brien, March 20, 1997
(Vice President and Director)           (Vice President,
                                    Principal Financial Officer)


                                    /s/ Gregory M. Swalwell

                                   Gregory M. Swalwell, March 20, 1997
                                   (Controller,
                                    Principal Accounting Officer)


                          ANNUAL REPORT ON FORM 10-K

                           ITEMS 8, 14(A) AND 14(D)

                 INDEX OF FINANCIAL STATEMENTS AND SCHEDULES


FINANCIAL STATEMENTS                                                 PAGE

  Reports of Independent Accountants                                F-2/F-3

  Consolidated Balance Sheets - December 31, 1995 and 1996          F-4/F-5

  Consolidated Statements of Income -
   Years ended December 31, 1994, 1995 and 1996                     F-6

  Consolidated Statements of Stockholder's Equity -
   Years ended December 31, 1994, 1995 and 1996                     F-7

  Consolidated Statements of Cash Flows -
   Years ended December 31, 1994, 1995 and 1996                     F-8/F-9

  Notes to Consolidated Financial Statements                        F-10/F-27



FINANCIAL STATEMENT SCHEDULES

  Reports of Independent Accountants                                S-1/S-2

  Schedule I  - Condensed financial information of Registrant       S-3/S-7

  Schedule II - Valuation and qualifying accounts                   S-8


     Schedules III and IV are omitted because they are not applicable.
                      REPORT OF INDEPENDENT ACCOUNTANTS



To the Stockholder and Board of Directors of Valcor, Inc.:

     We have audited the accompanying consolidated balance sheets of Valcor,
Inc. and Subsidiaries as of December 31, 1995 and 1996, and the related
consolidated statements of income, stockholder's equity and cash flows for each
of the three years in the period ended December 31, 1996.  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based on
our audits.  We did not audit the financial statements of Medite Corporation as
of December 31, 1995 and for each of the two years in the period ended December
31, 1995, which constituted approximately three-fifths of consolidated assets as
of December 31, 1995, and whose results of operations are reported as
discontinued operations in the accompanying consolidated statements of income.
These statements were audited by another auditor whose report thereon has been
furnished to us, and our opinion, insofar as it relates to such amounts included
for Medite, is based solely upon their report.

     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
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of another auditor provide a
reasonable basis for our opinion.
     In our opinion, based upon our audits and the report of another auditor,
the financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Valcor, Inc. as of December 31,
1995 and 1996, and the consolidated results of its operations and its cash flows
for each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.





                                                      COOPERS & LYBRAND L.L.P.

Dallas, Texas
March 7, 1997
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Stockholder of Medite Corporation:

     We have audited the consolidated balance sheet of Medite Corporation as of
December 31, 1995, and the related consolidated statements of income, redeemable
preferred stock and common stockholder's equity and cash flows for each of the
two years in the period ended December 31, 1995 (not presented separately
herein).  These financial statements are the responsibility of the Company's
management.  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
management, 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 consolidated financial statements (not presented
separately herein) referred to above present fairly, in all material respects,
the consolidated financial position of Medite Corporation as of December 31,
1995, and the consolidated results of its operations and its cash flows for each
of the two years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.


                                                           ARTHUR ANDERSEN LLP

Portland, Oregon,
January 27, 1996
                         VALCOR, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

                           DECEMBER 31, 1995 AND 1996

                       (IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
              ASSETS
                                                                                          1995           1996

<S>                                                                                      <C>            <C>
Current assets:
  Cash and cash equivalents                                                              $ 17,618       $136,054
  Accounts receivable, net of allowance of $800
   and $274                                                                                30,949         15,535
  Receivable from affiliates                                                                3,538            178
  Inventories                                                                              36,385         18,222
  Prepaid expenses                                                                          3,105          2,667
  Deferred income taxes                                                                     2,409          5,160


      Total current assets                                                                 94,004        177,816


Other assets:
  Timber and timberlands                                                                   53,099           -
  Intangible assets                                                                        18,145         16,272
  Other                                                                                     8,630          7,006


      Total other assets                                                                   79,874         23,278


Property and equipment:
  Land                                                                                     22,290         19,537
  Buildings                                                                                50,007         38,572
  Equipment                                                                               184,240        103,005
  Construction in progress                                                                  8,393          2,492

                                                                                          264,930        163,606
  Less accumulated depreciation                                                           111,216         75,684


      Net property and equipment                                                          153,714         87,922


                                                                                         $327,592       $289,016



</TABLE>

                         VALCOR, INC. AND SUBSIDIARIES

                    CONSOLIDATED BALANCE SHEETS (CONTINUED)

                           DECEMBER 31, 1995 AND 1996

                       (IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
   LIABILITIES AND STOCKHOLDER'S EQUITY
                                                                                          1995           1996

<S>                                                                                      <C>            <C>
Current liabilities:
  Current maturities of long-term debt                                                   $ 12,383       $  1,224
  Accounts payable                                                                         19,933         14,248
  Accrued liabilities                                                                      21,470         25,566
  Payable to affiliates                                                                        17         30,967
  Income taxes                                                                              2,275          1,070


      Total current liabilities                                                            56,078         73,075


Noncurrent liabilities:
  Long-term debt                                                                          198,584        108,458
  Deferred income taxes                                                                    24,461          8,717
  Other                                                                                     4,245          4,376


      Total noncurrent liabilities                                                        227,290        121,551


Stockholder's equity:
  Preferred stock, $1 par value; 1,000 shares
   authorized; none issued                                                                   -              -
  Common stock, $1 par value; 1,000 shares
   authorized, issued and outstanding                                                           1              1
  Additional paid-in capital                                                                  520            520
  Retained earnings                                                                        45,871         96,524
  Adjustments:
    Pension liabilities                                                                    (2,198)        (2,533)
    Currency translation                                                                       30           (122)


      Total stockholder's equity                                                           44,224         94,390


                                                                                         $327,592       $289,016



</TABLE>


[FN]
Commitments and contingencies (Notes 13 and 14)

                         VALCOR, INC. AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF INCOME

                  YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

                                 (IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                          1994*          1995*          1996

<S>                                                                      <C>            <C>             <C>
Revenues and other income:
  Net sales                                                              $185,522       $195,608        $204,717
  Other income, net                                                         1,279          1,045           2,237


                                                                          186,801        196,653         206,954

Costs and expenses:
  Cost of sales                                                           142,807        153,755         159,334
  Selling, general and administrative                                      14,159         15,741          15,482
  Interest                                                                 11,124         11,802          11,680


                                                                          168,090        181,298         186,496


    Income before income taxes                                             18,711         15,355          20,458

Provision for income taxes                                                  5,960          6,416           8,443


    Income from continuing operations                                      12,751          8,939          12,015

Discontinued operations                                                    18,347         10,607          39,021


    Net income                                                           $ 31,098       $ 19,546        $ 51,036


</TABLE>


















[FN]
* Reclassified.
                                       VALCOR, INC. AND SUBSIDIARIES

                              CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY

                                YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

                                               (IN THOUSANDS)
<TABLE>
<CAPTION>


                                                                  ADDITIONAL
                                                     COMMON        PAID-IN           RETAINED
                                                     STOCK         CAPITAL           EARNINGS

<S>                                                     <C>             <C>               <C>
Balance at December 31, 1993                            $1              $520              $13,095

Net income                                               -                -                31,098
Dividends                                                -                -                (9,570)
Other, net                                               -                -                  -


Balance at December 31, 1994                             1               520               34,623

Net income                                               -                -                19,546
Dividends                                                -                -                (8,298)
Other, net                                               -                -                  -


Balance at December 31, 1995                             1               520               45,871

Net income                                               -                -                51,036
Dividends                                                -                -                  (383)
Other, net                                               -                -                  -


Balance at December 31, 1996                            $1              $520              $96,524



</TABLE>




<TABLE>
<CAPTION>

                                                           ADJUSTMENTS

                                                                                              TOTAL
                                                      PENSION           CURRENCY           STOCKHOLDER'S
                                                    LIABILITIES        TRANSLATION            EQUITY

<S>                                                       <C>                 <C>                 <C>
Balance at December 31, 1993                              $  -                $ 235               $13,851

Net income                                                   -                  -                  31,098
Dividends                                                    -                  -                  (9,570)
Other, net                                                   -                 (529)                 (529)


Balance at December 31, 1994                                 -                 (294)               34,850

Net income                                                   -                  -                  19,546
Dividends                                                    -                  -                  (8,298)
Other, net                                                 (2,198)              324                (1,874)


Balance at December 31, 1995                               (2,198)               30                44,224

Net income                                                   -                  -                  51,036
Dividends                                                    -                  -                    (383)
Other, net                                                   (335)             (152)                 (487)


Balance at December 31, 1996                              $(2,533)            $(122)              $94,390




</TABLE>

                        VALCOR, INC. AND SUBSIDIARIES

                    CONSOLIDATED STATEMENTS OF CASH FLOWS

                 YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

                                (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                        1994*           1995*           1996

<S>                                                                     <C>             <C>             <C>
Cash flows from operating activities:
  Net income                                                            $ 31,098        $ 19,546        $ 51,036
  Depreciation, depletion and amortization                                 7,681           8,234           8,456
  Deferred income taxes                                                     (599)           (714)         (1,270)
  Discontinued operations                                                (18,347)        (10,607)        (39,021)
  Other, net                                                               1,570           1,481           1,610

                                                                          21,403          17,940          20,811

  Medite, net                                                             33,096          18,464          24,882
  Change in assets and liabilities:
    Accounts receivable                                                   (1,198)         (1,898)         (1,551)
    Inventories                                                           (2,244)           (125)         (1,678)
    Accounts payable and accrued liabilities                               1,915            (269)          1,209
    Accounts with affiliates                                              (3,014)          1,238            (755)
    Other, net                                                            (1,659)           (129)         (1,074)


      Net cash provided by operating
       activities                                                         48,299          35,221          41,844


Cash flows from investing activities:
  Capital expenditures                                                   (14,244)        (13,989)         (8,382)
  Purchase of business unit                                                 -             (5,982)           -
  Medite, net                                                            (32,728)        (12,527)        165,935
  Other, net                                                                 563             215             169
      Net cash provided (used) by investing
       activities
                                                                         (46,409)        (32,283)        157,722


Cash flows from financing activities:
  Indebtedness:
    Borrowings                                                            37,203          43,677          28,758
    Principal payments                                                   (45,982)        (33,388)        (45,359)
  Dividends                                                               (9,570)         (8,298)           (383)
  Medite, net                                                             29,772         (10,940)        (64,018)


      Net cash provided (used) by financing
       activities                                                         11,423          (8,949)        (81,002)


Net cash provided (used)                                                $ 13,313        $ (6,011)       $118,564




</TABLE>

                        VALCOR, INC. AND SUBSIDIARIES

              CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                 YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

                                (IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                        1994*          1995*           1996

<S>                                                                     <C>            <C>             <C>
Cash and cash equivalents:
  Net increase (decrease) from operating,
   investing and financing activities                                   $13,313        $(6,011)        $118,564
  Currency translation                                                     (420)           373             (128)

                                                                         12,893         (5,638)         118,436
  Balance at beginning of year                                           10,363         23,256           17,618


  Balance at end of year                                                $23,256        $17,618         $136,054




Supplemental disclosures - cash paid for:
  Interest, net of amounts capitalized:
    Continuing operations                                               $10,612        $11,406         $ 11,363
    Discontinued operations                                               5,824          8,010            8,014
    Eliminations                                                           (117)          (303)            (239)


                                                                        $16,319        $19,113         $ 19,138



  Income taxes:
    Continuing operations, net                                          $ 9,836        $ 5,777         $ 10,734
    Discontinued operations, net                                          9,135          6,461             (100)

                                                                        $18,971        $12,238         $ 10,634



</TABLE>
















* Reclassified.
                        VALCOR, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1 -  ORGANIZATION AND BASIS OF PRESENTATION:

     Valcor, Inc., a Delaware corporation, is a wholly-owned subsidiary of
Valhi, Inc. (NYSE: VHI).  Valcor was formed in 1993 at which time Valhi
contributed to Valcor the stock of the Company's subsidiaries; CompX
International Inc., formerly National Cabinet Lock, Inc. (component products);
Sybra, Inc. (fast food); and Medite Corporation (building products).  All of
Valcor's outstanding common stock is held by Valhi.  Contran Corporation holds,
directly or through subsidiaries, approximately 91% of Valhi's outstanding
common stock.  Substantially all of Contran's outstanding voting stock is held
by trusts established for the benefit of the children and grandchildren of
Harold C. Simmons, of which Mr. Simmons is the sole trustee.  Mr. Simmons, the
Chairman of the Board and Chief Executive Officer of Valcor, Valhi and Contran,
may be deemed to control each of such companies.

     Prior period statements of income and cash flows have been reclassified to
present Medite Corporation as discontinued operations.  See Note 14.

NOTE 2 -  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     Principles of consolidation and management's estimates.  The consolidated
financial statements include the accounts of Valcor and its wholly-owned
subsidiaries (collectively, the "Company").  All material intercompany accounts
and balances have been eliminated.  The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amount of revenues and expenses
during the reporting period.  Ultimate actual results may, in some instances,
differ from previously estimated amounts.

     Translation of foreign currencies.  Assets and liabilities of subsidiaries
whose functional currency is deemed to be other than the U.S. dollar are
translated at year-end rates of exchange and revenues and expenses are
translated at average exchange rates prevailing during the year.  Resulting
translation adjustments, net of related deferred income tax effects, are
accumulated in the currency translation adjustments component of stockholder's
equity.  Currency transaction gains and losses are recognized in income
currently.

     Cash and cash equivalents.  Cash equivalents include bank time deposits and
government and commercial notes and bills with original maturities of three
months or less.

     Inventories and cost of sales.  Inventories are stated at the lower of cost
or market.  The last-in, first-out method is used to determine the cost of
approximately 40% of total inventories at December 31, 1995 and 1996.  Other
inventory costs are generally based on average cost or the first-in, first-out
method.

     Timber and timberlands and depletion.  Timber and timberlands were stated
at cost less accumulated depletion.  Fertilization and other forest management
costs were expensed; costs of reforestation and road improvements were
capitalized.  Depletion was computed by the unit-of-production method.

     Intangible assets and amortization.  Goodwill, representing the excess of
cost over fair value of individual net assets acquired in business combinations
accounted for by the purchase method, is amortized by the straight-line method
over 40 years.  Fast food restaurant franchise fees and other intangible assets
are amortized by the straight-line method over the periods (10 to 20 years)
expected to be benefited.

     Property, equipment and depreciation.  Property and equipment are stated at
cost.  Maintenance, repairs and minor renewals are expensed; major improvements
are capitalized.  Interest costs related to major long-term capital projects are
capitalized as a component of construction costs.  Interest costs capitalized
related to continuing operations were nil in each of the past three years.

     Depreciation is computed principally by the straight-line method over the
estimated useful lives of 15 to 40 years for buildings and three to 10 years for
equipment.

     Income taxes.  Valcor, its qualifying subsidiaries and Valhi are members of
Contran's consolidated United States federal income tax group (the "Contran Tax
Group"). The policy for intercompany allocation of federal income taxes provides
that subsidiaries included in the Contran Tax Group compute the provision for
income taxes on a separate company basis.  Subsidiaries of Valhi make payments
to or receive payments from Valhi in the amounts they would have paid to or
received from the Internal Revenue Service had they not been members of the
Contran Tax Group.  The separate company provisions and payments are computed
using the tax elections made by Contran.

     Deferred income tax assets and liabilities are recognized for the expected
future tax consequences of temporary differences between the income tax and
financial reporting carrying amounts of assets and liabilities, including
investments in the Company's non-U.S. subsidiaries (which are not members of the
Contran Tax Group).

     Other.  Sales are recorded when products are shipped (fast food sales at
the time of retail sale).

     Accounting and funding policies for retirement and benefits plans are
described in Note 10.

     Advertising costs charged to continuing operations, expensed as incurred,
were $9.1 million in 1994, $9.6 million in 1995 and $9.8 million in 1996.
Research and development costs charged to continuing operations, expensed as
incurred, were $400,000 in each of 1994 and 1995 and $460,000 in 1996.

NOTE 3 -  BUSINESS AND GEOGRAPHIC SEGMENTS:
<TABLE>
<CAPTION>
Business segments                                                        YEARS ENDED DECEMBER 31,

                                                                          1994          1995           1996

                                                                              (IN MILLIONS)
<S>                                                                       <C>         <C>              <C>
Net sales:
  Component products - CompX International                                $ 70.0       $ 80.2          $ 88.7
  Fast food - Sybra                                                        115.5        115.4           116.0


                                                                          $185.5       $195.6          $204.7



Operating income:
  Component products                                                      $ 20.9       $ 19.9          $ 22.1
  Fast food                                                                  9.0          7.5             8.9

                                                                            29.9         27.4            31.0
General corporate, net                                                       (.1)         (.3)            1.2
Interest expense                                                           (11.1)       (11.8)          (11.7)


    Income before income taxes                                            $ 18.7       $ 15.3          $ 20.5




Depreciation, depletion and amortization:
  Component products                                                      $  1.8       $  2.2          $  2.5
  Fast food                                                                  5.9          6.0             6.0
                                                                          $  7.7       $  8.2          $  8.5



Capital expenditures:
  Component products                                                      $  3.4       $  2.0          $  2.3
  Fast food                                                                 10.8         12.0             6.1


                                                                          $ 14.2       $ 14.0          $  8.4



</TABLE>

       Capital expenditures exclude amounts attributable to business units
acquired in business combinations accounted for by the purchase method.  In
1995, the Company's Canadian component products subsidiary purchased certain
assets of a competitor for approximately $6 million cash.
<TABLE>
<CAPTION>
Geographic segments                                                      YEARS ENDED DECEMBER 31,

                                                                          1994          1995           1996

                                                                              (IN MILLIONS)
  <S>                                                                     <C>          <C>             <C>
  Net sales - point of origin:
    United States                                                         $139.4       $137.5          $138.9
    Canada                                                                  46.1         58.1            65.8


                                                                          $185.5       $195.6          $204.7



  Net sales - point of destination:
    United States                                                         $166.4       $170.8          $174.1
    Canada                                                                  17.2         22.8            27.8
    Pacific Rim and other                                                    1.9          2.0             2.8


                                                                          $185.5       $195.6          $204.7



  Operating income:
    United States                                                         $ 16.8       $ 14.0          $ 14.6
    Canada                                                                  13.1         13.4            16.4


                                                                          $ 29.9       $ 27.4          $ 31.0


</TABLE>

<TABLE>
<CAPTION>
Identifiable assets                                                                         DECEMBER 31,

                                                                                              1995        1996

                                                                                            (IN MILLIONS)
  <S>                                                                                       <C>         <C>
  Business segments:
    Building products                                                                       $200.4      $ 44.2
    Component products                                                                        44.4        48.4
    Fast food                                                                                 74.3        75.6
    Corporate                                                                                 22.9       143.6
    Eliminations                                                                             (14.4)      (22.8)


                                                                                            $327.6      $289.0



  Geographic segments:
    United States                                                                           $227.7      $257.6
    Republic of Ireland                                                                       70.1        -
    Canada                                                                                    29.8        31.4


                                                                                            $327.6      $289.0



</TABLE>

       Corporate assets consist principally of cash, cash equivalents and loans
to subsidiaries. Eliminations consist principally of intercompany receivables,
including loans to subsidiaries.  At December 31, 1996, the net assets of CompX
International's Canadian subsidiary included in consolidated net assets were
approximately $25 million.

NOTE 4 -       OTHER INCOME:
<TABLE>
<CAPTION>
                                                                         YEARS ENDED DECEMBER 31,

                                                                            1994          1995           1996

                                                                               (IN THOUSANDS)
<S>                                                                         <C>           <C>            <C>
Interest income                                                             $  543        $  840         $1,742
Currency transaction gains (losses), net                                       476            23            136
Disposal of property and equipment                                               7            18             11
Other, net                                                                     253           164            348


                                                                            $1,279        $1,045         $2,237



</TABLE>

NOTE 5 -  LONG-TERM DEBT:
<TABLE>
<CAPTION>
                                                                                         DECEMBER 31,

                                                                                          1995           1996

                                                                                         (IN THOUSANDS)
<S>                                                                                       <C>           <C>
Valcor - Senior Notes                                                                    $100,000       $100,000


Medite:
  U.S. and Irish bank term loans                                                           73,770           -
  U.S. and Irish bank working capital facilities                                           10,830           -
  Other                                                                                     4,117          3,895

                                                                                           88,717          3,895


Other:
  Sybra bank credit agreements                                                             16,770          1,081
  Sybra capital lease obligations                                                           5,382          4,540
  Other                                                                                        98            166

                                                                                           22,250          5,787

                                                                                          210,967        109,682
Less current maturities                                                                    12,383          1,224


                                                                                         $198,584       $108,458



</TABLE>

       Valcor.  Valcor's unsecured 9 5/8% Senior Notes Due November 2003 are
redeemable at the Company's option beginning November 1998, initially at
104.813% of principal amount declining to 100% after November 2000.  In the
event of a change of control of Valcor or certain asset dispositions, as
defined, Valcor would be required to make an offer to purchase the Senior Notes
at 101% and 100%, respectively, of principal amount.  At both December 31, 1995
and 1996, the quoted market price of the Senior Notes was $99.00 per $100
principal amount.

       The Indenture governing the Senior Notes limits, among other things, the
incurrence of additional indebtedness by Valcor and its subsidiaries, the
creation of liens and transactions and co-investing with affiliates.  The
Indenture generally limits the ability of the Company to pay dividends or make
other distributions to Valhi to 50% of consolidated net income, as defined,
subsequent to 1993.  At December 31, 1996, no amounts were available for
dividends.

     The after-tax proceeds from the disposition of Medite, net of repayments of
debt, will be available for Valcor's general corporate purposes, subject to
compliance with certain covenants contained in the Valcor Senior Note Indenture.
Also under the terms of the Indenture, Valcor is required to tender for a
portion of the Valcor Notes, at par, to the extent that a specified amount of
these proceeds is not used to either permanently paydown senior indebtedness of
Valcor or its subsidiaries or invest in related businesses, both as defined in
the Indenture, within one year of disposition.  While Valcor is not yet required
to execute a tender offer related to Medite's asset dispositions, on March 20,
1997, Valcor announced it had initiated a tender offer whereby Valcor would
purchase up to $86.7 million principal amount of Valcor Notes on a pro-rata
basis, at par value, in satisfaction of the covenant contained in the Indenture.
Pursuant to its terms, the tender offer will expire on April 24, 1997, unless
extended by Valcor.  The amount of Valcor Notes which will ultimately be
purchased by Valcor pursuant to the tender offer is dependent upon the amount of
Valcor Notes properly tendered.  Consequently, there can be no assurance as to
the amount of Valcor Notes which will ultimately be purchased by Valcor.  The
net proceeds from any disposition of the Company's fast food operations, net of
repayment of Sybra's bank indebtedness, would similarly be available for Valor's
general corporate purposes.  If the disposition of the Company's fast food
operations is completed and none of those net proceeds are used as provided by
the Indenture, a portion of the Notes would be subject to a subsequent tender
offer.  See Notes 13 and 14.

     Medite.  Medite's U.S. bank term and working capital facilities were repaid
and terminated in October 1996 following the sale of its timber and timberlands,
and the Irish bank term and working capital facilities were assumed by the
purchaser upon the sale of Medite's Irish subsidiary in November 1996.  See Note
14.

     Other Medite indebtedness consists principally of a State of Oregon term
loan that was assumed by the purchaser of Medite's Oregon MDF facility in
February 1997.  See Note 14.

     Other.  Sybra's revolving bank credit agreements provide for unsecured
credit facilities aggregating $29 million with interest generally at LIBOR plus
1.5%.  Borrowings under these agreements mature through July 1998. At December
31, 1996, the weighted average interest rate on outstanding revolving borrowings
was 6.9% (1995 - 7.5%), and $28 million was available for borrowing.

     Capital lease obligations are stated net of imputed interest.  Future
minimum payments under capital lease obligations at December 31, 1996, including
amounts representing interest, are approximately $1.4 million in each of the
next two years, $.6 million in each of the following three years and an
aggregate of $2.6 million thereafter.  The gross amount of assets recorded under
capital leases, included in property and equipment, was $6.2 million and $6.0
million at December 31, 1995 and 1996, respectively.  Accumulated amortization
of assets recorded under capital leases was $4.3 million and $4.7 million at
December 31, 1995 and 1996, respectively.

     CompX International has a Canadian bank credit agreement which currently
provides for approximately $5 million of U.S. or the equivalent Canadian dollar
borrowings, with interest generally at LIBOR plus .5% and collateralized by
substantially all of CompX International's Canadian assets.  At December 31,
1996, the full amount of this facility was available for borrowing.

     Credit agreements of subsidiaries typically require the respective
subsidiary to maintain minimum levels of equity, require the maintenance of
certain financial ratios, limit dividends and additional indebtedness, and
contain other provisions and restrictive covenants customary in lending
transactions of this type.  At December 31, 1996, the restricted net assets of
the Company's subsidiaries approximated $53 million.

Aggregate maturities of long-term debt at December 31, 1996
<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,                                                                         AMOUNT

                                                                                              (IN THOUSANDS)
  <S>                                                                                              <C>
  1997                                                                                             $  1,749
  1998                                                                                                2,735
  1999                                                                                                  976
  2000                                                                                                  866
  2001                                                                                                  866
  2002 and thereafter                                                                               105,140

                                                                                                    112,332
  Less amounts representing interest on capital leases                                                2,650


                                                                                                   $109,682



</TABLE>


NOTE 6 -       ACCRUED LIABILITIES:
<TABLE>
<CAPTION>
                                                                                           DECEMBER 31,

                                                                                            1995         1996

                                                                                           (IN THOUSANDS)
<S>                                                                                         <C>          <C>
Current accrued liabilities:
  Employee benefits                                                                         $ 7,894      $ 7,880
  Plant closure costs                                                                          -           7,669
  Interest                                                                                    3,636        1,648
  Insurance claims and expenses                                                               2,357        3,037
  Other                                                                                       7,583        5,332


                                                                                            $21,470      $25,566



Other noncurrent liabilities:
  Insurance claims and expenses                                                             $ 1,066      $   445
  Environmental cost                                                                            750        1,000
  Accrued pension and other employee benefits                                                   957        1,510
  Other                                                                                       1,472        1,421


                                                                                            $ 4,245      $ 4,376



</TABLE>

NOTE 7 -       INVENTORIES:
<TABLE>
<CAPTION>
                                                                                           DECEMBER 31,

                                                                                            1995         1996

                                                                                           (IN THOUSANDS)
<S>                                                                                         <C>          <C>
Raw materials:
  Building products                                                                         $12,404      $ 4,306
  Component products                                                                          1,927        2,556
  Fast food                                                                                   1,379        1,406

                                                                                             15,710        8,268


In process products:
  Building products                                                                           2,187           83
  Component products                                                                          4,320        4,974

                                                                                              6,507        5,057


Finished products:
  Building products                                                                           6,131        1,096
  Component products                                                                          2,921        3,300

                                                                                              9,052        4,396


Supplies                                                                                      5,116          501


                                                                                            $36,385      $18,222


</TABLE>


       The current cost of LIFO inventories (all of which relate to Medite)
exceeded the net carrying value of such inventories by approximately $4 million
and $3 million at December 31, 1995 and 1996, respectively.

NOTE 8 -       INTANGIBLE AND OTHER NONCURRENT ASSETS:
<TABLE>
<CAPTION>
                                                                                           DECEMBER 31,

                                                                                            1995         1996

                                                                                           (IN THOUSANDS)
<S>                                                                                         <C>          <C>
Intangible assets, net of accumulated
 amortization of $9,572 and $10,661:
  Goodwill                                                                                  $ 5,162      $ 4,996
  Franchise fees                                                                              5,605        4,872
  Intangible pension asset                                                                      403          193
  Other                                                                                       6,975        6,211


                                                                                            $18,145      $16,272



Other assets:
  Property held for sale                                                                    $ 3,920      $ 4,638
  Deferred financing costs                                                                    3,003        2,317
  Prepaid pension cost                                                                        1,501         -
  Other                                                                                         206           51


                                                                                            $ 8,630      $ 7,006




</TABLE>

       Property held for sale, all of which relates to Medite, is carried at the
lower of cost or estimated net realizable value under current market conditions.

NOTE 9 - FINANCIAL INSTRUMENTS:
<TABLE>
<CAPTION>
                                                                                  December

                                                                31,

                                                                         1995               1996


                                                                  CARRYING       FAIR     CARRYING        FAIR
                                                                   AMOUNT       VALUE       AMOUNT       VALUE

                                                                          (IN MILLIONS)
<S>                                                                 <C>         <C>         <C>          <C>
Cash and cash equivalents                                           $ 17.6      $ 17.6      $136.1       $136.1

Long-term debt (excluding capitalized leases):
  Valcor Senior Notes                                               $100.0      $ 99.0      $100.0       $ 99.0
  Medite debt with rates fixed via interest rate swaps                26.0        26.0         -            -
  Other fixed-rate debt                                               18.9        19.2         3.9          4.0
  Variable rate debt                                                  60.6        60.6         1.1          1.1

</TABLE>

       Fair value of the Valcor Senior Notes is based upon quoted market prices
(per $100 principal amount) of $99.00 at both December 31, 1995 and 1996.  See
Note 5.

       Medite had entered into interest rate swaps to mitigate the impact of
changes in interest rates for $26 million of its U.S. bank term loan.  The
interest rate swaps were terminated in October 1996 when the related loans were
repaid.  See Note 14.  The fair value of Medite debt on which interest rates had
been effectively fixed through the use of interest rate swaps was deemed to
approximate the book value of the debt plus or minus the fair value of the
related swaps.  See Note 5.  The fair value of Medite's interest rate swaps was
estimated to approximate the contract amount at December 31, 1995.  Such fair
values represented the estimated amounts Medite would have received if it
terminated the swap agreements at that date, and were based upon quotes obtained
from the counter party financial institution.

       Fair values of other fixed rate debt have been estimated based upon
relative changes in the Company's variable borrowing rates since the dates the
interest rates were fixed.  Fair values of variable interest rate debt are
deemed to approximate book value.

NOTE 10 - EMPLOYEE BENEFIT PLANS:

Company-sponsored pension plans

     Defined contribution plans.  Substantially all of the Company's full-time
U.S. employees are eligible to participate in contributory savings plans with
Company contributions based on matching or other formulas.  Defined contribution
plan expense charged to continuing operations aggregated $1.1 million in each of
1994 and 1995 and $1.2 million in 1996.
     Defined benefit plans.  Medite maintained a defined benefit pension plan
covering substantially all of its full-time Irish employees, which plan was
assumed by the purchaser upon sale of Medite's Irish subsidiary in November
1996.  Medite maintains a plan covering its U.S. employees, and substantially
all remaining employees will cease to accrue benefits in 1997 upon the sale of
Medite's Oregon MDF and timber conversion facilities.  See Note 14.  Defined
pension benefits are generally based on years of service and compensation under
fixed dollar, final pay or career average formulas, and the related expenses are
based on independent actuarial valuations.  The funding policy for U.S. defined
benefit plans is to contribute amounts satisfying funding requirements of the
Employee Retirement Income Security Act of 1974, as amended.  Non-U.S. defined
benefit plans were funded in accordance with applicable statutory requirements.
The plans' assets are comprised primarily of mutual funds.

     The rates used in determining the actuarial present value of benefit
obligations are presented in the table below.
<TABLE>
<CAPTION>
                                                                                     DECEMBER 31,

                                                                        1994               1995             1996

<S>                                                                   <C>                <C>               <C>
Discount rate                                                           8.5%               7.5%             7.5%
Rate of increase in future
 compensation levels                                                     4%                 4%               4%
Long-term rate of return on assets                                    7.5%-10%           7.5%-10%            10%

</TABLE>

<TABLE>
<CAPTION>
                                                                     PLAN ASSETS EXCEED     ACCUMULATED BENEFITS
                                                                    ACCUMULATED BENEFITS     EXCEED PLAN ASSETS

                                                                        December 31,            December 31,

                                                                      1995        1996        1995        1996

                                                                                   (IN THOUSANDS)
<S>                                                                  <C>         <C>         <C>         <C>
Actuarial present value of benefit obligations:
  Vested benefits                                                    $1,217      $  -        $20,290     $21,495
  Nonvested benefits                                                  1,163         -            470         494


  Accumulated benefit obligations                                     2,380         -         20,760      21,989
  Effect of projected salary increases                                1,456         -            386         245


  Projected benefit obligations ("PBO")                               3,836         -         21,146      22,234
Plan assets at fair value                                             4,315         -         19,776      20,453


Plan assets over (under) PBO                                            479         -         (1,370)     (1,781)
Unrecognized net loss from experience different from
 actuarial assumptions                                                1,044         -          4,331       4,484
Unrecognized prior service cost                                         -           -            403         193
Unrecognized net assets being amortized over periods of
 9 to 11 years                                                          (22)        -           (342)        (86)
Adjustment to recognize minimum liability                               -           -         (4,006)     (4,345)


Total prepaid (accrued) pension cost                                  1,501         -           (984)     (1,535)
Current portion and reclassification, net                               -           -           (349)       (347)



    Noncurrent prepaid (accrued) pension cost                        $1,501      $  -        $  (635)    $(1,188)



</TABLE>


       The adjustment required to recognize minimum pension liability
(accumulated pension benefit obligation in excess of plan assets) relates to
Medite's U.S. defined benefit plan.  Variances from actuarially assumed rates
will result in increases or decreases in accrued pension liabilities, pension
expense and funding requirements in future periods.  A one percentage point
decrease in the discount rate would increase the aggregate actuarial present
value of accumulated benefit obligations at December 31, 1996 by approximately
$3 million.  Net periodic pension cost related to Medite's plans, included in
discontinued operations, was not material in any of the past three years.

     Other.  Certain Medite retirees are eligible to participate in a group
health program until age 65, and contribute to the cost of such benefits.  The
actuarially-computed present value of the accumulated postretirement group
health program, and the related annual expense, are not material.

NOTE 11 - INCOME TAXES:
<TABLE>
<CAPTION>
                                                                             YEARS ENDED DECEMBER 31,

                                                                                1994        1995         1996

                                                                                  (IN MILLIONS)
<S>                                                                             <C>          <C>         <C>
Components of pre-tax income attributable to
 continuing operations:
  United States                                                                 $ 5.6        $ 1.9       $ 4.1
  Canada                                                                         13.1         13.4        16.4


                                                                                $18.7        $15.3       $20.5



Expected tax expense, at U.S. federal statutory
 income tax rate of 35%                                                         $ 6.5        $ 5.4       $ 7.2
Non-U.S. tax rates                                                                 .1           .1          .1
Incremental U.S. tax on non-U.S. earnings                                         (.7)          .3         1.0
U.S. state income taxes, net                                                       .1           .8         -
Rate change adjustment of deferred taxes                                          -           (1.0)        -
Other, net                                                                      -               .8          .1


                                                                                $ 6.0        $ 6.4       $ 8.4



Components of income tax expense:
  Currently payable:
    U.S. federal and state                                                      $ 1.8        $ 1.2       $ 2.0
    Non-U.S.                                                                      4.8          5.9         7.7

                                                                                  6.6          7.1         9.7

  Deferred income taxes:

    U.S. federal and state                                                        (.5)         (.8)       (1.5)
    Non-U.S.                                                                      (.1)          .1          .2

                                                                                  (.6)         (.7)       (1.3)


                                                                                $ 6.0        $ 6.4       $ 8.4



Comprehensive provision for income tax expense
 allocable to:
  Continuing operations                                                         $ 6.0        $ 6.4       $ 8.4
  Discontinued operations                                                        11.1          6.4        21.5
  Stockholder's equity - deferred taxes allocable
   to adjustments components                                                      (.3)        (1.2)        (.3)


                                                                                $16.8        $11.6       $29.6




</TABLE>

<TABLE>
<CAPTION>
                                                                                         DECEMBER 31,

                                                                                        1995            1996

                                                                                        (IN MILLIONS)
<S>                                                                                     <C>            <C>
Tax effect of temporary differences relating to:
  Inventories                                                                           $  (.8)        $  (.8)
  Timber and timberlands                                                                 (10.8)           -
  Property and equipment                                                                  (9.1)          (4.8)
  Capital lease assets and obligations                                                     1.3            1.2
  Accrued liabilities and other deductible differences                                     4.6           12.8
  Other taxable differences                                                               (6.2)         (12.1)
  Investments in non-U.S. subsidiaries                                                    (1.1)            .1


    Net deferred tax liabilities                                                        $(22.1)        $ (3.6)




Current deferred tax assets                                                             $  2.4         $  5.1
Noncurrent deferred tax liabilities                                                      (24.5)          (8.7)


                                                                                        $(22.1)        $ (3.6)




</TABLE>

NOTE 12 - RELATED PARTY TRANSACTIONS:

       The Company may be deemed to be controlled by Harold C. Simmons.  See
Note 1.  The Indenture governing the Valcor Senior Notes prohibits co-investment
with affiliates and contains restrictions on other transactions with affiliates.
It is the policy of the Company to engage in transactions with related parties
on terms, in the opinion of the Company, no less favorable to the Company than
could be obtained from unrelated parties.

       Payables to affiliates at December 31, 1996 include $30.8 million for
income taxes (1995 - $3.5 million receivable for refundable income taxes).

       Under the terms of Intercorporate Services Agreements with Valhi, Valhi
provides certain management and administrative services to the Company on a fee
basis.  Such fees are based upon estimates of time devoted to affairs of the
Company by individual Valhi employees and the salaries of such persons.  Fees
charged to the Company's continuing operations approximated $600,000 in each of
1994 and 1995 and $640,000 in 1996.  Net charges from related parties for
services provided in the ordinary course of business charged to continuing
operations, principally charges for insuring property and other risks,
aggregated $.9 million in 1994, $1.3 million in 1995 and $1.1 million in 1996.
Such charges are principally pass-through in nature and, in the Company's
opinion, are not materially different from those that would have been incurred
on a stand-alone basis.

       Certain employees of the Company have been awarded shares of restricted
Valhi common stock and/or granted options to purchase Valhi common stock under
the terms of Valhi's stock option plans.  The Company will pay Valhi the
aggregate difference between the option price and the market value of Valhi's
common stock on the exercise date of the options, and the Company accounts for
the related option expense (credit) in a manner similar to accounting for stock
appreciation rights.  The Company pays Valhi the market value of restricted
shares on the dates the restrictions expire, and accrues the related expense
over the restriction period. Compensation expense related to these stock
option/restricted stock grants was not material in any of the past three years.
At December 31, 1996, employees of the Company held options to purchase 680,000
Valhi shares at prices ranging from $4.76 to $14.66 per share (329,000 shares at
prices lower than the December 31, 1996 quoted market price of $6.38 per share).

NOTE 13 - COMMITMENTS AND CONTINGENCIES:

       Environmental matters.  The Company's operations are governed by various
federal, state, local and foreign environmental laws and regulations.  The
Company's policy is to comply with environmental laws and regulations at all of
its plants and to continually strive to improve environmental performance in
association with applicable industry initiatives.  The Company believes that its
operations are in substantial compliance with applicable requirements of
environmental laws.  From time to time, the Company may be subject to
environmental regulatory enforcement under various statutes, resolution of which
typically involves the establishment of compliance programs.  The imposition of
more strict standards or requirements under environmental laws and resolutions
could result in expenditures in excess of amounts currently estimated to be
required for such matters.

     At December 31, 1996, Medite has accrued approximately $4.6 million for the
estimated cost to complete environmental remediation efforts at certain of its
current and former facilities, including amounts included in accrued plant
closure costs.  Costs for future environmental remediation efforts are not
discounted to their present value, and no recoveries for remediation costs from
third parties have been recognized.  Such accruals will be adjusted, if
necessary, as further information becomes available or as circumstances change.
No assurance can be given that the actual costs will not exceed accrued amounts.
None of these facilities are the subject of any litigation, administrative
proceeding or investigation.

     Legal proceedings.  In July 1996, Medite filed a complaint in U.S. District
Court in New Mexico (Medite Corporation v. Public Service Company of New Mexico,
CIV 96-0929LH) regarding termination of the electricity supply contract for its
New Mexico MDF facility permanently closed in May 1996.  The complaint seeks,
among other things, to declare the contract terminated under New Mexico common
law and/or the force majeure provisions of the agreement.  Defendant filed a
motion to dismiss, and also filed a counterclaim demanding that Medite pay an
approximately $5 million termination penalty contained in the contract.  Medite
does not believe the termination penalty clause applies due to, among other
things, the force majeure provisions of the contract.  Discovery is proceeding.
The Company does not expect the resolution of this matter to have a material
adverse impact on its consolidated results of operations, financial position or
liquidity.

     In November 1995, a complaint was filed against Medite in the U.S. District
Court for the Western District of Oklahoma (Midgard Corporation v. Medite of New
Mexico, Inc., et al., CIV 95-1807-A) alleging, among other things, that Medite
breached Midgard's purportedly exclusive territorial supply contract by
purchasing certain raw materials from a third party located in Oklahoma City.
The complaint seeks, among other things, $4 million in compensatory damages and
$100 million in punitive damages.  Medite has answered the complaint denying
liability.  Discovery is proceeding.  The Company believes the complaint is
without merit, intends to defend the action vigorously and does not expect the
resolution of this matter to have a material adverse impact on its consolidated
results of operations, financial position or liquidity.

     In addition to the litigation described above, the Company is involved in
various environmental, contractual, product liability and other claims and
disputes incidental to its business.  The Company currently believes that the
disposition of all claims and disputes, individually or in the aggregate, should
not have a material adverse effect on the Company's consolidated financial
condition, results of operations or liquidity.

     Income taxes.  The Company is undergoing examinations of certain of its
income tax returns, and tax authorities have or may propose tax deficiencies.
The Company believes that it has adequately provided accruals for additional
income taxes and related interest expense which may ultimately result from such
examinations and believes that the ultimate disposition of all such examinations
should not have a material adverse effect on its consolidated financial
position, results of operations or liquidity.

     Royalties.  Royalty expense, which relates principally to fast food
operations, approximated $4 million in each of the past three years.  Fast food
royalties are paid to the franchiser based upon a percentage of gross sales, as
specified in the franchise agreement related to each individual restaurant.

     Concentrations of credit risk.  Component products are sold primarily to
original equipment manufacturers in the U.S. and Canada.  In each of the past
three years, the ten largest customers accounted for approximately one-third of
component products sales with at least five of such customers in each year
located in the U.S.

     Sybra's restaurants are clustered in four regions, principally Texas,
Michigan, Pennsylvania and Florida.  All fast food sales are for cash.

     At December 31, 1996, about 90% of the Company's consolidated cash and cash
equivalents was invested in A1 or P1-grade commercial paper issued by various
third parties having a maturity of three months or less (1995 - 25% on deposit
with a single Canadian bank and 10% on deposit with a single Irish bank).

     Development agreement.  Under the terms of Sybra's Market Development
Agreement with Arby's, Sybra has the exclusive right to open new Arby's units
within certain counties in Pennsylvania.  The Agreement requires Sybra to open
an aggregate of 25 new stores in its existing regions during 1997 through 2001
(four in 1997, six in 1998 and five each in 1999, 2000 and 2001), with at least
ten of the stores in the Pennsylvania region.

     Operating leases.  The Company leases various fast food retail and other
facilities and equipment.  Most of the leases contain purchase and/or various
term renewal options at fair market and fair rental values, respectively.  In
most cases the Company expects that, in the normal course of business, leases
will be renewed or replaced by other leases.  Net rent expense charged to
continuing operations approximated $5 million in each of 1994, 1995 and 1996.
Contingent rentals based upon gross sales of individual fast food restaurants
were less than 10% of total rent expense in each of the past three years.

     At December 31, 1996, substantially all future minimum payments under
noncancellable operating leases having an initial or remaining term of more than
one year relate to fast food restaurant facilities.
<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31,                                                                         AMOUNT

                                                                                              (IN THOUSANDS)
  <S>                                                                                               <C>
  1997                                                                                              $ 4,327
  1998                                                                                                3,568
  1999                                                                                                3,101
  2000                                                                                                2,664
  2001                                                                                                2,239
  2002 and thereafter                                                                                 7,370

                                                                                                     23,269
  Less minimum rentals due under noncancellable subleases                                               646


      Net minimum commitments                                                                       $22,623



</TABLE>


     Disposal of fast food operations.  The Company has executed agreements
involving the sale of its fast food operations conducted by Sybra.  The proposed
sale would be accomplished in simultaneous transactions that would include the
sale of certain restaurant real estate owned by Sybra to one party for $45
million cash consideration, and Valcor's sale of 100% of the stock of Sybra to
another party for approximately $39.7 million cash consideration, of which
approximately $23.7 million would be used to repay Sybra bank indebtedness.
These transactions are subject to, among other things, completion of customary
due diligence procedures, the purchaser of Sybra's stock obtaining necessary
financing for the transaction and certain consents from third parties.  If
completed, the transactions are expected to close in the second quarter of 1997,
at which time the Company estimates it would report a pre-tax gain on disposal
in excess of $24 million.  There can be no assurance that any such transactions
will be completed.

NOTE 14 - DISCONTINUED OPERATIONS:

     In September 1996, Medite Corporation signed three separate letters of
intent involving the sale of substantially all of its assets.  The first
transaction, involving the sale of Medite's timber and timberlands, closed in
October 1996 for approximately $118 million cash consideration, of which
approximately $53 million of the cash proceeds were used to pay off and
terminate Medite's U.S. bank credit facilities.  The second transaction,
involving the sale of Medite's Irish MDF subsidiary, closed in November 1996 for
approximately $61.5 million cash consideration plus the assumption of
approximately $21 million of Irish bank debt.  The third transaction, involving
the sale of Medite's Oregon MDF facility, closed in February 1997 for
approximately $36 million cash consideration plus the assumption of
approximately $3.7 million of Medite indebtedness.  The letter of intent with
the purchaser of the Oregon MDF facility originally contemplated the purchase of
Medite's two small Oregon timber conversion facilities, but in December 1996
negotiations regarding a definitive agreement for such timber conversion
facilities were terminated, and Medite determined to permanently close these
facilities.  The stud lumber facility, closed in December 1996, is being
dismantled and Medite will sell the salvageable machinery and equipment.  Medite
continues to operate the veneer facility on a short-term basis and expects to
either sell or close this facility in 1997.  Accordingly, the accompanying
financial statements present the results of operations of Medite's building
products business segment as discontinued operations for all periods presented.

     As is customary in transactions of these types, Medite has made certain
representations and warranties to the respective purchasers concerning, among
other things, the assets sold.  Medite has agreed to indemnify the three
purchasers for up to an aggregate of $6.5 million for certain breaches of these
representations and warranties.  As part of the transactions, Valhi has agreed
to guarantee Medite's indemnification obligations.  The Company does not
currently expect to be required to perform under any of these indemnification
obligations.

     Medite's 1996 results include a first quarter pre-tax charge of $24 million
for the estimated costs of permanently closing its New Mexico MDF plant, and a
$13 million fourth-quarter pre-tax charge for the estimated costs of permanently
closing its two Oregon timber conversion facilities.  Approximately $26 million
of such charges represented non-cash costs, most of which related to the net
carrying value of property and equipment in excess of estimated net realizable
value.  These non-cash costs were deemed utilized upon adoption of the
respective closure plans.  Approximately $11 million of the charge represents
workforce, environmental and other estimated cash costs associated with the
closure of the facilities, of which approximately $3 million had been paid at
December 31, 1996.  In August 1996, Medite completed the sale of substantially
all of the building and equipment of the New Mexico facility for $5.5 million
cash consideration, which approximated the previously-estimated net realizable
value.

     Condensed income statement data for Medite is presented below.  The $24
million pre-tax New Mexico MDF plant closure charge is included in Medite's
operating income for 1996 because the decision to close the New Mexico MDF
facility occurred prior to the decision to permanently dispose of the entire
business segment.  The aggregate net gain on disposal in 1996 includes the $13
million charge associated with the closure of the two Oregon timber conversion
facilities, and a nominal charge associated with a curtailment of its U.S.
defined benefit pension plan.  Medite expects to report a pre-tax gain on
disposal of approximately $20 million in the first quarter of 1997 related to
the sale of its Oregon MDF facility.  Interest expense included in discontinued
operations represents interest on indebtedness of Medite and its subsidiaries.
<TABLE>
<CAPTION>
                                                                         YEARS ENDED DECEMBER 31,

                                                                            1994          1995           1996

                                                                               (IN MILLIONS)
<S>                                                                      <C>              <C>           <C>
Operations of Medite:
  Net sales                                                                $189.9         $200.0        $171.7



  Operating income (loss)                                                  $ 36.4         $ 25.2         $(7.9)
  Interest expense and other, net                                            (6.9)          (8.2)         (6.7)

    Pre-tax income (loss)                                                    29.5           17.0         (14.6)
  Income tax expense (benefit)                                               11.2            6.4          (4.1)

                                                                             18.3           10.6         (10.5)

Net gain on disposal:
  Pre-tax gain                                                               -             -              75.1
  Income tax expense                                                         -             -              25.6

                                                                             -             -              49.5



                                                                           $ 18.3         $ 10.6        $ 39.0



</TABLE>

     Condensed balance sheets for Medite, included in the Company's consolidated
balance sheets, are presented below.
<TABLE>
<CAPTION>

                                                                                     DECEMBER 31,

                                                                                      1995              1996

                                                                                      (IN MILLIONS)
<S>                                                                                  <C>              <C>
Current assets                                                                        $ 56.1           $21.2
Timber and timberlands                                                                  53.1             -
Property and equipment, net                                                             84.8            18.2
Other assets                                                                             6.4             4.8


                                                                                      $200.4           $44.2




Current liabilities                                                                   $ 33.9           $17.6
Long-term debt                                                                          77.2             3.7
Deferred income taxes                                                                   22.1             1.6
Loan from Valcor (*)                                                                     5.0             -
Other liabilities                                                                        2.9             3.0
Stockholder's equity (*)                                                                59.3            18.3


                                                                                      $200.4           $44.2




</TABLE>

[FN]
* Eliminated in consolidation.

     Condensed cash flow data for Medite (excluding dividends paid to and
intercompany loans with Valcor) is presented below.
<TABLE>
<CAPTION>
                                                                         YEARS ENDED DECEMBER 31,

                                                                            1994          1995           1996

                                                                               (IN MILLIONS)
<S>                                                                         <C>           <C>             <C>
Cash flows from operating activities                                       $ 33.1         $ 18.5        $ 24.9


Cash flows from investing activities:

  Capital expenditures                                                      (32.0)         (12.3)        (13.3)
  Proceeds from disposal of assets                                            -              -           179.1
  Other, net                                                                  (.7)           (.2)           .1

                                                                            (32.7)         (12.5)        165.9


Cash flows from financing activities:
  Indebtedness, net                                                          28.6          (13.8)        (64.0)
  Other, net                                                                  1.2            2.9             -

                                                                             29.8          (10.9)        (64.0)



                                                                           $ 30.2         $ (4.9)       $126.8



</TABLE>

NOTE 15 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED):
<TABLE>
<CAPTION>
                                                                 QUARTER ENDED

                                                     MARCH 31       JUNE 30        SEPT. 30        DEC. 31

                                                                (IN THOUSANDS)
<S>                                                    <C>             <C>            <C>            <C>
Year ended December 31, 1995

  Net sales                                            $ 46,926        $48,044        $48,907        $51,731
  Operating income                                        6,548          6,944          6,511          7,397

  Income from continuing
   operations                                          $  1,796        $ 2,492        $ 2,065        $ 2,586
  Discontinued operations                                 4,957          4,238          1,518           (106)


    Net income                                         $  6,753        $ 6,730        $ 3,583        $ 2,480



Year ended December 31, 1996

  Net sales                                            $ 48,763        $51,039        $50,815        $54,100
  Operating income                                        5,946          7,511          7,368         10,210

  Income from continuing
   operations                                          $  1,716        $ 2,422        $ 2,669        $ 5,208
  Discontinued operations                               (14,884)         2,150          2,060         49,695


    Net income (loss)                                  $(13,168)       $ 4,572        $ 4,729        $54,903



</TABLE>


                      REPORT OF INDEPENDENT ACCOUNTANTS
                       ON FINANCIAL STATEMENT SCHEDULES



To the Stockholder and Board of Directors of Valcor, Inc.:

     Our report on the consolidated financial statements of Valcor, Inc. as of
December 31, 1995 and 1996 and for each of the three years in the period ended
December 31, 1996, which report is based in part upon the report of another
auditor, is herein included in this Annual Report on Form 10-K.  In connection
with our audits of such financial statements, we have also audited the related
financial statement schedules listed in the index on page F-1 of this Annual
Report on Form 10-K.  These consolidated financial statement schedules are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statement schedules based on our audits.

     In our opinion, based upon our audits and the report of another auditor,
the financial statement schedules referred to above, when considered in relation
to the basic financial statements taken as a whole, present fairly, in all
material respects, the information required to be included therein.





                                                      COOPERS & LYBRAND L.L.P.


Dallas, Texas
March 7, 1997






                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                       ON FINANCIAL STATEMENT SCHEDULES



To the Stockholder and Board of Directors of Medite Corporation:

     We have audited in accordance with generally accepted auditing standards
the consolidated financial statements (not presented separately herein) of
Medite Corporation as of December 31, 1995 and for each of the two years in the
period ended December 31, 1995, and have issued our report thereon dated January
27, 1996.  Our audits of the financial statements were made for the purpose of
forming an opinion on the basic financial statements taken as a whole.  The
financial statement schedule II (not presented separately herein) is the
responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not a
required part of the basic financial statements.  This schedule has been
subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, fairly states in all material respects
the financial data required to be set forth therein in relation to the basic
financial statements taken as a whole.





                                                           ARTHUR ANDERSEN LLP


Portland, Oregon,
January 27, 1996

                        VALCOR, INC. AND SUBSIDIARIES

          SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                           CONDENSED BALANCE SHEETS

                          DECEMBER 31, 1995 AND 1996

                                (IN THOUSANDS)

















<TABLE>
<CAPTION>
              ASSETS                                                                    1995            1996

<S>                                                                                     <C>             <C>
Current assets:
  Cash and cash equivalents                                                             $  5,332        $120,085
  Demand loans to subsidiaries                                                            14,000          20,000
  Income taxes and other receivables from
   affiliates, net                                                                           936             225
  Deferred income taxes                                                                     -                393
  Other                                                                                       10             553


      Total current assets                                                                20,278         141,256


Other assets:
  Investment in subsidiaries                                                             122,941          92,697
  Deferred financing costs                                                                 2,656           2,317


      Total other assets                                                                 125,597          95,014


                                                                                        $145,875        $236,270



   LIABILITIES AND STOCKHOLDER'S EQUITY

Current liabilities:
  Accrued interest                                                                      $  1,604        $  1,604
  Income taxes payable to affiliates, net                                                    -            33,078
  Other                                                                                       47           1,198


      Total current liabilities                                                            1,651          35,880

Long-term debt - Senior Notes Due 2003                                                   100,000         100,000

Noncurrent deferred income taxes                                                            -              6,000


Stockholder's equity                                                                      44,224          94,390


                                                                                        $145,875        $236,270



</TABLE>







                                          VALCOR, INC. AND SUBSIDIARIES

    SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (CONTINUED)

                        CONDENSED STATEMENTS OF INCOME

                 YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

                                (IN THOUSANDS)




<TABLE>
<CAPTION>
                                                                          1994           1995           1996

<S>                                                                       <C>             <C>           <C>
Interest income                                                           $ 1,099         $ 1,195       $ 1,975
General and administrative expenses                                          (172)           (633)         (197)
Interest expense                                                           (9,968)         (9,994)       (9,964)


    Loss before income taxes                                               (9,041)         (9,432)       (8,186)

Income tax benefit                                                          5,523           3,255         3,010

                                                                           (3,518)         (6,177)       (5,176)

Equity in earnings of subsidiaries                                         16,269          15,116        17,191


    Income from continuing operations                                      12,751           8,939        12,015

Discontinued operations                                                    18,347          10,607        39,021


    Net income                                                            $31,098         $19,546       $51,036



</TABLE>






                                          VALCOR, INC. AND SUBSIDIARIES

    SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (CONTINUED)

                      CONDENSED STATEMENTS OF CASH FLOWS

                 YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996

                                (IN THOUSANDS)





<TABLE>
<CAPTION>
                                                                        1994            1995            1996

<S>                                                                     <C>            <C>             <C>
Cash flows from operating activities:
  Net income                                                            $ 31,098       $ 19,546        $ 51,036
  Earnings of subsidiaries:
    Continuing operations                                                (16,269)       (15,116)        (17,191)
    Discontinued operations                                              (18,347)       (10,607)        (39,021)
  Dividends from subsidiaries                                             12,380         10,000          84,101
  Other, net                                                                 343            369             339
  Change in assets and liabilities, net                                   (1,549)         1,266          41,872


      Net cash provided by operating
       activities                                                          7,656          5,458         121,136

Cash flows from investing activities -
 loans to subsidiaries, net                                                  750          7,250          (6,000)

Cash flows from financing activities -
 dividends to Valhi                                                       (9,570)        (8,298)           (383)


Net increase (decrease) in cash                                           (1,164)         4,410         114,753
Balance at beginning of year                                               2,086            922           5,332


Cash and cash equivalents at end of year                                $    922       $  5,332        $120,085




Supplemental disclosures - cash paid
 (received) for:
  Interest expense                                                      $  9,438       $  9,625        $  9,625
  Income taxes, net                                                       (3,811)        (4,476)        (45,925)

</TABLE>






                                          VALCOR, INC. AND SUBSIDIARIES

    SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (CONTINUED)

                   NOTES TO CONDENSED FINANCIAL INFORMATION



NOTE 1 -  GENERAL:

     The Company's Consolidated Financial Statements are incorporated herein by
reference.  Certain prior year amounts have been reclassified.

NOTE 2 -  INVESTMENT IN SUBSIDIARIES:

<TABLE>
<CAPTION>
                                                                                       DECEMBER 31,

                                                                                        1995            1996

                                                                                       (IN THOUSANDS)
<S>                                                                                    <C>              <C>
Medite                                                                                 $ 59,349         $18,313
CompX International                                                                      32,612          39,242
Sybra                                                                                    30,980          35,142


                                                                                       $122,941         $92,697



</TABLE>



NOTE 3 -       EQUITY IN EARNINGS OF SUBSIDIARIES:


<TABLE>
<CAPTION>
                                                                        YEARS ENDED DECEMBER 31,

                                                                          1994           1995           1996

                                                                              (IN THOUSANDS)
<S>                                                                       <C>            <C>            <C>
Continuing operations
  CompX International                                                     $11,919        $12,101        $13,029
  Sybra                                                                     4,350          3,015          4,162


                                                                          $16,269        $15,116        $17,191



Discontinued operations - Medite                                          $18,347        $10,607        $39,021



</TABLE>



NOTE 4 -       CASH DIVIDENDS FROM SUBSIDIARIES:


<TABLE>
<CAPTION>
                                                                        YEARS ENDED DECEMBER 31,

                                                                          1994           1995          1996

                                                                                    (IN THOUSANDS)
<S>                                                                       <C>            <C>           <C>
Medite                                                                    $ 2,800        $ 4,000       $77,854
CompX International                                                         4,580          6,000         6,247
Sybra                                                                       5,000           -             -


                                                                          $12,380        $10,000       $84,101



</TABLE>



     Dividends from Medite in 1996 represent the proceeds from the dispositions
of its Oregon timber and timberlands and Irish MDF subsidiary, net of income
taxes and debt repayments.

NOTE 5 -  CASH PAID FOR INCOME TAXES:

<TABLE>
<CAPTION>
                                                                        YEARS ENDED DECEMBER 31,

                                                                          1994           1995           1996

                                                                              (IN THOUSANDS)
<S>                                                                       <C>            <C>            <C>
Paid to Valhi                                                             $11,300         $ 5,812       $    991
Received from subsidiaries:
  Medite                                                                   (8,140)         (6,389)       (42,021)
  CompX International                                                      (3,506)         (2,350)        (1,800)
  Sybra                                                                    (3,465)         (1,549)        (3,095)


    Cash received for income taxes, net                                   $(3,811)        $(4,476)      $(45,925)



</TABLE>



       Foreign subsidiaries are not members of the consolidated federal income
tax group of which Valcor, Medite, Sybra and CompX International are members.

     Cash paid for income taxes by Medite to Valcor includes amounts
attributable to the dispositions of its Oregon timber and timberlands and Irish
MDF subsidiary.  Under the terms of the Internal Revenue Code and similar state
regulations regarding the timing of estimated tax payments, Valcor and the
Contran Tax Group are not required to pay such cash income taxes to the
applicable tax authorities until 1997.

NOTE 6 -  LONG-TERM DEBT:


     The after-tax proceeds from the disposition of Medite, net of repayments of
Medite's U.S. bank debt, will be available for Valcor's general corporate
purposes, subject to compliance with certain covenants contained in the Valcor
Senior Note Indenture.  Also under the terms of the Indenture, Valcor is
required to tender for a portion of the Valcor Notes, at par, to the extent that
a specified amount of these proceeds is not used to either permanently paydown
senior indebtedness of Valcor or its subsidiaries or invest in related
businesses, both as defined in the Indenture, within one year of disposition.
While Valcor is not yet required to execute a tender offer related to Medite's
asset dispositions, on March 20, 1997, Valcor announced it had initiated a
tender offer whereby Valcor would purchase up to $86.7 million principal amount
of Valcor Notes on a pro-rata basis, at par value, in satisfaction of the
covenant contained in the Indenture.  Pursuant to its terms, the tender offer
will expire on April 24, 1997, unless extended by Valcor.  The amount of Valcor
Notes which will ultimately be purchased by Valcor pursuant to the tender offer
is dependent upon the amount of Valcor Notes properly tendered.  Consequently,
there can be no assurance as to the amount of Valcor Notes which will ultimately
be purchased by Valcor.  The net proceeds from any disposition of the Company's
fast food operations, net of repayment of Sybra's bank indebtedness, would
similarly be available for Valor's general corporate purposes.  If the
disposition of the Company's fast food operations is completed and none of those
net proceeds are used as provided by the Indenture, a portion of the Notes would
be subject to a subsequent tender offer.


                                       VALCOR, INC. AND SUBSIDIARIES

                              SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                                               (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                                                            ADDITIONS
                                                                                        BALANCE AT         CHARGED TO
                                                                                        BEGINNING           COSTS AND
            DESCRIPTION                                                                  OF YEAR            EXPENSES

<S>                                                                                           <C>                <C>
Year ended December 31, 1994:
  Allowance for doubtful accounts                                                             $  888             $  184



  Amortization of intangible assets:
    Goodwill                                                                                  $1,008             $  172
    Franchise fees and other                                                                   6,848              1,423


                                                                                              $7,856             $1,595



Year ended December 31, 1995:
  Allowance for doubtful accounts                                                             $  570             $  313



  Amortization of intangible assets:
    Goodwill                                                                                  $1,180             $  166
    Franchise fees and other                                                                   7,371              1,308


                                                                                              $8,551             $1,474



Year ended December 31, 1996:
  Allowance for doubtful accounts                                                             $  800             $  295



  Amortization of intangible assets:
    Goodwill                                                                                  $1,346             $  166
    Franchise fees and other                                                                   8,226              1,295


                                                                                              $9,572             $1,461




</TABLE>



<TABLE>
<CAPTION>

                                                                                                           BALANCE
                                                                                        DEDUCTIONS         AT END
            DESCRIPTION                                                                  AND OTHER         OF YEAR

<S>                                                                                          <C>              <C>
Year ended December 31, 1994:
  Allowance for doubtful accounts                                                            $ (502)          $   570



  Amortization of intangible assets:

    Goodwill                                                                                 $  -             $ 1,180
    Franchise fees and other                                                                   (900)            7,371


                                                                                             $ (900)          $ 8,551



Year ended December 31, 1995:
  Allowance for doubtful accounts                                                            $  (83)          $   800



  Amortization of intangible assets:
    Goodwill                                                                                 $  -             $ 1,346
    Franchise fees and other                                                                   (453)            8,226


                                                                                             $ (453)          $ 9,572



Year ended December 31, 1996:
  Allowance for doubtful accounts                                                            $ (821)          $   274



  Amortization of intangible assets:
    Goodwill                                                                                 $  -             $ 1,512
    Franchise fees and other                                                                   (372)            9,149


                                                                                             $ (372)          $10,661




</TABLE>