SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

X    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED] - For the fiscal year ended December 31, 1995
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COMMISSION FILE NUMBER 1-5467
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VALHI, INC.

(Exact name of registrant as specified in its charter)

DELAWARE                                            87-0110150
- -------------------------------                           --------------------

(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:          (214) 233-1700
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS                 WHICH REGISTERED
-------------------             ------------------------

Common stock                  New York Stock Exchange
($.01 par value per share)           Pacific Stock Exchange

9.25% Liquid Yield Option Notes,        New York Stock Exchange
due October 20, 2007

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

None.

INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K.  X

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
---     ---

AS OF FEBRUARY 29, 1996, 114,081,214 SHARES OF COMMON STOCK WERE OUTSTANDING.
THE AGGREGATE MARKET VALUE OF THE 9.8 MILLION SHARES OF VOTING STOCK HELD BY
NONAFFILIATES OF VALHI, INC. AS OF SUCH DATE APPROXIMATED $66 MILLION.

DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------

THE INFORMATION REQUIRED BY PART III IS INCORPORATED BY REFERENCE FROM THE
REGISTRANT'S DEFINITIVE PROXY STATEMENT TO BE FILED WITH THE COMMISSION PURSUANT
TO REGULATION 14A NOT LATER THAN 120 DAYS AFTER THE END OF THE FISCAL YEAR
COVERED BY THIS REPORT.

[INSIDE FRONT COVER]

A chart showing (i) Valhi's 54% ownership of NL Industries, Inc., (ii)
Valhi's 100% ownership of Valcor, Inc. and The Amalgamated Sugar Company, (iii)
Valhi's 50% ownership of Waste Control Specialists LLC and (iv) Valcor's 100%
ownership of Medite Corporation, National Cabinet Lock, Inc. and Sybra, Inc.

PART I

ITEM 1.   BUSINESS

Valhi, Inc. (NYSE: VHI), based in Dallas, Texas, is engaged in the
chemicals, refined sugar, building products, hardware products and fast food
industries, and is also entering the hazardous waste management business.
Information regarding the Company's business segments and the operating
subsidiaries conducting such businesses is set forth below.  Business and
geographic segment financial information is included in Note 2 to the Company's
Consolidated Financial Statements, which information is incorporated herein by
reference.

Chemicals                             NL is the world's fourth-largest
NL Industries, Inc.                 producer of titanium dioxide
(54%-owned)                        pigments ("TiO2"), used for
imparting whiteness, brightness and
opacity to a wide range of products
including paints, plastics, paper,
fibers and other "quality-of-life"
products.  NL has an estimated 11%
share of the worldwide TiO2 market.
NL believes it is also the world's
largest producer of rheological
additives for solvent-based systems.
NL has production facilities
throughout Europe and North America.

Refined Sugar                         Amalgamated is the second-largest
The Amalgamated Sugar Company       U.S. refiner and processor of
(100%-owned)                       sugarbeets with annual production of
over 1 1/2 billion pounds of sugar.
Sales from factories in Idaho and
Oregon are principally to industrial
sugar users.

Building Products                     Medite is a leading U.S. and
Medite Corporation                  European producer of medium density
(100%-owned)                       fiberboard ("MDF"), a wood fiber-
based engineered building board
product serving as a alternative to
certain traditional timber products.
Medite also conducts traditional
timber products operations in Oregon
where it owns 170,000 acres of
timberland.

Hardware Products                     National Cabinet Lock is a leading
National Cabinet Lock, Inc.         North American manufacturer of
(100%-owned)                       mechanical locks, workstations and
precision ball bearing drawer slides
for furniture and other markets.

Fast Food                             Sybra is the second-largest
Sybra, Inc.                         franchisee of Arby's restaurants
(100%-owned)                       with over 150 stores clustered
principally in Texas, Michigan,
Pennsylvania and Florida.

Waste Management                      Waste Control Specialists, formed in
Waste Control Specialists LLC       late 1995, is a development stage
(50%-owned)                        enterprise currently constructing a
facility in West Texas for the
processing, treatment, storage and
disposal of certain hazardous and
toxic wastes.  Revenues from
existing permits are expected to
begin in 1997 when the waste
disposal facility is planned to be
operational.

Valhi, a Delaware corporation, is the successor of the 1987 merger of The
Amalgamated Sugar Company and LLC Corporation.  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, President and Chief Executive Officer of Contran and
Valhi and may be deemed to control such companies.

During 1994, Valhi purchased additional NL common shares in market
transactions and thereby increased its direct ownership of NL from 49% to more
than 50% in mid-December 1994.  Accordingly, the Company ceased to report its
interest in NL by the equity method and commenced reporting NL as a consolidated
subsidiary.  The Company consolidated NL's financial position at December 31,
1994 and consolidated NL's results of operations and cash flows beginning in
1995.  Tremont Corporation, a Contran affiliate, holds an additional 18% of NL's
outstanding common stock.  See Note 3 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, statements found in this
Item 1 - `Business'', in Item 3 - ``Legal Proceedings'', and in Item 7 -
`Management's Discussion and Analysis of Financial Condition and Results of
Operations', are forward looking statements that involve a number of 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 and substitute products, customer and competitor strategies, the impact
of pricing and production decisions, environmental matters, government
regulations and possible changes therein, and the ultimate resolution of pending
litigation and possible future litigation as discussed in this Annual Report,
including, without limitation, the sections referenced above.

CHEMICALS - NL INDUSTRIES, INC.

NL Industries (NYSE: NL) is an international producer and marketer of TiO2
and specialty chemicals to customers in over 100 countries from facilities
located throughout Europe and North America.  Kronos, Inc., the largest of NL's
two principal operating subsidiaries, is the world's fourth-largest TiO2
producer, with an estimated 11% share of the worldwide market.  Approximately
one-half of Kronos' 1995 sales volume was in Europe, where Kronos is the second-
largest producer of TiO2.  Specialty chemicals, primarily rheological additives,
are produced through NL's Rheox, Inc. subsidiary.  In 1995, Kronos accounted for
87% of NL's sales and Rheox accounted for 13%.

NL's objective is to maximize its total shareholder returns by (i) focusing
on continued cost control, (ii) deleveraging during the current TiO2 upturn
cycle and (iii) investing in certain cost-effective debottlenecking projects to
increase TiO2 production capacity.

TiO2 products and operations.  Titanium dioxide pigments are chemical
products used for imparting whiteness, brightness and opacity to a wide range of
products, including paints, paper, plastics, fibers and ceramics.  TiO2 is
considered to be a "quality-of-life" product with demand affected by the gross
domestic product in various regions of the world.

Demand, supply and pricing of TiO2 have historically been cyclical.  The
last cyclical peak for TiO2 prices occurred in early 1990, with a cyclical low
in the third quarter of 1993.  The Company believes the TiO2 industry continues
to have long-term potential.  During the last TiO2 downturn, industry capacity
utilization dropped from almost 100% to approximately 85%.  Industry utilization
increased to about 91% in 1995, and Kronos' selling prices in the fourth quarter
of 1995 were about 24% above the 1993 low point.  Although TiO2 demand in Europe
and the U.S. is expected to be relatively flat during the first half of 1996, NL
expects industry capacity utilization rates will increase over the next several
years.  NL's expectations as to the future prospects of the TiO2 industry are
based on several factors beyond NL's control, principally continued worldwide
growth of gross domestic product and the absence of technological advancements
in or modifications to TiO2 processes that would result in material and
unanticipated increases in production efficiencies.  To the extent that actual
developments differ from NL's expectations, NL and the TiO2 industry's future
performance could be unfavorably affected.

Kronos has an estimated 18% share of European TiO2 sales and an estimated
9% share of the U.S. market.  Consumption per capita in the United States and
Western Europe far exceeds that in other areas of the world and these regions
are expected to continue to be the largest geographic markets for TiO2
consumption.  If the economies in Eastern Europe, the Far East and China
continue to develop, a significant market for TiO2 could emerge in those
countries.  Kronos believes that, due to its strong presence in Western Europe,
it is well positioned to participate in growth in the Eastern European market.

NL believes that there are no effective substitutes for TiO2.  However,
extenders such as kaolin clays, calcium carbonate and polymeric opacifiers are
used in a number of Kronos' markets.  Generally, extenders are used to reduce to
some extent the utilization of higher cost TiO2.  The use of extenders has not
significantly affected TiO2 consumption over the past decade because extenders
generally have, to date, failed to match the performance characteristics of
TiO2.  NL believes that the use of extenders will not materially alter the
growth of the TiO2 business in the foreseeable future.

NL currently produces over 40 different TiO2 grades, sold under the Kronos
and Titanox trademarks, which provide a variety of performance properties to
meet customers' specific requirements.  Major TiO2 customers include
international paint, paper and plastics manufacturers.  Kronos and its
distributors and agents sell and provide technical services for its products to
over 5,000 customers with the majority of sales in Europe, the United States and
Canada.

Kronos and its predecessors have produced and marketed TiO2 in North
America and Europe for over 70 years.  As a result, Kronos believes that it has
developed considerable expertise and efficiency in the manufacture, sale,
shipment and service of its products in domestic and international markets.  By
volume, about one-half of Kronos' 1995 TiO2 sales were to Europe, with 36% to
North America and the balance to export markets.  Kronos' international
operations are conducted through Kronos International, Inc. ("KII"), a German-
based holding company formed in 1989 to manage and coordinate NL's manufacturing
operations in Europe and Canada and its sales and marketing activities in over
100 countries.

Kronos is also engaged in the mining and sale of ilmenite ore (a raw
material used in the sulfate pigment production process), and the manufacture
and sale of iron-based water treatment chemicals (derived from co-products of
the pigment production processes). Water treatment chemicals are used as
treatment and conditioning agents for industrial effluents and municipal
wastewater and in the manufacture of iron pigments.

TiO2 manufacturing process, properties and raw materials.  TiO2 is
manufactured by Kronos using both the chloride process and the sulfate process.
Approximately two-thirds of Kronos' current production capacity is based on its
chloride process which generates less waste than the sulfate process.  The waste
acid resulting from the sulfate process is either neutralized or reprocessed at
Kronos' or third party facilities.  Although most end-use applications can use
pigments produced by either process, chloride process pigments are generally
preferred in certain segments of the coatings and plastics applications, and
sulfate process pigments are generally preferred for paper, fibers and ceramics
applications. Due to environmental factors and customer considerations, the
proportion of TiO2 industry sales represented by chloride process pigments has
increased relative to sulfate process pigments in the past few years, and
chloride process production facilities currently represent approximately 55% of
industry capacity.

Kronos currently has four TiO2 facilities in Europe  (Leverkusen and
Nordenham, Germany; Langerbrugge, Belgium; and Fredrikstad, Norway).  In North
America, Kronos has a facility in Varennes, Quebec and, through a manufacturing
joint venture discussed below, a one-half interest in a plant in Lake Charles,
Louisiana.  Kronos' principal German operating subsidiary leases the land under
its Leverkusen production facility pursuant to a lease expiring in 2050.  The
Leverkusen plant, with almost one-third of Kronos' current TiO2 production
capacity, is located within an extensive manufacturing complex owned by Bayer
AG, and Kronos is the only unrelated party so situated.  Under a separate
supplies and services agreement expiring in 2011, Bayer provides some raw
materials, auxiliary and operating materials and utilities services necessary to
operate the Leverkusen plant.  Both the lease and supplies and services
agreement restrict NL's ability to transfer ownership or use of the Leverkusen
plant.  Kronos also has a governmental concession with an unlimited term to
operate its ilmenite mine in Norway.

Kronos produced a record 393,000 metric tons of TiO2 in 1995, compared to
357,000 metric tons in 1994 and 352,000 metric tons in 1993.  Kronos believes
its annual attainable production capacity is approximately 390,000 metric tons,
including its one-half interest in the Louisiana plant.  Following completion of
its $25 million debottlenecking expansion of its Leverkusen, Germany chloride-
process facility in 1997, Kronos' expects its worldwide annual attainable
production capacity will increase to about 400,000 metric tons.

The primary raw materials used in the TiO2 chloride production process are
chlorine, coke and titanium-containing feedstock derived from beach sand
ilmenite and natural rutile ore.  Chlorine and coke are available from a number
of suppliers.  Titanium-containing feedstock suitable for use in the chloride
process is available from a limited number of suppliers around the world,
principally in Australia, Africa, India and the United States.  Kronos purchases
slag refined from beach sand ilmenite from Richards Bay Iron and Titanium
(Proprietary) Ltd. (South Africa), approximately 50% of which is owned by Q.I.T.
Fer et Titane Inc. ("QIT"), an indirect subsidiary of RTZ Corp., under a long-
term supply contract expiring in 2000.  Natural rutile ore, another chloride
feedstock, is purchased primarily from RGC Mineral Sands Limited (Australia)
under a long-term supply contract that also expires in 2000.  Raw materials
under these contracts are expected to meet Kronos' chloride feedstock
requirements over the next several years.

The primary raw materials used in the TiO2 sulfate production process are
sulfuric acid and titanium-containing feedstock derived primarily from rock and
beach sand ilmenite.  Sulfuric acid is available from a number of suppliers.
Titanium-containing feedstock suitable for use in the sulfate process is
available from a limited number of suppliers around the world.  Currently, the
principal active sources are located in Norway, Canada, Australia, India and
South Africa.  As one of the few vertically-integrated producers of sulfate
process pigments, Kronos operates a rock ilmenite mine near Hauge i Dalane,
Norway, which provided all of Kronos' feedstock for its European sulfate process
pigment plants in 1995.  Kronos' mine is also a commercial source of rock
ilmenite for other sulfate process producers in Europe.  Kronos also purchases
sulfate grade slag under contracts negotiated annually with QIT and Tinfos
Titanium and Iron K/S.

Kronos believes the availability of titanium-containing feedstock for both
the chloride and sulfate processes is adequate through the remainder of the
decade.  Kronos does not anticipate experiencing any interruptions of its raw
material supplies because of its long-term supply contracts, although political
and economic instability in the countries where NL purchases its raw material
supplies could adversely affect their availability.

TiO2 manufacturing joint venture.  In October 1993, Kronos formed a
manufacturing joint venture with Tioxide Group, Ltd., a wholly-owned subsidiary
of Imperial Chemicals Industries PLC.  The joint venture, which is equally owned
by subsidiaries of Kronos and Tioxide, owns and operates the Louisiana chloride
process TiO2 plant formerly owned by Kronos.  Production from the plant is
shared equally by Kronos and Tioxide pursuant to separate offtake agreements.

A supervisory committee, composed of four members, two of whom are
appointed by each partner, directs the business and affairs of the joint
venture, including production and output decisions.  Two general managers, one
appointed and compensated by each partner, manage the day-to-day operations of
the joint venture acting under the direction of the supervisory committee.

The manufacturing joint venture is intended to be operated on a break-even
basis, and accordingly Kronos' transfer price for its share of the TiO2 produced
is equal to its share of the joint venture's production costs and interest
expense.  Kronos' share of the production costs are reported as part of cost of
sales as the related TiO2 acquired from the joint venture is sold, and Kronos'
share of the joint venture's interest expense is reported as a component of
interest expense.

Specialty chemicals products and operations.  Rheological additives
produced by Rheox control the flow and leveling characteristics of a variety of
products, including paints, inks, lubricants, sealants, adhesives and cosmetics.
Organoclay rheological additives are clays which have been chemically reacted
with organic chemicals and compounds.  Rheox produces rheological additives for
both solvent-based and water-based systems.  Rheox believes that it is the
world's largest producer of rheological additives for solvent-based systems, and
is also a supplier for rheological additives used in water-based systems.
Rheological additives for solvent-based systems accounted for 80% of Rheox's
sales in 1995, with the remainder principally rheological additives for water-
based systems.  Rheox has introduced a number of new products during the past
three years, the majority of which are for water-based systems, which represent
a larger portion of the market than solvent-based systems.  Rheox believes
water-based additives will account for an increasing portion of its sales in the
long run.  Rheox's plants are in Charleston, West Virginia, Newberry Springs,
California, St. Louis, Missouri, Livingston, Scotland and Nordenham, Germany.

Sales of rheological additives generally follow overall economic growth in
Rheox's principal markets and are influenced by the volume of shipments of the
worldwide coatings industry.  Since Rheox's rheological additives are used in
industrial coatings, plant and equipment spending has an influence on demand for
this product line.

The primary raw materials for rheological additives are bentonite clays,
hectorite clays, quaternary amines, polyethylene waxes and castor oil
derivatives.  Bentonite clays are currently purchased under a three-year
contract, renewable through 2004, with a subsidiary of Dresser Industries, Inc.,
which has significant bentonite reserves in Wyoming.  This contract assures
Rheox the right to purchase its anticipated requirements of bentonite clays for
the foreseeable future, and Dresser's reserves are believed to be sufficient for
such purpose.  Hectorite clays are mined from company-owned reserves in Newberry
Springs, California, which NL believes are adequate to supply its needs for the
foreseeable future.  The Newberry Springs ore body contains the largest known
commercial deposit of hectorite clays in the world.  Quaternary amines are
purchased primarily from a joint venture company 50%-owned by Rheox and are also
generally available on the open market from a number of suppliers.  Castor oil-
based rheological additives are purchased from sources in the United States and
abroad.  Rheox has a supply contract with a manufacturer of these products,
which may not be terminated without 180 days notice by either party.

Competition.  The TiO2 industry is highly competitive.  During the late
1980's worldwide demand approximated available supply and the major producers,
including Kronos, were operating at or near available capacity and customers
were generally served on an allocation basis.  During the early 1990's, supply
exceeded demand, primarily due to new chloride process capacity coming
on-stream.  Relative supply/demand relationships, which favorably impacted
industry-wide prices during the late 1980's, had a negative impact on prices
during the subsequent downward cycle.  During 1994 and the first half of 1995,
improved industry capacity utilization resulted in increases in worldwide TiO2
prices.  Average TiO2 prices in the fourth quarter of 1995 were 14% higher than
the fourth quarter of 1994, and were about 17% lower than the previous peak.

Worldwide capacity additions in the TiO2 market resulting from construction
of grassroot plants require significant capital expenditures and substantial
lead time (typically three to five years in NL's experience) for, among other
things, planning, obtaining environmental approvals and construction.  No
grassroot plants have been announced, but industry capacity in the next few
years can be expected to increase as Kronos and its competitors complete
debottlenecking projects at existing facilities.  Based on factors described
under `TiO2 products and operations'' above, NL expects that the average annual
increase in industry capacity from announced debottlenecking projects will be
less than the average annual demand growth for TiO2 during the next few years.

Kronos competes primarily on the basis of price, product quality and
technical service, and the availability of high performance pigment grades.
Although certain TiO2 grades are considered specialty pigments, the majority of
grades and substantially all of Kronos' production are considered commodity
pigments with price generally being a most significant competitive factor.
Kronos has an estimated worldwide TiO2 market share of 11%, and believes that it
is the leading marketer of TiO2 in a number of countries, including Germany and
Canada.  Kronos' principal competitors are E.I. du Pont de Nemours & Co.;
Tioxide; Hanson PLC (SCM Chemicals); Kemira Oy; Ishihara Sangyo Kaisha, Ltd;
Bayer AG; Thann et Mulhouse and Kerr-McGee Corporation.  These eight competitors
have estimated individual worldwide market shares ranging from 4% to 21%, and an
aggregate estimated 76% share.  Du Pont has over one-half of total U.S. TiO2
production capacity and is Kronos' principal North American competitor.

Competition in the specialty chemicals industry is generally concentrated
in the areas of product uniqueness, quality and availability, technical service,
knowledge of end-use applications and price.  Rheox's principal competitors for
rheological additives for solvent-based systems are LaPorte PLC and Sud-Chemie
AG.  Principal competitors for water-based systems are Rohm and Haas Company,
Hercules Incorporated, The Dow Chemical Company and Union Carbide Corporation.

Research and development.  NL's expenditures for research and development
and technical support programs have averaged approximately $10 million during
the past three years, with Kronos accounting for about three-fourths of the
annual spending.  TiO2 research and development activities are conducted
principally at KII's Leverkusen, Germany facility.  Such activities are directed
primarily towards improving both the chloride and sulfate production processes,
improving product quality and strengthening Kronos' competitive position by
developing new pigment applications.  Activities relating to rheological
additives are conducted primarily in the U.S. and are directed towards the
development of new products for water-based systems, environmental applications
and new end-use applications for existing product lines.

Patents and trademarks.  Patents held for products and production processes
are believed to be important to NL and contribute to the continuing business
activities of Kronos and Rheox.  NL continually seeks patent protection for its
technical developments, principally in the United States, Canada and Europe, and
from time to time enters into licensing arrangements with third parties.  In
connection with the formation of the manufacturing joint venture with Tioxide,
Kronos and certain of its subsidiaries exchanged proprietary chloride process
and product technologies with Tioxide and certain of its affiliates.  Use by
each recipient of the other's technology in Europe is restricted until October
1996.  NL does not expect that the technology sharing arrangement with Tioxide
will materially impact its competitive position within the TiO2 industry.  See
`-- TiO2 manufacturing joint venture.''  NL's major trademarks, including
Kronos, Titanox and Rheox, are protected by registration in the United States
and elsewhere with respect to those products it manufactures and sells.

Customer base and seasonality.  NL believes that neither its aggregate
sales nor those of any of its principal product groups are concentrated in or
materially dependent upon any single customer or small group of customers.
Neither NL's business as a whole nor that of any of its principal product groups
is seasonal to any significant extent.  Due in part to the increase in paint
production in the spring to meet spring and summer painting season demand, TiO2
sales are generally higher in the second and third calendar quarters than in the
first and fourth calendar quarters.  Sales of rheological additives are
influenced by the worldwide industrial protective coatings industry, where
second calendar quarter sales are generally the strongest.

Employees.  As of December 31, 1995, NL employed approximately 3,200
persons (excluding the joint venture employees), with 400 employees in the
United States and 2,800 at non-U.S. sites.  Hourly employees in production
facilities worldwide, including the TiO2 joint venture, are represented by a
variety of labor unions, with labor agreements having various expiration dates.
NL believes its labor relations are satisfactory.

Regulatory and environmental matters.  Certain of NL's businesses are and
have been engaged in the handling, manufacture or use of substances or compounds
that may be considered toxic or hazardous within the meaning of applicable
environmental laws.  As with other companies engaged in similar businesses,
certain past and current operations and products of NL have the potential to
cause environmental or other damage.  NL has implemented and continues to
implement various policies and programs in an effort to minimize these risks.
NL's policy is to achieve compliance with applicable environmental laws and
regulations at all of its facilities and to strive to improve its environmental
performance.  It is possible that future developments, such as stricter
requirements of environmental laws and enforcement policies thereunder, could
affect NL's production, handling, use, storage, transportation, sale or disposal
of such substances.

NL's U.S. manufacturing operations are governed by federal environmental
and worker health and safety laws and regulations, principally the Resource
Conservation and Recovery Act, the Occupational Safety and Health Act, the Clean
Air Act, the Clean Water Act, the Safe Drinking Water Act, the Toxic Substances
Control Act, and the Comprehensive Environmental Response, Compensation and
Liability Act, as amended by the Superfund Amendments and Reauthorization Act
("CERCLA"), as well as the state counterparts of these statutes.  NL believes
that all of its U.S. plants and the Louisiana plant owned and operated by the
joint venture are in substantial compliance with applicable requirements of
these laws or compliance orders issued thereunder.  From time to time, NL
facilities may be subject to environmental regulatory enforcement under such
statutes.  Resolution of such matters typically involves the establishment of
compliance programs.  Occasionally, resolution may result in the payment of
penalties, but to date such penalties have not involved amounts having a
material adverse effect on NL's consolidated financial position, results of
operations or liquidity.

NL's European and Canadian production facilities operate in an
environmental regulatory framework in which governmental authorities typically
are granted broad discretionary powers which allow them to issue operating
permits required for the plants to operate.  NL believes all of its European and
Canadian plants are in substantial compliance with applicable environmental
laws.

While the laws regulating operations of industrial facilities in Europe
vary from country to country, a common regulatory denominator is provided by the
European Union ("EU"). Germany, Belgium and the United Kingdom, each members of
the EU, follow the initiatives of the EU; Norway, although not a member,
generally patterns its environmental regulatory actions after the EU.  Kronos
believes it is in substantial compliance with agreements reached with European
environmental authorities and with an EU directive to control the effluents
produced by TiO2 production facilities.  Rheox also believes it is in
substantial compliance with environmental regulations in Germany and the United
Kingdom.

In order to reduce sulfur dioxide emissions into the atmosphere consistent
with applicable environmental regulations, Kronos is currently installing off-
gas desulfurization systems at its Norwegian and German plants at an estimated
cost of approximately $30 million and expects to complete the systems in 1996
and 1997, respectively.  The Louisiana manufacturing joint venture installed a
$16 million off-gas desulfurization system which commenced operations in 1995.
In addition, Kronos expects to complete an $11 million wastewater treatment
chemical purification project at its Leverkusen, Germany facility in 1996.

The Quebec provincial government has environmental regulatory authority
over Kronos' Canadian TiO2 production facilities, which currently consist of
plants utilizing both the chloride and sulfate process technologies. The
provincial government regulates discharges into the St. Lawrence River.  In May
1992, the Quebec provincial government extended Kronos' right to discharge
effluents from its sulfate process TiO2 plant into the St. Lawrence River until
June 1994.  Kronos completed a waste acid neutralization facility and
discontinued discharging effluents into the St. Lawrence River in June 1994.
Notwithstanding the foregoing, in March 1993 Kronos' Canadian subsidiary and two
of its directors were charged by the Canadian federal government with five
violations of the Canadian Fisheries Act relating to discharges into the St.
Lawrence River from the Varennes sulfate TiO2 production facility.  The penalty
for these violations, if proven, could be up to Canadian $15 million.
Additional charges, if brought, could involve additional penalties.  NL believes
that this charge is inconsistent with the extension granted by provincial
authorities, referred to above, and is vigorously contesting the charge.

NL's capital expenditures related to its ongoing environmental protection
and compliance programs, including those described above, are currently expected
to approximate $23 million in 1996 and $5 million in 1997.

NL has been named as a defendant, potentially responsible party ("PRP") or
both, pursuant to CERCLA and similar state laws in approximately 80 governmental
enforcement and private actions associated with waste disposal sites and
facilities currently or previously owned, operated or used by NL, many of which
are on the U.S. Environmental Protection Agency's Superfund National Priorities
List or similar state lists.  See Item 3 - "Legal Proceedings."

REFINED SUGAR - THE AMALGAMATED SUGAR COMPANY

Amalgamated is the second-largest U.S. beet sugar producer with
approximately 10% of domestic annual sugar production.  Amalgamated's primary
strategic focus is to improve its efficiency in extracting and refining sugar in
order to increase sugar production, reduce unit production costs and maintain
market share.  Amalgamated's capital investments over the past few years have
emphasized extraction and other productivity improvement projects.

Products and operations.  Refined sugar accounts for approximately 90% of
Amalgamated's annual sales.  Animal feed, in the forms of beet pulp and other
by-products of sugarbeet processing, accounts for most of its remaining sales.
Each spring, Amalgamated contracts with approximately 1,500 individual farmers
to plant a specified number of acres of sugarbeets and to deliver the sugarbeets
to Amalgamated upon harvest in the fall.  Amalgamated's sugarbeet processing,
which consists of extracting sugar from the sugarbeets and refining the sugar,
begins upon harvest and usually lasts until February.  Approximately 30% of the
sugarbeet crop is initially processed into a thick syrup, which is stored in
Amalgamated's facilities and subsequently processed into refined sugar.  Refined
sugar is sold throughout the year while by-products are sold primarily in the
first and fourth calendar quarters.  Amalgamated's profitability is determined
primarily by the quantity and quality of the sugarbeets processed, its
efficiency in extracting and refining sugar, and the sales price of refined
sugar.

Amalgamated's four factories operate at approximately full capacity during
the annual sugarbeet processing campaigns, and annual sugar production has
generally averaged 1.6 billion pounds over the past few years.  However, due
principally to an abnormally high yield per acre resulting from extremely
favorable weather conditions during the 1994 growing season, sugar production
from the crop harvested in the fall of 1994 was a record 1.74 billion pounds.
Production from the crop harvested in the fall of 1995 will likely be more in
line with prior crop levels, or about 7% lower than the prior year's record.

The price paid to growers for sugarbeets is a function of Amalgamated's
average sales price for refined sugar during the contract settlement year, which
runs from October through September, and of the sugar content of the sugarbeets.
This variable cost feature serves as a partial hedge of selling price changes.
The cost of transporting sugarbeets to Amalgamated's factories generally limits
the geographic area from which sugarbeets are purchased.  The anticipated price
of sugar and the price of competing crops influence the number of acres of
sugarbeets planted.  The available sugarbeet acreage in Amalgamated's geographic
area of operations exceeds Amalgamated's processing capacity.

Amalgamated sells sugar primarily in the North Central and Intermountain
Northwest regions of the United States.  Approximately 80% of sugar sales are to
industrial sugar users and approximately 20% are to wholesalers or retailers in
consumer-sized packages.  As is customary in the sugar industry, Amalgamated
sells sugar to its customers under contract for future delivery, generally
within one to six months.  Amalgamated does not otherwise engage in the purchase
or sale of sugar futures contracts.

Beet pulp and other by-products of the sugar extraction process constitute
approximately 10% of Amalgamated's sales and are sold primarily to animal
feeders in the U.S. Intermountain Northwest region and Japan.  The quantity of
by-products available for sale is determined principally by the size of the
sugarbeet crop.  By-product sales prices are influenced by the prices of
competing animal feeds and have no direct relation to sugar prices.

Competitors and competition.  Sugar production in the United States has
increased in recent years, and the U.S. sugar industry currently produces about
85% of the country's sugar needs from domestically-grown sugarbeets and
sugarcane.  The remainder of the country's sugar supply is imported, principally
as raw sugar that is processed into refined sugar by coastal refiners.  There is
no difference between domestically-produced sugar, either from sugarbeets or
sugarcane, and that produced from imported raw sugar.  Amalgamated competes with
virtually all processors of either domestically-grown sugar crops or imported
raw sugar.  Major competitors in Amalgamated's geographic sales area include the
American Crystal, C&H, Domino, Imperial Holly, Savannah Foods and Western Sugar
companies.  Because refined sugar is a commodity product, Amalgamated has little
ability to independently establish selling prices.

Total and per capita domestic sugar consumption has increased slightly
during the past ten years after declining during the early 1980's as a result of
increased consumption of high fructose corn syrup and non-caloric sweeteners
such as aspartame.  According to published sources, the percentage of total U.S.
caloric sweetener use attributable to refined sugar has averaged approximately
45% during the last five years.  Per capita consumption of refined sugar in 1995
is estimated at 64.6 pounds, as compared to actual consumption of 64.5 pounds in
1990 and 63 pounds in 1985.

Amalgamated does not believe it is dependent upon one or a few customers;
however, major food processors are substantial customers and represent an
important portion of sales.  Amalgamated's ten largest customers accounted for
approximately one-third of its sales in each of the past three years, with the
largest customer accounting for 4% to 5% of sales in each year.

Governmental sugar price support program.  The Food, Agriculture,
Conservation and Trade Act of 1990 (the "1990 Farm Bill"), as amended by the
Omnibus Budget Reconciliation Act of 1993, continues, through the 1997 crop year
ending in September 1998, the sugar price support program for domestically-grown
sugarcane and sugarbeets established by the Agriculture and Food Act of 1981.
The U.S. Congress is currently considering a new Farm Bill which would, among
other things, extend the sugar price support program through September 2003.
While there can be no assurance, the Company currently believes the sugar
program will remain relatively intact when the new Farm Bill is enacted,
although reforms will likely eliminate marketing allotments, provide only for
recourse loans (vs. current nonrecourse loans) unless sugar imports exceed
certain levels, and generally make the industry more market-oriented.

Under the current sugar price support loan program, Amalgamated is able to
obtain, from the federal government, nonrecourse loans on its refined sugar
inventories at loan rates based upon a raw sugar support price of no less than
18/ per pound.  The effective net government loan rate applicable to
Amalgamated's 1995 crop sugar is 20.22/ per pound.  The 1990 Farm Bill
implemented marketing assessments on domestically-produced beet and cane sugars.
The marketing assessment cost is shared by the processors and the growers, and
results in a net cost to Amalgamated of about 0.08/ per pound, or approximately
$1.5 million per year.

The sugar price support loan program is to be operated at no cost to the
federal government, which requires the government to take actions to maintain
sugar market prices above the price support loan levels in order to prevent
defaults on the nonrecourse loans extended under the program.  Currently, the
government restricts sugar supply to help maintain domestic market prices both
by imposing quotas and duties on imported sugar and, when necessary, limiting
quantities which domestic producers can sell in the U.S. market.

The 1990 Farm Bill guarantees a minimum annual import quota of 1.25 million
short tons (1.1 million metric tons) of raw sugar and the United States
Department of Agriculture can impose marketing allotments on domestic sugarcane
and sugarbeet processors to limit the amount of raw and refined sugar which each
domestic processor may market.  Marketing allotments were imposed during the
1992 and 1994 crop years while the 1993 crop was free of allotments.  The
government has announced that there will be no allotments during the current
crop year which ends September 1996.

Research and development.  Amalgamated has historically maintained research
and development programs emphasizing processing technology and its annual
research and development expense has been $500,000 to $800,000 during the past
three years.  Amalgamated developed various proprietary technologies related to
sugar processing and employs these process improvements to reduce its operating
costs.  Some of these techniques apply to fructose and cane refinery operations
as well as sugarbeet operations.

In December 1995, Amalgamated's research and development activities were
transferred to Amalgamated Research, Inc., an indirect wholly-owned subsidiary
of Valhi.  Amalgamated Research is continuing the research and development
activities formerly performed directly by Amalgamated, and also intends to
extend its activities into other areas within and outside of the sweetener
industry.  Amalgamated has agreed to pay an intercompany fee to cover
substantially all of Amalgamated Research's operating costs, which fee is
currently expected to approximate Amalgamated's historical research and
development expenditures.  In return, Amalgamated has been granted a perpetual,
royalty-free license for the use of all existing and future-developed technology
owned by Amalgamated Research, and Amalgamated will share in any future sales or
licenses of technology owned by Amalgamated Research.  Amalgamated Research
presently holds patents on certain of its proprietary technology.  The loss of
any of such patents would not have a material adverse effect on the Company's
sugar operations.

Employees.  Amalgamated employs approximately 2,700 persons at the height
of the production season, of which approximately 1,600 are year-round employees.
Amalgamated's three-year labor agreement with the American Federation of Grain
Millers, which represents production employees through local unions, expires
July 1996.  Amalgamated believes its labor relations are satisfactory.

Energy.  Amalgamated's primary fuel is coal, but it can utilize other
fuels.  The supply of coal is provided under a long-term contract expiring
February 1998, subject to extension at Amalgamated's option for three five-year
periods.  Energy is an important element in the processing of sugarbeets, and
the use of coal has historically resulted in lower production costs than if oil,
natural gas or electricity were Amalgamated's primary energy source.

Properties.  Amalgamated owns four sugar processing factories, located in
Paul, Twin Falls and Nampa, Idaho and Nyssa, Oregon, and also owns three
distribution terminals in three states and six storage facilities in two states.
The Nampa factory, with a daily slice rate approaching 12,000 tons per day, is
the largest such facility in the United States.  Amalgamated believes the
capacity of each of its four factories exceed the U.S. average.

Regulatory and environmental matters.  Amalgamated's operations are
governed by federal, state and local laws and regulations relating to production
procedures, operating environment, emissions and waste disposal, air and water
quality, and worker and product safety and protection.  Amalgamated believes
that it is currently in substantial compliance with existing permits and
regulations relating to its facilities; however, federal and state environmental
compliance requirements are becoming more stringent in certain respects and are
expected to result in expenditures in excess of the relatively nominal amounts
spent in recent years.  Amalgamated's capital budget for 1996 includes
approximately $2 million in the area of environmental protection and
improvement, principally related to air and water treatment facilities at
certain of its factories.

BUILDING PRODUCTS - MEDITE CORPORATION

Medite's principal business is the international production and sale of
medium density fiberboard.  MDF is a wood fiber-based engineered building board
product manufactured primarily from pre-commercial forest thinnings and forest
product industry residuals (wood chips, shavings and sawdust) which are bonded
together with resins to form a machineable, consistent panel.  Relative to
traditional timber products, MDF generally has both lower unit costs and
physical characteristics which promote the use of MDF in a variety of
applications, including furniture, cabinetry, shop fittings, moldings, millwork
and joinery.  According to industry sources, furniture currently accounts for
approximately 75% of MDF use in Europe and 85% in the United States.

Medite's MDF production facilities in the Republic of Ireland and Oregon
had a 1995 annual capacity of 420,000 cubic meters.  A capacity addition
completed in late 1994 at the Irish plant will ultimately increase its capacity
by an additional 55,000 M3 by 1998.  Medite also currently operates a third MDF
plant, located in New Mexico, which in 1995 accounted for approximately 19% of
Medite's total MDF sales and approximately 25% of its MDF production.  On March
14, 1996, the Company announced its plans to close this facility by May 13,
1996.  See `Environmental matters and government regulations,'' Item 7 -
`Management's Discussion and Analysis of Financial Condition and Results of
Operations''and Note 22 to the Consolidated Financial Statements.

Medite's major markets are in North America (40% of 1995 MDF sales) and
Europe (54%).  The Company believes that Medite is the world's most recognized
MDF trademark.  In addition to standard Medite, the Company offers a wide range
of specialty MDF products which are sold for higher prices and generally result
in higher operating margins than standard MDF products.  Substantially all MDF
produced at the New Mexico facility is standard Medite sold predominately in
North America.  Accordingly, the percentage mix of Medite's total MDF sales in
Europe and specialty products are both expected to increase following closure of
the New Mexico plant.

In addition to its MDF operations, Medite owns approximately 170,000 acres
of timberland in Southern Oregon containing approximately 667 million board feet
("MMBF") of generally second-growth merchantable timber and operates facilities
that produce traditional timber products including logs, lumber, veneer and wood
chips.  Medite actively manages its fee timberlands, which have become an
increasingly valuable resource in recent years as the volume of timber offered
for sale in the Pacific Northwest by U.S. government agencies has substantially
declined.

Medite's strategy is to continue to focus on MDF, including development of
specialty MDF products and enhancement of machineability in response to
increasing substitution in molding and similar applications, and to manage its
fee timber resources on a longer-term sustainable basis and seek to maximize the
operating contribution of its harvested timber.

MDF products.  Medite's standard MDF product, Medite, was first introduced
in 1975 and is produced exclusively for interior applications such as furniture,
shelving, door frames, cabinet doors and interior paneling.  In 1995, standard
Medite accounted for approximately 75% of Medite's total MDF sales dollars, with
specialty products, described below, accounting for 25%.  Excluding the New
Mexico operations, specialty products accounted for approximately 30% of 1995
sales dollars.

Specialty products include Medex, designed for exterior applications,
Medite 313 for interior applications that involve high-humidity environments,
Medite FR, developed by Medite primarily to address strict building code
requirements in Europe for flame/fire resistance, and Medite II developed to
meet specialized needs for a low formaldehyde-content interior MDF product.

MDF production facilities and raw materials.  Medite uses the newer
technology continuous line press, more efficient in producing thin board MDF
(three to 15 millimeters), at its Irish MDF plant and uses an older multi-
opening press technology at each of its facilities generally to produce thicker
MDF (16 to 30 millimeters).

Medite's Clonmel, Republic of Ireland MDF plant produces standard and
specialty MDF products under the ISO 9000 quality management certification.  A
$32 million expansion completed in the fourth quarter of 1994 raised future
production capacity to 300,000 M3.  Production during 1995 amounted to
approximately 237,000 M3 (approximately 97% of 1995 capacity).  Approximately
28% of 1995 Clonmel production consisted of specialty MDF products.  Medite has
what it considers to be an attractive long-term supply contract with the Irish
Forestry Service, pursuant to which Medite has a reliable, fixed price supply of
pre-commercial thinnings from Irish forests.  See Note 20 to the Consolidated
Financial Statements.  These and other private sources of pre-commercial
thinnings accounted for approximately 60% of the Clonmel plant's fiber raw
materials in 1995.  The balance of fiber requirements are provided by wood chips
acquired from local sawmill operators, which Medite believes will be available
in adequate supply due to the continuing development of the Irish forest
products industry.

Production at the Oregon MDF plant during 1995 was approximately 82% of its
175,000 M3 capacity, with standard Medite accounting for approximately 90% of
production.  The primary fiber sources are wood chips, shavings and sawdust,
almost all purchased from sawmills located in close proximity to the plant at
spot market prices.  Production at the New Mexico plant during 1995 was
approximately 78% of its 160,000 M3 capacity, approximately 95% of which was
standard Medite product.  The primary fiber sources are wood chips, shavings and
sawdust produced within a 150-mile radius of the plant, most of which are
purchased pursuant to short-term contracts.

Through its Oregon fee timberlands, its long-term wood supply agreements
with the Irish Forestry Service and other sources, Medite believes it has access
to adequate fiber supplies to meet current and expected operating needs for its
existing facilities.  However, Medite anticipates increasing competition for
wood fiber in future years and, accordingly, there can be no assurance that
long-term future fiber supply will be adequate, with respect to quantity and
price, to maintain margins or to provide for future capacity expansion.

Medite purchases urea formaldehyde resins for standard MDF products from
suppliers located in close proximity to its plants.  Resins for U.S. specialty
MDF products are purchased primarily from suppliers in Texas and Louisiana with
resins for specialty MDF products produced in Ireland purchased primarily from
U.K. suppliers.

Traditional timber products - products, operations and properties.  Medite
produces and sells lumber used in residential and commercial construction, and
veneer which is used in the production of plywood and laminated veneer lumber
("LVL"), and wood chips, which are a basic raw material for the MDF and paper
industries.  Logs harvested from Medite's fee timberlands are utilized in the
production of lumber, veneer and wood chips.  Certain sizes and species of logs
harvested by Medite that are not used in its manufacturing operations are sold
to other mills in the Northwest.

Medite owns approximately 170,000 acres of timberland which contain
approximately 667 million board feet of generally second-growth merchantable
timber. The dominant species is Douglas Fir and the average annual timber growth
rate is approximately 4%.  Medite's timber holdings are within close proximity
to its Oregon production facilities and are in relatively accessible terrain.

Medite produces veneer in Rogue River, Oregon and stud lumber in White
City, Oregon.  Annual capacities of these plants are 80,000 square feet (3/8"
basis) of veneer and 70,000 board feet of lumber plus a combined annual wood
chip capacity of 70,000 bone dry units.  The Rogue River plant, completed in
late 1993 to replace a similar facility destroyed by fire in June 1992, is
designed to process cull (defective) logs from throughout the Southern Oregon
area and the smaller second-growth timber expected to be available from Company-
owned timberlands on a longer-term basis.  Veneer from this plant is sold to the
LVL industry as well as to traditional softwood and hardwood plywood products
manufacturers.  The White City mill produces primarily 2x4 studs, used in
residential construction in California, from small logs and "peeler cores", a
by-product of veneer conversion facilities.

Distribution and sale of products.  Medite's manufactured products are sold
primarily to wholesalers of building materials.  Medite's major MDF markets
include the United Kingdom, Northern Europe and the Republic of Ireland; west
and central United States; the Pacific Rim and Mexico.  In 1995, approximately
40% of Medite's total MDF sales were in North America with 54% in Europe (29% in
the United Kingdom).  As MDF produced by the New Mexico facility was sold
predominately in North America, the relative percent of Medite's total MDF sales
in Europe will increase following closure of the facility.  U.S. distribution is
primarily by rail and common carrier trucking, while most Irish production is
shipped by containerized ocean cargo.

Manufactured traditional timber products are sold primarily in Western U.S.
markets.  Logs are sold primarily to other Oregon mills.  Although logging
operations are seasonal due to inclement weather conditions during winter and
spring months, the production and sale of manufactured products is not
particularly seasonal in nature.

Medite's operations are not dependent upon one or a few customers, the loss
of which would have a material adverse effect on its operations.  Medite's ten
largest customers accounted for about one-fifth of sales in each of the past
three years with at least six of such customers in each year located in the U.S.

Cyclicality.  Demand for Medite's MDF products is in part derived from the
general level of economic activity in its principal markets (North America and
Europe).  Economic growth rates in Europe and North America slowed during 1995
and may continue to be relatively slow in 1996.  Demand for Medite's traditional
timber products is largely influenced by new U.S. construction, which is highly
cyclical in nature.  Medite expects its future operating performance will
continue to be affected in part by both general and industry specific economic
conditions, some of which are cyclical in nature.

Competition.  Medite operates in highly competitive industries.  Within the
MDF segment of its business, Medite competes on the basis of quality, product
breadth, customer service and price.  In the traditional timber products
business, Medite competes primarily on the basis of price.  Transportation costs
generally limit the geographic markets in which Medite's and its competitors'
products are sold.

During 1994, global demand for MDF exceeded availability and numerous
producers, including Medite, placed customers on allocation.  The high MDF
operating rates and increasing product prices, coupled with favorable forecasts
for increasing MDF demand, resulted in industry capacity additions during 1995
with additional capacity expected in 1996.  Such industry capacity additions,
coupled with lower-than-expected demand in Europe and North America, contributed
to lower MDF selling prices and operating rates in the last half of 1995 and are
expected to continue price and volume pressures in 1996.  These factors, along
with the closure of the New Mexico MDF facility, will reduce Medite's worldwide
market share from current levels.  Certain factors affecting Medite's MDF
operating performance in 1996 are beyond its control, including general economic
conditions in its markets, the ramp-up rate of 1995 and 1996 industry capacity
additions and competitor pricing decisions.  To the extent that actual
developments differ from Medite's expectations, Medite's operating performance
could be affected.

Medite's MDF operations compete in North America principally with a number
of producers of MDF and other composite board products such as particle board,
and in the Pacific Rim with Australian, New Zealand and other U.S.
manufacturers.  In Europe, Medite competes principally with other European Union
producers.  Medite's larger MDF competitors in Europe include Kronospan and
Gluntz AG and in North America include International Paper and Willamette
Industries.  The cost of shipping products, which is borne by the customer, is
significant and Medite may operate at a competitive disadvantage relative to
certain other producers who are located closer to certain markets.
Approximately 70% of Medite's MDF production capacity in Ireland and Oregon
utilizes the older multi-opening press technology and 30% utilizes the newer and
generally more efficient continuous press technology.  Medite understands that
much of the 1995/1996 industry capacity additions utilize the newer press
technology and may subject Medite to certain competitive disadvantages.  In
addition, some of Medite's competitors may possess greater financial resources,
including in some cases the financial support of the governments of the
countries in which such competitors are located.  Due to periodic declines in
the value of the U.S. dollar relative to other currencies, Medite's Irish
operations have also experienced periodic competition from North American
producers.

Medite's traditional timber products operations compete primarily with
numerous other producers in the Pacific Northwest, Canada and, increasingly, the
Southern United States.  While Medite's fee timber is a valuable resource which
aids its ability to control product costs, other companies with greater supplies
of fee timber may have a competitive product cost advantage.

Environmental matters and governmental regulation.  Medite's MDF and
traditional timber products manufacturing operations are subject to numerous
national, state and local laws and regulations relating to, among other things,
raw materials handling, production procedures, operating environment, emissions
and waste disposal, air and water quality, worker and product safety and
protection of the environment generally.  As Medite engages in manufacturing
activities in the United States and Europe, it must at times contend with
differing regulatory standards and requirements.  Except with respect to the New
Mexico MDF facility to be closed (See Item 3 - `Legal Proceedings'' and Note 22
to the Consolidated Financial Statements), Medite believes that it currently is
in material compliance with existing regulations.  There can be no assurance,
however, that new or more rigorous regulations affecting Medite's products or
manufacturing operations will not be adopted or that future expenditures to
comply with any such regulations would not be material.

Urea formaldehyde resin is used as a binding agent in the production of
standard MDF products.  Formaldehyde, which also occurs naturally in wood and
other natural resources, is listed as a "suspected" carcinogen by the U.S.
federal government based upon results of laboratory studies performed using
maximum tolerated doses.  While Medite's MDF products that contain urea
formaldehyde resins currently meet applicable regulations, there can be no
assurance that the MDF industry, including Medite, will not be compelled to
reduce or even eliminate the use of urea formaldehyde resins in the future.
Medite produces a `formaldehyde-free'' specialty MDF product, Medite II, which
represented a nominal amount of sales in 1995.

Medite's MDF manufacturing operations also release formaldehyde into the
atmosphere as a waste by-product.  These emissions have been targeted for
increasingly stringent regulation under the U.S. Clean Air Act, although final
regulations for emissions are not scheduled to be promulgated by the
Environmental Protection Agency until 1997 and Medite cannot predict what, if
any, future pollution control technology may be required.  The cost of any such
future technology could be significant in the years in which it might be
required to be installed.

Medite's traditional timber products operations are subject to a variety of
Oregon and federal laws and regulations dealing with timber harvesting,
reforestation and endangered species.  The Northern Spotted Owl is currently
designated as a threatened species under the Endangered Species Act ("ESA").
Generally, habitat for these owls is found in old-growth timber stands, and not
in Medite's predominantly second-growth timber.  Consequently, the Northern
Spotted Owl's ESA status has not to date had, and, Medite believes, will not in
the future have, a material adverse effect on its timber harvesting practices.
A 1994 amendment to the Oregon Forest Practices Act imposed more restrictive
regulations on the harvest of timber near rivers and streams, including
intermittent stream beds.  Medite believes that this amendment will not
materially impact its ability to harvest timber from its timberlands.  There can
be no assurance, however, that future legislation or governmental regulations
will not adversely affect Medite or its ability to harvest timber and sell logs
in the manner currently contemplated.

Trademarks and patents.  Medite believes that the patents it holds for MDF
products and production processes are important to its MDF business.  Medite's
major MDF trademarks, Medite and Medex, are protected by registration in the
United States and certain other countries.  Medite also has a non-exclusive
worldwide license relating to application of resins in the manufacture of Medex
and a patent on the apparatus and method of manufacture of Medex.

Employees.  As of December 31, 1995, Medite employed approximately 700
persons  including 500 in the United States and 200 in Europe. Approximately 30%
of U.S. employees and 70% of non-U.S. employees were represented by various
labor unions.  The New Mexico MDF facility employs approximately 160 persons,
none of which are covered by a collective bargaining agreement.  The collective
bargaining agreements related to its veneer plant, its Irish MDF plant and its
Oregon MDF plant expire in June 1996, March 1997 and September 1997,
respectively.  Medite believes that its labor relations are satisfactory.

Risk of loss from fire or other casualties.  Medite assumes substantially
all risks of loss from fire and other casualties on its timberlands, as do the
owners of most other timber tracts in the United States.  Consistent with the
past practices of Medite and most other U.S. timber owners, Medite does not
maintain  fire insurance in respect to standing timber.  Medite is a participant
with state agencies and other timberland owners in cooperative fire fighting and
aerial fire surveillance programs.  The extensive roads on Medite's acreage also
serve as fire breaks and facilitate implementation of fire control techniques
and utilization of fire fighting equipment.  Medite's various timber tracts are
somewhat geographically dispersed, which also reduces the possibility of
significant fire damage.  The only significant forest fire on Medite's
timberlands during the past five years occurred in July 1994 and resulted in
damage to approximately 1,200 acres, which were salvaged with minimal loss.

Medite's production facilities are susceptible to fire because of the
nature of their operations, and in 1992 the Rogue River veneer mill was
completely destroyed by fire.  To reduce the risk of significant fire damage,
Medite's present facilities employ sophisticated fire monitoring and detection
systems.  The Company also maintains property and business interruption
insurance to mitigate potential risk of loss arising from fires or other
casualty losses.

HARDWARE PRODUCTS - NATIONAL CABINET LOCK, INC.

Products, operations and properties.  National Cabinet Lock manufactures
low and medium-security mechanical locks, precision ball bearing drawer slides,
computer workstations and other components for furniture and a variety of other
applications.  In 1995, each of the three major product lines (locks, drawer
slides and workstations) accounted for about one-third of the Company's total
hardware sales.  Locks are produced by National Cabinet Lock primarily in
Mauldin, South Carolina.  Drawer slides and workstations are produced in
Kitchener, Ontario under the Waterloo Furniture Components name.  The Company
believes its hardware products compete in relatively well-defined niche markets
and believes that it is (i) the largest U.S. cabinet lock producer, (ii) the
largest Canadian producer of drawer slides and (iii) the largest supplier of
computer keyboard support arms to the North American office furniture
manufacturing market.

Purchased components, including zinc castings, are the principal raw
materials used in the manufacture of latching and security products.  Strip
steel is the major raw material used in the manufacture of drawer slides and
workstation products.  These raw materials are purchased from several suppliers
and are readily available.  The cost of zinc, copper and steel has generally
increased throughout the past two years.  Such increased raw material costs were
partially offset by responsive selling price increases.  There can be no
assurance that any future raw material cost increases can be fully recovered
through additional product price increases.

Strategy.  National Cabinet Lock'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.  In this regard, in August 1995 National Cabinet
Lock acquired the assets of a Canadian workstation and drawer slide competitor
for approximately $6 million.

Competition and customer base.  Competition in the Company's hardware
products markets is based on product features, customer service, quality,
distribution channels, consumer brand preferences and price.  Approximately 30%
of lock sales are made through National Cabinet Lock'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.  Precision ball bearing drawer slides
and workstations are produced in Canada under the Waterloo Furniture Components
tradename.  The primary market for these products are office furniture
manufacturers in the United States and Canada.  Hardware products are marketed
primarily through the Company's own sales organization as well as select
manufacturers' representatives.

Major competitors include Chicago Lock, ESP and Fort Lock (locks), Accuride
and Knape & Vogt (drawer slides) and Weber Knapp (workstations).  National
Cabinet Lock 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
hardware operations.  The ten largest customers accounted for about one-third of
hardware products sales in each of the past three years, with the largest
customer less than 10% in each year.  In 1995, five of the ten largest customers
were located in the U.S. with five in Canada.  Of such customers, nine were
primarily purchasers of Waterloo Furniture Components' products and one was a
U.S. lock customer.

Patents and trademarks.  National Cabinet Lock holds a number of patents
relating to its hardware 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, which the Company
believes are well recognized in the hardware products industry.

Employees.  As of December 31, 1995, National Cabinet Lock employed
approximately 750 persons, of which 220 were in the United States and 530 were
in Canada.  Approximately two-thirds of Canadian employees are covered by a
three-year collective bargaining agreement expiring February 1997.  National
Cabinet Lock believes that its labor relations are satisfactory.

Regulatory and environmental matters.  The Company's hardware products
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.  National Cabinet Lock 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) operates over
150 Arby's restaurants clustered in four regions, principally in Michigan (47
stores), Texas (58), Pennsylvania (31) and Florida (22), pursuant to licenses
with Arby's, Inc.  According to information provided by Arby's, Sybra is the
second-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 has evolved whereby roast beef accounts
for approximately two-thirds of sandwich sales compared to 80% five years ago.
In January 1996, Sybra introduced its first `dual-branded'' store, offering
ZuZu Handmade Mexican Food as well as the Arby's menu.  Sybra may introduce
additional dual-branded stores if returns are deemed satisfactory.

Sybra's 158 Arby's restaurants at the end of 1995 represent a net decrease
of two  stores in the past three years (18 opened; 20 closed) during which
period Sybra also remodeled 18 of its older stores.  Sybra currently expects a
net decrease of at least five stores in 1996, as it plans to open one new
restaurant during the first quarter and has closed six stores during January and
February.

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 1995, approximately 80% of Sybra's 158 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.  Approximately 90% of the
leases of free-standing locations contain purchase options at fair market values
and/or various renewal options.  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.

Sybra has a Consolidated Development Agreement ("CDA") with Arby's, Inc.
which currently provides Sybra with exclusive development rights within certain
counties in the Dallas/Fort Worth, Texas area, and provides Sybra and Arby's
with joint development rights in the Tampa, Florida area.  As of December 31,
1995, Sybra is required to open an aggregate of 12 more stores in its existing
regional markets through various dates in 1997 (five in 1996).  The Company is
considering curtailing new store openings and, as a result, Sybra may not be in
compliance with the current terms of the CDA by the end of 1996.  In that event,
there can be no assurance that Sybra could renegotiate the CDA in order to
retain its exclusive development rights, in which case other Arby's competitors
would be free to enter the Dallas/Ft. Worth and Tampa markets.  Sybra does not
have any other 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 of 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, 42% 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 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 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 historically been affected by
both retail shopping patterns and weather conditions.  Accordingly, Sybra
historically 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, 1995, Sybra had approximately 3,900
employees, of which 3,200 were part-time employees.  Approximately 3,800
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 are approximately 29% of sales.
Any increase in the minimum wage rate or legislation requiring mandatory medical
insurance benefits to part-time employees would increase Sybra's labor costs.
Although Sybra's competitors would likely experience similar increases, there
can be no assurance that Sybra will be able to increase sales prices to offset
future increases, if any, 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.

WASTE MANAGEMENT - WASTE CONTROL SPECIALISTS LLC

Waste Control Specialists LLC, formed in November 1995, is a development
stage enterprise currently constructing a facility in West Texas for the
processing, treatment, storage and disposal of certain hazardous and toxic
wastes.  Waste Control Specialists expects to report losses during the
development stage and does not expect to begin reporting revenues from existing
permits until 1997 when the facility is planned to be operational.  Valhi has
committed to contribute $25 million to Waste Control Specialists through early
1997 for its 50% interest. Valhi's $25 million investment will be used primarily
to fund construction of the facility.  The other 50%-owner (controlled by the
Chief Executive Officer of Waste Control Specialists) contributed certain
assets, primarily land and operating permits for the facility site, and Waste
Control Specialists also assumed certain indebtedness of the other owner.

Facility under construction. The facility under construction, located on a
1,338 acre site in West Texas owned by Waste Control Specialists, will initially
consist of a common-hole landfill plus individual condominium landfills, in
which customers' wastes will be segregated in separate landfills.  The facility
will also handle treatment and stabilization of wastes and contain a warehouse
for storage of drummed wastes.   Waste Control Specialists owns approximately
15,000 acres of land surrounding the permitted site, a small portion of which is
located in New Mexico.  This presently undeveloped additional acreage is
available for future expansion assuming appropriate permits could be obtained.

The 1,338 acre facility site has, in Waste Control Specialists' opinion,
superior geological characteristics     which make it an environmentally
desirable location.  The site is located in a relatively remote and arid section
of West Texas.  The ground is composed of triassic red bed clay for which the
possibility of leakage into any underground water table is considered remote.

Future operations, services and customers.  Waste Control Specialists has
been issued permits by the Texas Natural Resource Conservation Commission
(`TNRCC'') and the U.S. EPA to accept, pending facility construction and
certification, hazardous and toxic wastes governed by The Resource Conservation
and Recovery Act (`RCRA'') and the Toxic Substances Control Act (``TSCA'').  The
ten-year RCRA and TSCA permits initially expire in 2004, but are subject to
renewal by the TNRCC assuming Waste Control Specialists remains in compliance
with the provisions of the permits.  While there can be no assurance, Waste
Control Specialists believes it will be able to obtain extensions to continue
operating the facility for the foreseeable future.  Waste Control Specialists
presently intends to seek additional authorizations to accept wastes regulated
under various other environmental laws and regulations, including low-level and
mixed low-level radioactive wastes.  Any such new permits are not expected to be
obtained prior to 1997, and there can be no assurance that these permits can be
obtained.

The West Texas facility is intended to operate as a final repository for
wastes that cannot be further reclaimed and recycled, and will serve as a
staging and processing location for material that requires other forms of
treatment prior to final disposal as mandated by the U.S. EPA or other
regulatory bodies.  Treatment operations will involve processing wastes through
one or more thermal, chemical or other treatment methods, depending upon the
particular waste being disposed and the customer requirements.  Thermal
treatment will consist of a thermal destruction technology as the primary
mechanism for waste destruction.  Physical treatment methods may include
distillation, evaporation and separation, all of which result in the separation
or removal of solid materials from liquids.  Chemical treatment uses chemical
oxidation and reduction, chemical precipitation of heavy metals, hydrolysis and
neutralization of acid and alkaline wastes, and basically results in the
transformation of wastes into inert materials through one or more chemical
processes.

Once treated and stabilized, wastes will either be (i) placed in the common
landfill site, (ii) placed in one of the individual condominium landfill sites
(in which one particular customer's wastes are segregated from any other
customer), (iii) stored on-site in drums or other specialized containers or (iv)
shipped to third-party facilities for final disposition.  Only wastes which meet
certain specified regulatory requirements can be placed in the landfill.

Waste Control Specialists will take delivery of wastes collected from
customers and transported on behalf of customers, via rail or highway, by
independent contractors to the West Texas site.  Such transportation is subject
to regulations governing the transportation of hazardous wastes issued by the
U.S. Department of Transportation.

In the U.S., the major federal statutes governing management, and
responsibility for clean-up, of hazardous and toxic wastes include RCRA, TSCA
and CERCLA.  Waste Control Specialists' future business is heavily dependent
upon the extent to which regulations promulgated under these or other similar
statutes and their enforcement require wastes to be managed and disposed of at
facilities of the types being constructed by Waste Control Specialists.

Waste Control Specialists' intended target customers are industrial
companies, including chemical, aerospace and electronics businesses and
governmental agencies, including the Department of Energy (`DOE''), which
generate hazardous and other wastes.  A majority of the customers are expected
to be located in the southwest United States, although customers outside a 500
mile radius can be handled via rail lines.  Waste Control Specialists intends to
employ a salesforce to market its services to potential customers.  The DOE
could become a significant customer if Waste Control Specialists is successful
in obtaining permits for low-level and mixed low-level radioactive waste.

Waste Control Specialists may enter into partnership or other joint venture
arrangements with other entities in the waste management industry to assist
Waste Control Specialists in research and development and other aspects of
customer service.  In this regard, in March 1996 Waste Control Specialists
entered into a memorandum of understanding with Battelle Memorial Institute, a
leader in the waste management technology industry, to form a joint venture to
identify and commercialize environmental technologies in the waste management
industry.

Competition.  The hazardous waste industry (other than low-level and mixed
low-level radioactive waste) currently has substantial excess industry capacity
caused by a number of factors, including a relative decline in the number of
environmental remediation projects generating hazardous wastes and efforts on
the part of generators to reduce the volume of waste and/or manage it on-site at
their facilities.  These factors have led to reduced demand and increased price
pressure for non-radioactive hazardous waste management services.  Consequently,
Waste Control Specialists believes its long-term future potential in the waste
management industry is significantly dependent upon its ability to obtain
permits for low-level and mixed low-level radioactive wastes.

Competition within the hazardous waste industry is diverse.  Competition is
based primarily on pricing and customer service.  Price competition is expected
to be intense with respect to RCRA and TSCA-related wastes.  Principal
competitors are expected to include Chemical Waste Management (a wholly-owned
subsidiary of WMX Technologies), Laidlaw, American Ecology Corporation,
Envirosafe Services and Rollins Environment.  These competitors are well-
established and have significantly greater resources than Waste Control
Specialists, which could be an important competitive factor.  However, Waste
Control Specialists believes it may have certain competitive advantages
including its environmentally-desirable location, broad level of local community
support, a public transportation network leading to the facility and capability
for future site expansion.

Employees.  At December 31, 1995, Waste Control Specialists employed 10
individuals, and currently expects to have approximately 75 to 100 employees by
early 1997.

Regulatory and environmental matters.  While the waste management industry
has benefitted from increased governmental regulation, the industry itself has
become subject to extensive and evolving regulation by federal, state and local
authorities.  Most importantly, the regulatory process requires firms in the
waste management industry to obtain and retain numerous operating permits
covering various aspects of their operations, any of which could be subject to
revocation, modification or denial.  Regulations also allow public participation
in the permitting process.  Individuals as well as companies may oppose the
grant of permits.  In addition, governmental policies are by their nature
subject to change and the exercise of broad discretion by regulators, and it is
possible that Waste Control Specialists' ability to obtain any desired
applicable permits on a timely basis, and to retain those permits, could in the
future be impaired.  The loss of any individual permit could have a significant
impact on Waste Control Specialists' financial condition, results of operations
and liquidity.  For example, adverse decisions by governmental authorities on
permit applications submitted by Waste Control Specialists could result in the
abandonment of projects, premature closing of a facility or operating
restrictions.  Waste Control Specialists' ten-year RCRA and TSCA permits expire
in 2004, although such permits are subject to renewal assuming Waste Control
Specialists is in compliance with their required operating provisions.

Federal, state and local authorities have, from time to time, proposed or
adopted other types of laws and regulations with respect to the waste management
industry, including laws and regulations restricting or banning the interstate
or intrastate shipment of certain wastes, imposing higher taxes on out-of-state
waste shipments compared to in-state shipments, reclassifying certain categories
of hazardous wastes as non-hazardous and regulating disposal facilities as
public utilities.  Certain states have issued regulations which attempt to
require that all waste generated within that particular state must be sent to
disposal sites within that state.  The U.S. Congress has also, from time to
time, considered legislation which would enable or facilitate such bans,
restrictions, taxes and regulations.  Due to the complex nature of the waste
management industry regulation, implementation of existing or future laws and
regulations by different levels of government could be inconsistent and
difficult to foresee.  Waste Control Specialists will attempt to monitor and
anticipate regulatory, political and legal developments which affect the waste
management industry, but there can be no assurance that Waste Control
Specialists will be able to do so.  Nor can Waste Control Specialists predict
the extent to which legislation or regulations that may be enacted, or any
failure of legislation or regulations to be enacted, may affect its operations
in the future.

The demand for certain hazardous waste services expected to be provided by
Waste Control Specialists is dependent in large part upon the existence and
enforcement of federal, state and local environmental laws and regulations
governing the discharge of hazardous wastes into the environment.  The waste
management industry would be adversely affected to the extent such laws or
regulations are amended or repealed or their enforcement is lessened.

Because of the high degree of public awareness of environmental issues,
companies in the waste management business may be, in the normal course of their
business, subject to judicial and administrative proceedings.  Governmental
agencies may seek to impose fines or revoke, deny renewal of, or modify any
applicable operating permit or licenses.  In addition, private parties and
special interest groups could bring actions against Waste Control Specialists
alleging, among other things, violation of operating permits.

OTHER

Foreign operations.  The Company has substantial operations and assets
located outside the United States, principally chemicals operations in Germany,
Belgium, Norway and the United Kingdom, chemicals and hardware products
operations in Canada and MDF operations in Ireland.  See Note 2 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."

The Company uses multi-currency revolving credit borrowings to mitigate
exchange rate risk on certain receivables and also monitors net receivable/
payable currency positions.  Also, the Company's Irish and Canadian subsidiaries
have, from time to time, entered into forward currency contracts to mitigate
exchange rate fluctuation risk for a portion of their future sales, and the
Company has in the past used currency forward contracts to fix the dollar
equivalent of specific commitments.  Otherwise, the Company does not generally
engage in currency derivative transactions.  See Note 15 to the Consolidated
Financial Statements.

Political and economic uncertainties in certain of the countries in which
the Company operates may expose the Company to risk of loss.  The Company does
not believe that there is currently any likelihood of material loss through
political or economic instability, seizure, nationalization or similar event.
The Company cannot predict, however, whether events of this type in the future
could have a material effect on its operations.  The Company's manufacturing and
mining operations are also subject to extensive and diverse environmental
regulation in each of the foreign countries in which they operate, as discussed
in the respective business sections elsewhere herein.

Regulatory and environmental matters.  Regulatory and environmental matters
are discussed in the respective business sections contained elsewhere herein and
in Item 3 - "Legal Proceedings."  In addition, the information included in Note
20 to the Consolidated Financial Statements under the captions "Legal
proceedings -- Lead pigment litigation and -- Environmental matters and
litigation" is incorporated herein by reference.

Acquisition and restructuring activities.  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 unconsolidated
affiliates, and the estimated sales value of those units.  As a result of this
process, the Company has in the past and may in the future seek to raise
additional capital, refinance or restructure indebtedness, modify its dividend
policy, consider the sale of interests in subsidiaries, business units,
marketable securities or other assets, or take a combination of such steps or
other steps, to increase liquidity, reduce indebtedness and fund future
activities.  Such activities have in the past and may in the future involve
related companies.  From time to time, the Company also evaluates the
restructuring of ownership interests among its subsidiaries and related
companies and expects to continue this activity in the future.

The Company and other entities that may be deemed to be controlled by or
affiliated with Mr. Harold C. Simmons routinely evaluate acquisitions of
interests in, or combinations with, companies, including related companies,
perceived by management to be undervalued in the marketplace.  These companies
may or may not be engaged in businesses related to the Company's current
businesses.  In a number of instances, the Company has actively managed the
businesses acquired with a focus on maximizing return-on-investment through cost
reductions, capital expenditures, improved operating efficiencies, selective
marketing to address market niches, disposition of marginal operations, use of
leverage, and redeployment of capital to more productive assets.  In other
instances, the Company has disposed of the acquired interest in a company prior
to gaining control.  The Company intends to consider such activities in the
future and may, in connection with such activities, consider issuing additional
equity securities and increasing the indebtedness of Valhi, its subsidiaries and
related companies.

Other.  Through June 1989, Valmont Insurance Company, a wholly-owned
captive insurance subsidiary, reinsured workers' compensation and employers'
liability, auto liability, and comprehensive general liability risks of Valhi
and certain affiliates.  Through April 1989, Valmont assumed certain third-party
reinsurance business, primarily property, marine and casualty risks from
insurance subsidiaries of other industrial firms, and a small amount of U.S.
quota share property and casualty risks.  Valmont currently writes certain
miscellaneous direct coverages of Valhi and affiliates.  All of Valmont's third-
party reinsurance risks are on a runoff basis.

The Company, through a general partnership, has an interest in certain
medical-related research and development activities pursuant to sponsored
research agreements.  See Note 19 to the Consolidated Financial Statements.

ITEM 2.   PROPERTIES

Valhi leases approximately 34,000 square feet of office space for its
principal executive offices in a building located at 5430 LBJ Freeway, Dallas,
Texas, 75240-2697.

The principal properties used in the operations of the Company, including
certain risks and uncertainties related thereto, are described in the applicable
business sections of Item 1 - "Business."  The Company believes that its
facilities are generally adequate and suitable for their respective uses.

ITEM 3.   LEGAL PROCEEDINGS

The Company is involved in various legal proceedings.  In addition to
information that is included below, certain information called for by this Item
is included in Note 20 to the Consolidated Financial Statements under the
caption "Legal proceedings -- Other litigation," which information is
incorporated herein by reference.

Lead pigment litigation.  NL was formerly involved in the manufacture of
lead pigments for use in paint and lead-based paint.  NL has been named as a
defendant or third party defendant in various legal proceedings alleging that NL
and other manufacturers are responsible for personal injury and property damage
allegedly associated with the use of lead pigments.  NL is vigorously defending
such litigation.  Considering NL's previous involvement in the lead pigment and
lead-based paint businesses, there can be no assurance that additional
litigation, similar to that described below, will not be filed.  In addition,
various legislation and administrative regulations have, from time to time, been
enacted or proposed that seek to (a) impose various obligations on present and
former manufacturers of lead pigment and lead-based paint with respect to
asserted health concerns associated with the use of such products and (b)
effectively overturn court decisions in which NL and other pigment manufacturers
have been successful.  Examples of such proposed legislation include bills
proposed in Massachusetts and Ohio which would permit civil liability for
damages on the basis of market share and, in the case of Massachusetts, extend
certain statutes of limitations.  No legislation or regulations have been
enacted to date which are expected to have a material adverse effect on NL's
consolidated financial position, results of operations or liquidity.  NL has not
accrued any amounts for the pending lead pigment litigation.  Although no
assurance can be given that NL will not incur future liability in respect of
this litigation in view of the inherent uncertainties involved in court and jury
rulings in pending and possible future cases, based on, among other things, the
results of such litigation to date, NL believes that the pending lead pigment
litigation is without merit.  Liability, if any, that may result is not
reasonably capable of estimation.

In 1989 and 1990, the Housing Authority of New Orleans ("HANO") filed
third-party complaints for indemnity and/or contribution against NL, other
alleged manufacturers of lead pigment (together with NL, the "pigment
manufacturers") and the Lead Industries Association (the "LIA") in 14 actions
commenced by residents of HANO units seeking compensatory and punitive damages
for injuries allegedly caused by lead pigment.  The actions in the Civil
District Court for the Parish of Orleans, State of Louisiana were dismissed by
the district court in 1990.  Subsequently, HANO agreed to consolidate all the
cases and appealed.  In March 1992, the Louisiana Court of Appeals, Fourth
Circuit, dismissed HANO's appeal as untimely with respect to three of these
cases.  With respect to the other cases included in the appeal, the court of
appeals reversed the lower court decision dismissing the cases.  These cases
were remanded to the District Court for further proceedings.  In November 1994,
the District Court granted defendants' motion for summary judgment in one of the
remaining cases and in June 1995 the District Court granted defendants' motion
for summary judgment in several of the remaining cases.  After such grant, only
two cases remained pending.

In November 1995, NL was served with a complaint in Jefferson v. Lead
Industry Association, et al. (No. 95-2835) filed in the U.S. District Court for
the Eastern District of Louisiana.  The complaint asserts claims against the LIA
and the lead pigment defendants on behalf of a putative class of allegedly
injured children in Louisiana.  The complaint purports to allege claims for
strict liability, negligence, failure to warn, breach of alleged warranties,
fraud and misrepresentation and conspiracy, and seeks actual and punitive
damages.  The complaint asserts several theories of liability, including joint
and several and market share liability.  NL moved to dismiss in February 1996.

In June 1989, a complaint was filed in the Supreme Court of the State of
New York, County of New York, against the pigment manufacturers and the LIA.
Plaintiffs seek damages, contribution and/or indemnity in an amount in excess of
$50 million for monitoring and abating alleged lead paint hazards in public and
private residential buildings, diagnosing and treating children allegedly
exposed to lead paint in city buildings, the costs of educating city residents
to the hazards of lead paint, and liability in personal injury actions against
the City and the Housing Authority based on alleged lead poisoning of city
residents (The City of New York, the New York City Housing Authority and the New
York City Health and Hospitals Corp. v. Lead Industries Association, Inc., et
al., No. 89-4617).  In December 1991, the court granted the defendants' motion
to dismiss claims alleging negligence and strict liability and denied the
remainder of the motion.  In January 1992, defendants appealed the denial.  NL
has answered the remaining portions of the complaint denying all allegations of
wrongdoing, and the case is in discovery.  In May 1993, the Appellate Division
of the Supreme Court affirmed the denial of the motion to dismiss plaintiffs'
fraud, restitution, conspiracy and concert of action claims.  In August 1993,
the defendants' motion for leave to appeal was denied.  In May 1994, the trial
court granted the defendants' motion to dismiss the plaintiffs' restitution and
indemnification claims, and plaintiffs have appealed.  Defendants' motion for
summary judgment on the remaining fraud claim was denied in August 1995;
defendants have noticed an appeal.  In December 1995, defendants moved for
summary judgment on the basis that the fraud claim was time-barred; the motion
is pending.

In March 1992, NL was served with a complaint in Skipworth v. Sherwin-
Williams Co., et al. (No. 92-3069), Court of Common Pleas, Philadelphia County.
Plaintiffs are a minor and her legal guardians seeking damages from lead paint
and pigment producers, the LIA, the Philadelphia Housing Authority and the
owners of the plaintiffs' premises for bodily injuries allegedly suffered by the
minor from lead-based paint.  Plaintiffs' counsel has asserted that
approximately 200 similar complaints would be served shortly, but no such
complaints have yet been served.  In April 1994, the court granted defendants'
motion for summary judgment and the dismissal was affirmed by the Superior Court
in October 1995.  Plaintiffs sought review by the Pennsylvania Supreme Court in
November 1995 and the request for review is pending.

In August 1992, NL was served with an amended complaint in Jackson, et al.
v. The Glidden Co., et al., Court of Common Pleas, Cuyahoga County, Cleveland,
Ohio (Case No. 236835).  Plaintiffs seek compensatory and punitive damages for
personal injury caused by the ingestion of lead, and an order directing
defendants to abate lead-based paint in buildings.  Plaintiffs purport to
represent a class of similarly situated persons throughout the State of Ohio.
The amended complaint identifies 18 other defendants who allegedly manufactured
lead products or lead-based paint, and asserts causes of action under theories
of strict liability, negligence per se,  negligence, breach of express and
implied warranty, fraud, nuisance, restitution, and negligent infliction of
emotional distress.  The complaint asserts several theories of liability
including joint and several, market share, enterprise and alternative liability.
In October 1992, NL and the other defendants moved to dismiss the complaint with
prejudice.  In July 1993, the court dismissed the complaint.  In December 1994,
the Ohio Court of Appeals reversed the trial court dismissal and remanded the
case to the trial court.

In November 1993, NL was served with a complaint in Brenner, et al. v.
American Cyanamid, et al. (No. 12596-93), Supreme Court, State of New York, Erie
County alleging injuries to two children purportedly caused by lead pigment.
The complaint seeks $24 million in compensatory and $10 million in punitive
damages for alleged negligent failure to warn, strict products liability, fraud
and misrepresentation, concert of action, civil conspiracy, enterprise
liability, market share liability, and alternative liability.  In January 1994,
NL answered the complaint, denying liability.  Discovery is proceeding.

In January 1995, NL was served with complaints in Wright (Alvin) and Wright
(Allen) v. Lead Industries, et. al., (Nos. 94-363042 and 363043), Circuit Court,
Baltimore City, Maryland.  Plaintiffs are two brothers (one deceased) who allege
injuries due to exposure to lead pigment.  The complaints, as amended in April
1995, seek more than $100 million in compensatory and punitive damages for
alleged strict liability, negligence, conspiracy, fraud and unfair and deceptive
trade practices claims.  In July 1995, the trial court granted, in part, the
defendants' motion to dismiss, and dismissed the plaintiffs' fraud and unfair
and deceptive trade practices claims.  A trial date has been set in these
consolidated cases for October 1996 and discovery is proceeding.  In February
1996, NL filed a motion for summary judgment which is pending.

In January 1996, NL was served with a complaint on behalf of individual
intervenors in German, et.al. v. Federal Home Loan Mortgage Corp., et. al. (U.S.
District Court, Southern District of New York, Civil Action No. 93 Civ. 6941
(RWS)).  This class action lawsuit had originally been brought against the City
of New York and other landlord defendants.  The intervenors' complaint alleges
claims against NL and other former manufacturers of lead pigment for medical
monitoring, property abatement and other injunctive relief, based on various
causes of action, including negligent product design, negligent failure to warn,
strict products liability, fraud and misrepresentation, concert of action, civil
conspiracy, enterprise liability, market share liability, breach of express and
implied warranties, and nuisance.  The intervenors purport to represent a class
of children and pregnant women who reside in New York City.

NL believes that the foregoing lead pigment actions are without merit and
intends to continue to deny all allegations of wrongdoing and liability and to
defend such actions vigorously.

NL has filed actions seeking declaratory judgment and other relief against
various insurance carriers with respect to costs of defense and indemnity
coverage for certain of its environmental and lead pigment litigation.  NL
Industries, Inc. v. Commercial Union Insurance Cos., et al., Nos. 90-2124, -2125
(HLS) (District Court of New Jersey).  The action relating to lead pigment
litigation defense costs, filed in May 1990 against Commercial Union Insurance
Company ("Commercial Union") seeks to recover defense costs incurred in the City
of New York lead pigment case and two other cases which have since been resolved
in NL's favor.  In July 1991, the court granted NL's motion for summary judgment
and ordered Commercial Union to pay NL's reasonable defense costs for such
cases.  In June 1992, NL filed an amended complaint in the United States
District Court for the District of New Jersey against Commercial Union seeking
to recover costs incurred in defending four additional lead pigment cases which
have since been resolved in NL's favor.  In August 1993, the court granted NL's
motion for summary judgment and ordered Commercial Union to pay the reasonable
costs of defending those cases.  In July 1994, the court entered judgment on the
order requiring Commercial Union to pay previously-incurred NL costs in
defending those cases.  In September 1995, the U.S. Court of Appeals for the
Third Circuit reversed and remanded for further consideration the decision by
the trial court that Commercial Union was obligated to pay the Company's
reasonable defense costs in certain of the lead pigment cases.  The trial court
made its decision applying New Jersey law; the Court of Appeals concluded that
New York law, and not New Jersey law, applied and remanded the case to the trial
court for a determination under New York law.  Other than granting motions for
summary judgment brought by two excess liability insurance carriers, which
contended their policies contained unique pollution exclusion language, and
certain summary judgment motions regarding policy periods, the court has not
made any final rulings on defense costs or indemnity coverage with respect to
NL's pending environmental litigation.  The Court has not made any final ruling
on indemnity coverage in the lead pigment litigation.  No trial dates have been
set.  Other than ruling to date, the issue of whether insurance coverage for
defense costs or indemnity or both will be found to exist depends upon a variety
of factors, and there can be no assurance that such insurance coverage will
exist in other cases.  NL has not considered any potential insurance recoveries
for lead pigment or environmental litigation in determining related accruals.

Environmental matters and litigation.  NL has been named as a defendant,
PRP, or both, pursuant to CERCLA and similar state laws in approximately 80
governmental and private actions associated with waste disposal sites and
facilities currently or previously owned, operated or used by NL, or its
subsidiaries, or their predecessors, many of which are on the U.S. Environmental
Protection Agency's Superfund National Priorities List or similar state lists.
These proceedings seek cleanup costs, damages for personal injury or property
damage, or both.  Certain of these proceedings involve claims for substantial
amounts.  Although NL may be jointly and severally liable for such costs, in
most cases, it is only one of a number of PRPs who are also jointly and
severally liable.  In addition to the matters noted above, certain current and
former facilities of NL, including several divested secondary lead smelter and
former mining locations, are the subject of environmental investigations or
litigation arising out of industrial waste disposal practices and mining
activities.

The extent of CERCLA liability cannot be determined until the Remedial
Investigation and Feasibility Study ("RIFS") is complete, the U.S. EPA issues a
record of decision and costs are allocated among PRPs.  The extent of liability
under analogous state cleanup statutes and for common law equivalents are
subject to similar uncertainties.  NL believes it has provided adequate accruals
for reasonably estimable costs for CERCLA matters and other environmental
liabilities.  At December 31, 1995, NL had accrued $100 million with respect to
those environmental matters which are reasonably estimable.  NL determines the
amount of accrual on a quarterly basis by analyzing and estimating the range of
possible costs to NL.  Such costs include, among other things, remedial
investigations, monitoring, studies, clean-up, removal and remediation.  It is
not possible to estimate the range of costs for certain sites.  NL has estimated
that the upper end of the range of reasonably possible costs to NL for sites for
which it is possible to estimate costs is approximately $169 million.  No
assurance can be given that actual costs will not exceed accrued amounts or the
upper end of the range for sites for which estimates have been made, and no
assurance can be given that costs will not be incurred with respect to sites as
to which no estimate presently can be made.  The imposition of more stringent
standards or requirements under environmental laws or regulations, new
developments or changes respecting site cleanup costs or allocation of such
costs among PRPs, or a determination that NL is potentially responsible for the
release of hazardous substances at other sites could result in expenditures in
excess of amounts currently estimated by NL to be required for such matters.
Further, there can be no assurance that additional environmental matters will
not arise in the future.  More detailed descriptions of certain legal
proceedings relating to environmental matters are set forth below.

NL has been identified as a PRP by the U.S. EPA because of its former
ownership of three secondary lead smelters (battery recycling plants) in
Pedricktown, New Jersey; Granite City, Illinois; and Portland, Oregon.  In all
three matters, NL voluntarily entered into administrative consent orders with
the U.S. EPA requiring the performance of a RIFS, a study with the objective of
identifying the nature and extent of the hazards, if any, posed by the sites,
and selecting a remedial action, if necessary.

At Pedricktown, the U.S. EPA divided the site into two operable units.
Operable unit one covers contaminated ground water, surface water, soils and
stream sediments.  NL submitted the final RIFS for operable unit one to the U.S.
EPA in May 1993.  In July 1994, the U.S. EPA issued the Record of Decision for
operable unit one.  The U.S. EPA estimates the cost to complete operable unit
one is $18.7 million.  The U.S. EPA recently issued a notice requesting that the
PRPs enter into an agreement to perform the remedial design phase of operable
unit one.  In addition, the U.S. EPA incurred past costs in the estimated amount
of $4 million to $5 million.  The U.S. EPA issued an order with respect to
operable unit two in March 1992 to NL and 30 other PRPs directing immediate
removal activities including the cleanup of waste, surface water and building
surfaces.  NL has complied with the order, and the work with respect to operable
unit two is completed.  NL has paid approximately 50% of  operable unit two
costs, or $2.5 million.

At Granite City, the RIFS is complete, and in 1990 the U.S. EPA selected a
remedy estimated to cost approximately $28 million.  In July 1991, the United
States filed an action in the U.S. District Court for the Southern District of
Illinois against NL and others (United States of America v. NL Industries, Inc.,
et al., Civ. No. 91-CV 00578) with respect to the Granite City smelter.  The
complaint seeks injunctive relief to compel the defendants to comply with an
administrative order issued pursuant to CERCLA, and fines and treble damages for
the alleged failure to comply with the order.  NL and the other parties did not
comply with the order believing that the remedy selected by the U.S. EPA was
invalid, arbitrary, capricious and not in accordance with law.  The complaint
also seeks recovery of past costs of $.3 million and a declaration that the
defendants are liable for future costs.  Although the action was filed against
NL and ten other defendants, there are 330 other PRPs who have been notified by
the U.S. EPA.  Some of those notified were also respondents to the
administrative order.  In February 1992, the court entered a case management
order directing that the remedy issues be tried before the liability aspects are
presented.  In August 1994, when the U.S. EPA reinitiated the residential yard
soils remediation in Granite City after an agreed-upon stay of the cleanup
pending completion of a health study and reopening of the administrative record,
the PRPs and the City of Granite City sought an injunction against the U.S. EPA
to prevent further cleanup until after the record was reopened for submittal of
additional comments on the selected remedy.  In September 1995, the U.S. EPA
released its decision selecting cleanup remedies for the Granite City site.  The
cost of the remedies selected by the U.S. EPA aggregates, in its estimation,
$40.8 million to $67.8 million, although its decision states that the higher
amount is not considered to be representative of expected costs.  NL believes
that certain components of the U.S. EPA's estimated costs may be erroneous and
has challenged portions of the U.S. EPA's selection of the remedy.  There is no
allocation among the PRPs for these costs.

Having completed the RIFS at Portland, NL conducted predesign studies to
explore the viability of the U.S. EPA's selected remedy pursuant to a June 1989
consent decree captioned U.S. v. NL Industries, Inc., Civ. No. 89-408, United
States District Court for the District of Oregon.  Subsequent to the completion
of the predesign studies, the U.S. EPA issued notices of potential liability to
approximately 20 PRPs, including NL, directing them to perform the remedy, which
was initially estimated to cost approximately $17 million, exclusive of
administrative and overhead costs and any additional costs, for the disposition
of recycled materials from the site.  In January 1992, the U.S. EPA issued
unilateral administrative orders to NL and six other PRPs directing the
performance of the remedy.  Based upon site operations to date, the remedy is
not proceeding in accordance with engineering expectations or cost projections;
therefore, NL and the others PRPs have met with the U.S. EPA to discuss
alternative remedies for the site.  The U.S. EPA authorized NL and other PRPs to
cease performing most aspects of the selected remedy.  In September 1994, NL and
the other PRPs submitted a focused feasibility study to the U.S. EPA, which
proposes alternative remedies for the site.  In January 1996, NL and the other
PRP's submitted to U.S. EPA the Amended Remedy Document (`ARD''), recommending
selection of a new remedy for the site.  The U.S. EPA has indicated that it
intends to notice the ARD for public comment in 1996 and will thereafter select
a new remedy for the site.  Pursuant to an interim allocation, NL's share of
remedial costs is approximately 50%.  In November 1991, Gould, Inc., the current
owner of the site, filed an action, Gould Inc. v. NL Industries, Inc., No. 91-
1091, United States District Court for the District of Oregon, against NL for
damages for alleged fraud in the sale of the smelter, rescission of the sale,
past CERCLA response costs and a declaratory judgment allocating future response
costs and punitive damages.  The court granted Gould's motion to amend the
complaint to add additional defendants (adjoining current and former landowners)
and third party defendants (generators).  The amended complaint deletes the
fraud and punitive damages claims asserted against NL; thus, the pending action
is essentially one for reallocation of past and future cleanup costs.  Discovery
is proceeding.  A trial date has been tentatively set for September 1996.

NL and other PRPs entered into an administrative consent order with the
U.S. EPA requiring the performance of a RIFS at two sites in Cherokee County,
Kansas, where NL and others formerly mined lead and zinc.  A former NL
subsidiary mined at the Baxter Springs subsite, where it is the largest viable
PRP.  The final RIFS was submitted to the U.S. EPA in May 1993.   In August
1994, the U.S. EPA issued its proposed plan for the cleanup of the Baxter
Springs and Treece sites in Cherokee County.   The proposed remedy is estimated
by the U.S. EPA to cost $6 million.

In January 1989, the State of Illinois brought an action against NL and
several other subsequent owners and operators of the former lead oxide plant in
Chicago, Illinois (People of the State of Illinois v. NL Industries, et al., No.
88-CH-11618, Circuit Court, Cook County).  The complaint seeks recovery of $2.3
million of cleanup costs expended by the Illinois Environmental Protection
Agency, plus penalties and treble damages.  In October 1992, the Supreme Court
of Illinois reversed the Appellate Division, which had affirmed the trial
court's earlier dismissal of the complaint, and remanded the case for further
proceedings.  In December 1993, the trial court denied the State's petition to
reinstate the complaint, and dismissed the case with prejudice.  In February
1996, the appeals court affirmed the dismissal.  The time in which review by the
state Supreme Court may be sought has not expired.

In 1980, the State of New York commenced litigation against NL in
connection with the operation of a plant in Colonie, New York formerly owned by
NL.  Flacke v. NL Industries, Inc., No. 1842-80 ("Flacke I") and Flacke v.
Federal Insurance Company and NL Industries, Inc., No. 3131-92 ("Flacke II"),
New York Supreme Court, Albany County.  The plant manufactured military and
civilian products from depleted uranium and was acquired from NL by the U.S.
Department of Energy ("DOE") in 1984.  Flacke I seeks penalties for alleged
violations of New York's Environmental Conservation Law, and of a consent order
entered into to resolve these alleged violations.  Flacke II seeks forfeiture of
a $200,000 surety bond posted in connection with the consent order, plus
interest from February 1980.  NL denied liability in both actions.  The
litigation had been inactive from 1984 until July 1993 when the State moved for
partial summary judgment for approximately $1.5 million on certain of its claims
in Flacke I and for summary judgment in Flacke II.  In January 1994, NL cross-
moved for summary judgment in Flacke I and Flacke II.  All summary judgment
motions have been denied and both parties have appealed.

Residents in the vicinity of NL's former Philadelphia lead chemicals plant
commenced a class action allegedly comprised of over 7,500 individuals seeking
medical monitoring and damages allegedly caused by emissions from the plant.
Wagner, et al v. Anzon and NL Industries, Inc., No. 87-4420, Court of Common
Pleas, Philadelphia County.  The complaint sought compensatory and punitive
damages from NL and the current owner of the plant, and alleged causes of action
for, among other things, negligence, strict liability, and nuisance.  A class
was certified to include persons who resided, owned or rented property, or who
work or have worked within up to approximately three-quarters of a mile from the
plant from 1960 through the present.  NL answered the complaint, denying
liability.  In December 1994, the jury returned a verdict in favor of NL.
Plaintiffs have appealed.  Residents also filed consolidated actions in the
United States District Court for the Eastern District of Pennsylvania, Shinozaki
v. Anzon, Inc. and Wagner and Antczak v. Anzon and NL Industries, Inc.  Nos. 87-
3441, 87-3502, 87-4137 and 87-5150.  The consolidated action is a putative class
action seeking CERCLA response costs, including cleanup and medical monitoring,
declaratory and injunctive relief and civil penalties for alleged violations of
the Resource Conservation and Recovery Act ("RCRA"), and also asserting pendent
common law claims for strict liability, trespass, nuisance and punitive damages.
The court dismissed the common law claims without prejudice, dismissed two of
the three RCRA claims as against NL with prejudice, and stayed the case pending
the outcome of the state court litigation.

In July 1991, a complaint was filed in the United States District Court for
the Central District of California, United States of America v. Peter Gull and
NL Industries, Inc., Civ. No. 91-4098, seeking recovery of $2 million in costs
incurred by the United States in response to the alleged release of hazardous
substances into the environment from a facility located in Norco, California,
treble damages and $1.75 million in penalties for NL's alleged failure to comply
with the U.S. EPA's administrative order No. 88-13.  The order, which alleged
that NL arranged for the treatment or disposal of materials at the Norco site,
directed the immediate removal of hazardous substances from the site.  NL
carried out a portion of the remedy at the Norco site, but did not complete the
ordered activities because it believed they were in conflict with California
law.  NL answered the complaint denying liability.  The government claims it
expended in excess of $2.7 million for this matter.  Trial was held in March and
April 1993.  In April 1994, the court entered final judgment in this matter
directing NL to pay $6.3 million plus interest.  The court ruled that NL was
liable for approximately $2.7 million in response costs plus approximately $3.6
million in penalties for failure to comply with the administrative order.  Both
NL and the government have appealed.  In August 1994, this matter was referred
to mediation, which is pending.

At a municipal and industrial waste disposal site in Batavia, New York, NL
and six others have been identified as PRPs.  The U.S. EPA has divided the site
into two operable units.  Pursuant to an administrative consent order entered
into with the U.S. EPA, NL conducted a RIFS for operable unit one, the closure
of the industrial waste disposal section of the landfill.  NL's RIFS costs to
date are approximately $2 million.  In June, 1995, the U.S. EPA issued the
record of decision for operable unit one, which is estimated by the U.S. EPA to
cost approximately $12.3 million.  In September 1995, the U.S. EPA and certain
PRPs (including NL), entered into an administrative order on consent for the
remedial design phase of the remedy for operable unit one.  NL and other PRPs
entered into an interim cost sharing arrangement for this phase of the work.
With respect to the second operable unit, the extension of the municipal water
supply, the U.S. EPA estimated the costs at $1.2 million plus annual operation
and maintenance costs.  NL and the other PRPs are performing the work comprising
operable unit two.  The U.S. EPA has also demanded approximately $.9 million in
past costs from the PRPs.

See also Item 1 - "Business - Chemicals - Regulatory and environmental
matters".

In 1995, Medite was named as a defendant in a complaint filed in the New
Mexico District Court (New Mexico Environmental Department (`NMED'') v. Medite
Corporation, No. SF 95-2581(C)).  The complaint involved certain violations of
state air quality emission standards at Medite's New Mexico MDF facility.  In
December 1995, Medite entered into a settlement agreement with the NMED wherein
Medite paid fines of $200,000 to settle prior violations of air quality emission
standards and agreed to submit an application for new operating permits for the
facility and related compliance plans as necessary to the NMED in 1996.  Medite
will incur fines of $750 per day of operation without a new operating permit for
the facility.  See Note 22 to the Consolidated Financial Statements, which
information is incorporated herein by reference.

The Company has also been named as a PRP pursuant to CERCLA at one
Superfund site in Indiana and has also undertaken a voluntary cleanup program
approved by state authorities at another Indiana site, both of which involve
operations no longer conducted by the Company.  The total estimated cost for
cleanup and remediation at the Indiana Superfund site is $40 million, of which
the Company's share is currently estimated to be approximately $2 million.  The
Company's estimated cost to complete the voluntary cleanup program at the other
Indiana site, which involves both surface and groundwater remediation, is
relatively nominal.  The Company believes it has adequately provided accruals
for reasonably estimable costs for CERCLA matters and other environmental
liabilities.  At December 31, 1995, the Company had accrued $2 million in
respect of such matters, which accrual does not reflect any amounts which the
Company could recover from insurers or other third parties and is near the
Company's estimate of the upper end of range of possible costs.  No assurance
can be given that actual costs will not exceed accrued amounts or the upper end
of the range.  The imposition of more stringent standards or requirements under
environmental laws or regulations, new developments or changes respecting site
cleanup costs or allocation of such costs among PRPs or a determination that the
Company is potentially responsible for the release of hazardous substances at
other sites could result in expenditures in excess of amounts currently
estimated by the Company to be required for such matters.  Furthermore, there
can be no assurance that additional environmental matters related to current or
former operations will not arise in the future.

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

No matters were submitted to a vote of security holders during the quarter

PART II

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

Valhi's common stock is listed and traded on the New York and Pacific Stock
Exchanges (symbol: VHI).  As of March 15, 1996, there were approximately 5,250
holders of record of Valhi common stock.  The following table sets forth the
high and low sales prices for Valhi common stock for the years indicated,
according to the New York Stock Exchange Composite Tape, and dividends paid
during such periods.  On March 15, 1996 the closing price of Valhi common stock
according to the NYSE Composite Tape was $7.63.

DIVIDENDS
HIGH        LOW        PAID
------      -----    ---------

Year ended December 31, 1994

First Quarter                              $7         $4 3/4      $.02
Second Quarter                              6          4 7/8       .02
Third Quarter                               6          5           .02
Fourth Quarter                              8 1/8      5 5/8       .02

Year ended December 31, 1995

First Quarter                              $8 3/8     $6 5/8      $.03
Second Quarter                              8 5/8      6 3/4       .03
Third Quarter                               8 1/8      6 3/4       .03
Fourth Quarter                              7 1/2      5 3/4       .03

In March 1996, Valhi's regular quarterly dividend was increased to $.05 per
share.  Declaration and payment of future dividends and the amount thereof will
be dependent upon the Company's results of operations, financial condition, cash
requirements for its businesses, contractual requirements and restrictions and
other factors deemed relevant by the Board of Directors.  There are currently no
contractual restrictions on the ability of Valhi to declare or pay dividends.

ITEM 6.  SELECTED FINANCIAL DATA

The following selected financial data should be read in conjunction with
the Company's Consolidated Financial Statements and Item 7 - "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

YEARS ENDED DECEMBER 31,
--------------------------------------------------------------

1991          1992          1993           1994         1995
----          ----          ----           ----         ----

(IN MILLIONS, EXCEPT PER SHARE DATA)

STATEMENTS OF OPERATIONS DATA:
Net sales:
Chemicals                                  $  -           $  -           $  -          $  -        $1,023.9
Refined sugar                                 439.7          459.2          430.8         457.3       541.3
Building products                             179.7          194.8          174.3         189.9       200.0
Hardware products                              44.8           54.0           64.4          70.0        80.2
Fast food                                     101.5          103.8          111.6         115.5       115.4
--------       --------       --------      --------    --------

$  765.7       $  811.8       $  781.1      $  832.7    $1,960.8
========       ========       ========      ========    ========

Operating income:
Chemicals                                  $  -           $  -           $  -          $  -        $  178.5
Refined sugar                                  42.0           37.8           37.5          31.6        26.8
Building products                               8.0           22.0           26.3          36.4        25.2
Hardware products                               7.9           10.7           17.5          20.9        19.9
Fast food                                       7.8            8.5            9.7           9.0         7.5
--------       --------       --------      --------    --------

$   65.7       $   79.0       $   91.0      $   97.9    $  257.9
========       ========       ========      ========    ========

Equity in losses of NL
prior to 1994 consolidation:
Operations                                 $  (19.5)      $  (37.4)      $  (52.4)     $  (25.1)
Provision for market value impairment         -              -              (84.0)        -
--------       --------       --------      --------

$  (19.5)      $  (37.4)      $ (136.4)     $  (25.1)
========       ========       ========      ========

Income (loss) from continuing operations     $   19.9       $    (.8)      $  (59.3)     $   19.7    $   68.5
Discontinued operations                            .1          (21.4)          (4.8)         (8.1)      -
Extraordinary items                               4.8           (6.3)         (15.4)        -           -
Cumulative effect of changes in
accounting principles (1)                      -              (69.8)            .4         -           -
--------       --------       --------      --------    --------

Net income (loss)                        $   24.8       $  (98.3)      $  (79.1)     $   11.6    $   68.5
========       ========       ========      ========    ========

PER SHARE DATA:
Income (loss) from continuing operations     $    .18       $   (.01)      $   (.52)     $    .17    $    .60

Net income (loss)                            $    .22       $   (.86)      $   (.69)     $    .10    $    .60

Cash dividends                               $    .20       $    .20       $    .05      $    .08    $    .12

Weighted average common shares
outstanding                                    113.5          113.9          114.1         114.3       114.4

BALANCE SHEET DATA (at year end):
Total assets                                 $1,177.1       $1,077.0       $  903.9      $2,480.7    $2,572.2
Long-term debt                                  352.7          288.7          302.5       1,086.7     1,084.3
Stockholders' equity                            385.5          259.1          207.5         198.4       274.3

[FN]
(1)  Relates to OPEB and income tax accounting in 1992 and marketable securities
in 1993.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

RESULTS OF OPERATIONS

CONTINUING OPERATIONS

Net income of $68.5 million, or $.60 per share, in 1995 represented the
Company's highest earnings since 1990.  A major factor in the Company's earnings
improvements during 1994 and 1995 was higher average selling prices for TiO2 at
NL Industries.  Operating income in 1995 increased 36% to $258 million on a 14%
increase in sales to approximately $2 billion (% comparisons to 1994 pro forma
results).  Overall operating income margins were 13% in 1995 compared to 11% in
1994 as chemicals improvements, driven by higher TiO2 prices, more than offset
other declines.

The Company currently believes its reported net income for 1996 will be
lower than for 1995 in large part due to (i) the charge resulting from the
closure of Medite's New Mexico MDF facility and (ii) the expected increase in
the Company's reported minority interest in NL's earnings resulting from NL's
resumption of dividend payments in 1996.

The statements in this Annual Report on Form 10-K relating to matters that
are not historical facts, including, but not limited to, statements found in
Item 1 - `Business'' and Item 3 - ``Legal Proceedings'' as well as in this Item
7 - `Management's Discussion and Analysis of Financial Condition and Results of
Operations', are forward looking statements that involve a number of 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 and substitute products, customer and competitor strategies, the impact
of pricing and production decisions, environmental matters, government
regulations and possible changes therein, and the ultimate resolution of pending
litigation and possible future litigation as discussed in this Annual Report,
including, without limitation, the sections referenced above.

CHEMICALS

Selling prices for TiO2, NL's principal chemical product, increased during
1994 and the first nine months of 1995 after four consecutive years of declining
prices.  NL's TiO2 operations are conducted through Kronos while its specialty
chemicals operations are conducted through Rheox.

YEARS ENDED DECEMBER 31,
-------------------------------------------

NL'S                                  % CHANGE
---------
HISTORICAL BASIS     PRO FORMA
---------------------
1994-1995
1993       1994      1994(A)     1995(A)      (B)
----       ----    -----------  --------   ---------

(IN MILLIONS)

Net sales:
Kronos               $697.0    $770.1      $770.1     $  894.1     + 16%
Rheox                 108.3     117.9       117.9        129.8     + 10%
------    ------      ------     --------

$805.3    $888.0      $888.0     $1,023.9     + 15%
======    ======      ======     ========

Operating income:
Kronos               $ 36.1    $ 80.5      $ 62.6     $  141.6     +126%
Rheox                  26.3      30.8        29.3         36.9     + 26%
------    ------      ------     --------

$ 62.4    $111.3      $ 91.9     $  178.5     + 94%
======    ======      ======     ========

Operating income
margins:
Kronos                   5%       10%          8%          16%
Rheox                   24%       26%         25%          28%

TiO2 data:
Sales volume
(thousands of          346       376         376          366    -  3%
metric tons)
Average price index
(1983=100)             127       131         131          150    +  15%

[FN]
(A)Valhi's purchase accounting adjustments made in conjunction with the
acquisitions of its interest in NL result in additional depreciation,
depletion and amortization expense beyond amounts separately reported by NL.
Such additional non-cash expenses reduce chemicals operating income, as
reported by Valhi, by approximately $20 million annually as compared to
amounts separately reported by NL.
[FN]
(B)% change 1994 pro forma to 1995 amounts.

The improvement in Kronos' 1995 TiO2 results was primarily due to higher
average selling prices and production volume, partially offset by lower sales
volume.  In billing currency terms, average TiO2 selling prices in 1995 were
approximately 15% higher than 1994.  However, a majority of the 1995 price
increase occurred during the first half of the year, and Kronos' fourth quarter
1995 average selling prices were 1% lower than the third quarter of 1995.  TiO2
sales volume in 1995 was 3% lower than the record levels of 1994, with declines
in both Europe and North America, due to softening demand in the second half of
1995 and customers building inventories during 1994 and early 1995.  Kronos
increased its capacity utilization in 1995 to approximately full capacity from
94% in 1994.  Kronos has curtailed production rates in early 1996 in response to
softening demand and its high inventory levels.  Kronos anticipates TiO2 demand
will remain soft during the first half of 1996, although industry capacity
utilization rates are expected to increase over the next several years.
Approximately one-half of Kronos' 1995 TiO2 sales, by volume, were attributable
to markets in Europe, with 36% attributable to North America and the balance to
export markets.

The improvement in Kronos' 1994 results was primarily due to higher average
selling prices, higher production and sales volume for TiO2 and higher
technology fee income.  In billing currency terms, Kronos' 1994 average TiO2
selling prices were approximately 3% higher than in 1993.  Record sales volume
of 376,000 metric tons of TiO2 in 1994 represent an increase of 9% over 1993,
with increases in all major regions.

Demand, supply and pricing of TiO2 have historically been cyclical, with
the last cyclical peak for TiO2 prices in early 1990 and the trough in the third
quarter of 1993.  The average TiO2 selling price index (using 1983 = 100) of 150
in 1995 was 15% above the 1994 average index of 131 (1994 was 3% above the 1993
level), but was still 14% below the TiO2 price index of 175 for 1990.  Kronos
believes that its operating margins for 1996 could be lower than in 1995 due
principally to the net effect of higher sales volume offset by increased raw
material costs, lower production volume and lower technology fee income.

Rheox's operating results improved in 1995 primarily as a result of higher
sales volume and higher average selling prices, while 1994 results improved
compared to 1993 due primarily to higher sales volume and lower operating costs.

NL has substantial operations and assets located outside the United States
(principally Germany, Norway, Belgium and Canada).  The U.S. dollar value of
NL's foreign sales and operating results are subject to currency exchange rate
fluctuations which may favorably or adversely impact reported earnings and
affect the comparability of period to period operating results.  A significant
amount of NL's sales are denominated in currencies other than the U.S. dollar
(64% in 1995), principally major European currencies and the Canadian dollar.
Certain raw materials, primarily titanium-containing feedstocks, are purchased
in U.S. dollars, while labor and other production costs are denominated
primarily in the local currencies.  Fluctuations in the value of the U.S. dollar
relative to other currencies increased 1995 sales by $54 million compared to
1994 and decreased 1994 sales by $2 million compared to 1993.
REFINED SUGAR

Sugar sales volume comparisons can be affected by relative timing of sales
during the crop year, which runs from October 1 to September 30, and by
government-imposed marketing allotments as well as by the size of the respective
sugarbeet crops.

YEARS ENDED DECEMBER 31,          % CHANGE
-------------------------     ------------------

1993      1994       1995      1993-94   1994-95
----      ----       ----      -------   -------

(IN MILLIONS)

Net sales:
Refined sugar             $396.6   $422.0   $492.6        + 6%        +17%
By-products and other       34.2     35.3     48.7        + 3%        +38%
------   ------   ------

$430.8   $457.3   $541.3        + 6%        +18%
======   ======   ======

Operating income:
FIFO basis                $ 31.9   $ 29.3   $ 26.0        - 8%        -11%
LIFO adjustment              5.6      2.3       .8
------   ------   ------

LIFO (reporting basis)  $ 37.5   $ 31.6   $ 26.8        -16%        -15%
======   ======   ======

Operating income margin:
FIFO accounting method       7%       6%        5%
LIFO accounting method       9%       7%        5%

Sugar sales volume
(cwt millions)               14.9     15.8     18.2        + 6%        +15%

Due primarily to an abnormally high yield per acre, Amalgamated's sugar
production from the crop harvested in the fall of 1994 was approximately 10%
higher than its previous record crop and refined sugar sales volume in 1995 was
an all-time record.  The record volume was aided by expiration of the U.S.
government-imposed restrictive marketing allotments at the end of the third
quarter of 1995, with fourth quarter 1995 volume almost 50% higher than the same
period in 1994 when marketing allotments were in effect.

Average refined sugar selling prices increased slightly (1%) in 1995
compared to last year and were aided in part by the effect of marketing
allotments imposed on domestic producers during the crop year ended September
30, 1995.  To help reduce the relatively high level of sugar inventories
resulting from the record crop, Amalgamated made limited sales into foreign
markets during the first nine months of 1995, which sales were excluded from the
domestic allotments.  Net returns from foreign sales are typically lower than
from domestic sales.

The large sugarbeet crop harvested in the fall of 1994 and adverse weather
conditions resulted in a long and difficult processing campaign.  These factors,
along with a lower sugar content of the beets, contributed to a 10% increase in
per hundredweight (`cwt'') crop processing costs.  Certain difficulties
encountered in processing that crop are not expected to recur, and per cwt
processing costs for the current crop harvested in the fall of 1995 should be
somewhat lower than last year.

Average sugar selling prices in 1994 were nominally (less than 1%) higher
than in 1993 due to fourth quarter increases resulting in large part from the
effects of the government-imposed marketing allotments.  Per cwt processing
costs were higher in 1994 than in 1993 due in part to generally more favorable
weather conditions during 1993's sugarbeet processing campaign and a higher
sugar content of that year's sugarbeets.
Amalgamated's sugar production from the crop harvested in the fall of 1995
is currently expected to be more in line with historical levels of the past few
years, or about 7% lower than the prior record crop.  Consequently, 1996 sugar
sales volume is expected to be somewhat lower than the record volume of 1995.
Indications are that the generally smaller industry-wide crops could lead to
some improvement in 1996 sugar prices and the U.S. Department of Agriculture has
announced that there will be no marketing allotments during the crop year ending
September 30, 1996.  Amalgamated currently expects contracted acreage for the
crop to be planted in the spring of 1996 will approximate the acreage harvested
in 1995.

Refined sugar historically represents approximately 90% of Amalgamated's
annual sales.  Fluctuations in the volume of by-products sold, generally sold
principally in the first and fourth calendar quarters, approximate those of
refined sugar.  The selling prices of by-products are affected by the prices of
competing animal feeds and are, therefore, independent of the price of sugar.
The increase in by-product sales in 1995 compared to 1994 was due primarily to
higher pulp sales volume, reflecting the larger crop.  By-product sales
increased slightly in 1994 compared to 1993 due to a 5% increase in average pulp
prices.

Sugarbeet purchase cost is the largest cost component of producing refined
sugar and the price paid for sugarbeets is, under the terms of contracts with
the sugarbeet growers, a function of the average selling price of Amalgamated's
refined sugar.  As a result, changes in sugar selling prices impact sugarbeet
purchase costs as well as revenues and serve as a partial hedge against changing
prices.  However, related LIFO adjustments can significantly affect operating
income and margin comparisons relative to FIFO basis comparisons.

The largest component of Amalgamated's selling, general and administrative
expenses is the freight cost of sugar and by-products delivered to customers.
Consequently, such expenses vary significantly with the volume of refined sugar
and by-products sold.

The U.S. Congress is currently considering a new Farm Bill.  While there
can be no assurance, the Company currently believes the sugar program will
remain relatively intact when the U.S. Congress enacts a new Farm Bill, although
reforms will likely eliminate marketing allotments, provide for only recourse
loans (vs. current nonrecourse loans) unless sugar imports exceed certain
levels, and generally make the industry more market-oriented.

BUILDING PRODUCTS

Results of operations during the past three years have been influenced by
Medite's ongoing strategy to emphasize MDF and to downsize its traditional
timber products operations.

YEARS ENDED DECEMBER 31,             % CHANGE
-------------------------        ------------------

1993     1994        1995       1993-94   1994-95
----     ----        ----       -------   -------

(IN MILLIONS)

Net sales:
Medium density fiberboard  $112.1   $134.9   $149.5           +20%     +11%
Traditional timber products  63.7     56.1     52.4           -12%     - 7%
Eliminations                 (1.5)    (1.1)    (1.9)
------   ------   ------

$174.3   $189.9   $200.0           + 9%     + 5%
======   ======   ======

Operating income:
Medium density fiberboard  $ 13.9   $ 27.1   $ 18.7           +95%     -31%
Traditional timber products  12.4      9.3      6.5           -25%     -30%
------   ------   ------

$ 26.3   $ 36.4   $ 25.2           +38%     -31%
======   ======   ======

Operating income margins:
Medium density fiberboard     12%      20%      13%
Traditional timber products   19%      16%      12%
Aggregate margin            15%      19%      13%

MDF sales volume
(M3 thousands):
Standard grade              419.7    385.7    400.8           - 8%     + 4%
Specialty products           55.4     94.7     84.5           +71%     -11%
------   ------   ------
475.1    480.4    485.3           + 1%     + 1%
======   ======   ======

Medium density fiberboard.   Average MDF selling prices for all of 1995
were 10% higher than in 1994 (7% in billing currency terms), with aggregate MDF
volume up nominally.  However, MDF prices generally peaked in the second quarter
of 1995 and declined during the last half of the year.  Increases in industry
capacity, particularly in Europe, and slower economic growth in North America
and Europe contributed to the lower MDF prices and operating rates and
additional industry capacity additions are expected in 1996.  A 19% increase in
average per-unit costs resulting from higher material costs and lower capacity
utilization, along with lower specialty product sales, also diluted operating
margins.

Improvements in MDF sales, operating income and margins in 1994 compared to
1993 were driven by both higher selling prices and higher volumes of higher-
priced/higher-margin specialty MDF products.  Overall average MDF selling prices
were up 19% in 1994 while average per-unit MDF costs increased approximately 6%.

The U.S. dollar value of Medite's foreign sales and operating costs is
subject to currency exchange rate fluctuations which may favorably or adversely
impact reported earnings and affect the comparability of operating results.
Fluctuations in the value of the U.S. dollar relative to other currencies
accounted for about four percentage points of the 1995 increase in both MDF
selling prices and per-unit costs (one percentage point in 1994).  Approximately
56% of Medite's 1995 MDF sales were denominated in currencies other than the
U.S. dollar, principally the U.K. Pound Sterling and the European Currency Unit.
Medite's Irish operations accounted for approximately 47% of its MDF production
in 1995.  Fiber, labor and most other production costs in Ireland are
denominated principally in Irish punts, while Irish resins are purchased
primarily in Sterling.  Medite's Irish operations will constitute a larger
percentage of its total MDF business after the New Mexico plant is closed.

Economic conditions in North America and Europe and relative MDF industry
capacity/demand ratios, including the impact of industry capacity additions in
1995 and 1996, are currently expected to continue MDF price and volume pressures
in 1996.  These factors, along with the closure of the New Mexico plant, will
reduce Medite's worldwide market share from current levels.

In March 1996, Medite determined to close its New Mexico MDF facility,
which accounted for approximately 19% of MDF sales in 1995.  In connection with
the intended closure, Medite will record a $24 million charge to operating
income in the first quarter of 1996.  See Note 22 to the Consolidated Financial
Statements.  Cash costs, net of income tax benefits, are not expected to be
material.

Traditional timber products.  Medite allocates timber harvested from its
fee timberlands between log sales and its traditional timber products conversion
facilities depending upon prevailing market conditions.  Log sales accounted for
approximately 20% of traditional timber products sales dollars in 1995, down
from 32% in 1994 and 49% in 1993.

Log volumes, prices and margins were higher in 1994 than in either 1995 or
1993.  Lumber prices declined significantly in 1995 while veneer volumes and
prices rose.  Overall traditional timber products margins in 1994 were aided by
a favorable impact of reductions in LIFO log inventories while being hindered by
veneer plant start-up costs.  In 1993, $1.9 million of business interruption
insurance from the 1992 Rogue River veneer mill fire had a significant,
favorable, non-recurring effect on operating income margins as this income had
no associated cost.

HARDWARE PRODUCTS

YEARS ENDED DECEMBER 31,        % CHANGE
-------------------------   ------------------

1993      1994      1995      1993-94    1994-95
----      ----      ----      -------    -------

(IN MILLIONS)

Net sales                  $64.4     $70.0     $80.2      + 9%       +15%
Operating income            17.5      20.9      19.9      +19%       - 5%

Operating income margin      27%      30%       25%

National Cabinet Lock continues to add new products to its STOCK LOCKS
product line as well as to its Waterloo Furniture Components workstation and
drawer slide lines and reported new highs in sales in both 1994 and 1995.
Volumes increased in 1994 compared to 1993 in each of its three major product
lines (locks, workstation and drawer slides).  In 1995, volumes continued to
increase in both the workstation and drawer slide product lines however lock
volume from a government contract completed in early 1995 was only partially
replaced. The workstation product line continued to be the fastest growing line
with sales up 30% in 1995 following an 18% increase in 1994.

Operating income margins in 1995 were impacted by both higher raw material
costs, as competitive pressures prevented full recovery through higher selling
prices, and costs associated with integrating the operations of a Canadian
competitor acquired in August 1995.  The acquired operations generated
approximately $3 million in sales in 1995, principally in the workstation and
drawer slide product lines.  The Company's principal facilities are operating at
a high rate of capacity, and overtime was used throughout 1994 and 1995 in order
to meet market demand.

Over 70% of the Company's hardware 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.  As a result, fluctuations in the value of the
U.S. dollar relative to the Canadian dollar favorably impacted operating results
in both 1995 and 1994 compared to the respective prior year.

FAST FOOD

YEARS ENDED DECEMBER 31,         % CHANGE
--------------------------   ------------------

1993      1994      1995     1993-94    1994-95
----      ----      ----     -------    -------

(IN MILLIONS)

Net sales                  $111.6   $115.5    $115.4       +3%      - 0%
Operating income              9.7      9.0       7.5       -6%      -17%

Operating income margin       9%        8%        7%

Arby's units operated:
At end of year             160       162      158        +1%      - 2%
Average during the year    159       159      158        -        - 1%

Excluding the effect of a 53rd week in 1994, comparable store sales were
relatively flat during the past three years (up nominally in 1994 and down
nominally in 1995).  Despite stable to lower food costs, increased competitive
promotions and discounts and higher labor costs continue to reduce operating
results and margins.

Sybra opened 18 new stores during the past three years (nine in 1995) and
plans to open one new restaurant in the first quarter of 1996.  Sybra
continually evaluates the profitability of its individual restaurants, closed 20
stores during the past three years (13 in 1995) and intends to continue to close
unprofitable stores when appropriate.  Costs associated with store closings were
$.6 million in 1993, $1.4 million in 1994 and $.9 million in 1995.  In addition
to six stores closed in January and February 1996, Sybra may close one to two
additional stores later in the year.

The Company is considering various strategic alternatives with respect to
this increasingly competitive business, including possible disposition of one or
more regions.

WASTE MANAGEMENT

Waste Control Specialists LLC was formed in November 1995 and is currently
constructing a facility in West Texas for the processing, treatment, storage and
disposal of certain hazardous and toxic wastes.  Waste Control Specialists
reported a loss of $.5 million during the last two months of 1995 and expects to
continue to report losses during the development stage.  The facility is planned
to be ready to accept RCRA and TSCA wastes for processing and to begin reporting
revenues from existing permits in 1997.

Valhi is entitled to a 20% cumulative preferential return on its $25
million investment in Waste Control Specialists after which earnings are
generally split 50/50.  The liabilities assumed by Waste Control Specialists
exceeded the carrying value of the assets contributed by the other 50%-owner by
approximately $3 million.  Accordingly, all of Waste Control Specialists' income
or loss will accrue to Valhi until Waste Control Specialists reports positive
equity attributable to the other 50%-owner.

GENERAL CORPORATE AND OTHER ITEMS

General corporate.  Net general corporate expenses in 1995 declined
compared to the 1994 pro forma amount as lower environmental remediation and
litigation costs at NL in 1995 more than offset NL's 1994 $20 million gain
related to settlement of a lawsuit.  Historically reported general corporate
expenses in 1994, which exclude NL, increased compared to 1993 as higher legal-
related expenses were only partially offset by lower environmental-related
charges.  Securities earnings in 1994 were reduced by a first quarter 1994
decline in the market value of certain fixed-income investments.

Interest expense. Interest expense increased in 1995 compared to the 1994
pro forma amount as lower borrowing levels associated with NL's DM and other
bank loans and lower average interest rates on NL's DM-denominated debt were
more than offset by changes in currency exchange rates, higher average U.S.
variable borrowing rates and higher borrowing levels associated with facilities
expansion (primarily at Amalgamated and Medite).  Historically reported interest
expense in 1994 declined $3 million compared to 1993 as a result of lower
average levels of indebtedness and interest rates.

At December 31, 1995, approximately $662 million of consolidated
indebtedness, principally publicly-traded debt, bears interest at fixed interest
rates averaging 10.9%.  The weighted average interest rate on $632 million of
outstanding variable rate borrowings at December 31, 1995 was 6.4%, compared to
7.4% on outstanding variable rate borrowings at December 31, 1994, which lower
average rate is due in large part to lower rates on NL's DM-denominated
borrowings.

NL has significant DM-denominated variable interest rate borrowings and,
accordingly, NL's interest expense is also subject to currency fluctuations.
Periodic cash interest payments are not required on Valhi's 9.25% deferred
coupon LYONs, and NL's 13% Discount Notes do not require periodic interest
payments until 1998.  As a result, current cash interest expense payments are
lower than accrual basis interest expense.

Minority interest.  Minority interest in 1995 (and pro forma 1994) relates
to certain partially-owned foreign subsidiaries of NL, certain of which minority
interest was purchased by Rheox in early 1996.  At December 31, 1995, NL
separately reported a shareholders' deficit of approximately $209 million and,
as a result, no minority interest in NL Industries is recorded in the Company's
consolidated balance sheet.  Until such time as NL reports positive
shareholders' equity in its separate financial statements, all of NL's
undistributed earnings will accrue to the Company for financial reporting
purposes.  NL did not pay any dividends in 1995 and, accordingly, all of NL's
net income accrued to Valhi for financial reporting purposes.  NL resumed
regular quarterly dividends in the first quarter of 1996 at a rate of $.10 per
quarter.  At such quarterly rate for all of 1996, approximately $9.4 million of
NL dividends would be paid to NL stockholders other than Valhi, and Valhi would
report such amount as minority interest in NL's earnings.

PROVISION FOR INCOME TAXES

The principal reasons for the difference between the Company's effective
income tax rates and the U.S. federal statutory income tax rates are explained
in Note 16 to the Consolidated Financial Statements.  Income tax rates vary by
jurisdiction (country and/or state), and relative changes in the geographic mix
of the Company's pre-tax earnings can result in fluctuations in the Company's
consolidated effective income tax rate.  In addition, because certain
subsidiaries, including NL, are not members of the consolidated U.S. tax group,
Valhi's incremental income taxes on its after-tax earnings or losses
attributable to such subsidiaries can also increase the Company's overall
effective tax rate.

The provision for income taxes in 1995 includes net deferred income tax
benefits resulting from changes in the U.S./Canada income tax treaty and the
reduction of NL's deferred income tax valuation allowance to recognize the
future benefit of certain tax credits.  In 1994, the geographic mix of pre-tax
income included losses in certain of NL's tax jurisdictions for which no current
refund was available and for which recognition of a deferred tax asset was not
considered appropriate.  This contributed significantly to NL's effective tax
rate, and, consequently, the Company's pro forma 1994 effective tax rate,
varying from a normally expected rate.  See Note 16 to the Consolidated
Financial Statements.

DISCONTINUED OPERATIONS, EXTRAORDINARY ITEMS, AND CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLES.

See Notes 3, 13 and 17 to the Consolidated Financial Statements.

EQUITY IN EARNINGS OF NL PRIOR TO CONSOLIDATION

As discussed in Note 3 to the Consolidated Financial Statements, the
Company's interest in NL was reported by the equity method during 1993 and 1994.
As discussed above and in Note 3, the Company consolidated NL's results of
operations beginning in 1995.  The Company's equity in NL's separately-reported
results of operations, summarized below for periods prior to consolidation by
Valhi, differ from its effective percentage interest in NL's separate results.
Amortization of basis differences arising from purchase accounting adjustments
made by the Company in conjunction with the acquisition of its interests in NL
generally reduces earnings, or increases losses, as reported by the Company
compared to amounts separately reported by NL.

YEARS ENDED
DECEMBER 31,
-----------------

1993      1994
----      ----

(IN MILLIONS)

Net sales                                               $ 805.3     $888.0
=======     ======

Operating income                                        $  62.4     $111.3
Corporate, net                                            (33.1)     (40.8)
Interest expense                                          (99.1)     (83.9)
-------     ------

(69.8)     (13.4)
Income tax expense                                        (12.7)      (9.8)
Minority interest                                           (.7)       (.8)
-------     ------

Loss from continuing operations                         $ (83.2)    $(24.0)
=======     ======

The Company's equity in NL's losses, including
amortization of basis differences                      $ (52.4)    $(25.1)
Provision for market value impairment of NL
common stock                                             (84.0)       -
-------     ------

$(136.4)    $(25.1)
=======     ======

NL's sales and operating income are discussed under "Chemicals" above.
NL's net corporate expenses in 1994 were higher than in 1993 as a $20 million
gain related to the settlement of a lawsuit was offset primarily by increased
provisions for environmental remediation and litigation costs.  NL's interest
expense declined in 1994 principally as a result of lower debt levels.  NL's tax
provision is discussed under "Provision for income taxes" above.

The Company periodically evaluates the net carrying value of its long-term
assets to determine if there has been any decline in value below their
respective net carrying values that is considered to be other than temporary and
would, therefore, require a write-down accounted for as a realized loss.  As a
result of this process, Valhi recorded an $84 million pre-tax charge to earnings
for an other than temporary decline in market value of NL common stock in the
first quarter of 1993.  See Notes 2 and 3 to the Consolidated Financial
Statements.

LIQUIDITY AND CAPITAL RESOURCES:

CONSOLIDATED CASH FLOWS

Operating activities.  Cash provided by operating activities before changes
in assets and liabilities was $170 million in 1995, up from $118 million
compared to pro forma 1994.  Generally reflecting relative earnings
fluctuations, NL accounted for $66 million of the $52 million net increase while
Medite was down $10 million.  Changes in assets and liabilities result primarily
from the timing of production, sales and purchases.  Such changes include the
impact of year-to-year fluctuations in the size of the sugarbeet crop which, as
discussed under `Refined sugar'' below, can be significant.  In addition, TiO2
and MDF production volume during 1995 exceeded their respective sales volume by
approximately 4% and 7%, respectively, which contributed significantly to the
increase in chemicals and building products inventories.  Noncash interest
expense consists of amortization of original issue discount on certain Valhi and
NL indebtedness and amortization of deferred financing costs.

The 1994 pro forma cash provided by operating activities includes $136
million attributable to NL's receipt of German tentative income tax refunds
discussed below.  Liquidation of the Company's portfolio of trading securities
in 1995 also impacted cash flow comparisons.

Cash costs related to the 1996 closure of Medite's New Mexico's MDF
facility, net of related income tax benefits, are not expected to be material.

Investing activities.  Capital expenditures are disclosed by business
segment in Note 2 to the Consolidated Financial Statements and are discussed in
the respective individual company sections below.  Capital expenditures in 1995
increased slightly compared to the 1994 pro forma amount as higher spending by
NL (primarily for environmental and productivity-enhancing projects) and Sybra
(for store expansion) was offset by lower spending by Medite following the
completion of its Irish MDF plant expansion in 1994 and by lower productivity-
enhancing capital spending by Amalgamated.  The higher level of historically
reported capital spending in 1994 compared to 1993 relates principally to
capacity projects, including Amalgamated's sugar productivity-enhancing
equipment, Medite's Irish MDF plant expansion and Sybra's new restaurants.

At December 31, 1995, the estimated cost to complete capital projects in
process approximated $59 million, most of which relates to environmental
protection and compliance programs at NL and productivity-enhancing equipment at
NL and Medite.  The Company's total capital expenditures for 1996 are estimated
at approximately $94 million, down from $115 million in 1995.  Such 1996
estimated capital expenditures include $5 million for new productivity-enhancing
equipment at Amalgamated and $11 million for NL's TiO2 debottlenecking projects.
Estimated 1996 capital expenditures also include approximately $26 million
related to environmental protection and compliance programs, principally off-gas
desulfurization and water treatment chemical purification systems at certain of
NL's TiO2 plants and air and water facilities at certain of Amalgamated's
factories.  Other 1996 capital projects are principally of an ongoing nature.
Capital expenditures in 1996 are expected to be financed primarily from
operations or existing cash resources and credit facilities.

During 1995, (i) National Cabinet Lock purchased the assets of a Canadian
workstation/drawer slide competitor for an aggregate of $6 million, (ii) Valhi
purchased an additional 1.1 million NL shares at an average price of $12 per
share and (iii) Valhi invested $5 million in Waste Control Specialists.

Net sales of securities in 1993 include sales made in conjunction with the
redemption of Valhi's 12 1/2% Notes discussed below.

Financing activities.  Net repayments of indebtedness in 1995 relate
primarily to (i) $39 million of net short-term borrowings under NL DM-
denominated short-term credit facilities and (ii) principal repayments under NL,
Amalgamated and Medite term loans aggregating $63 million, including a $10
million prepayment under Rheox's term loan.

Pro forma 1994 net repayments of indebtedness include $131 attributable to
NL, principally reductions in DM borrowings paid with proceeds of the German
tentative tax refunds discussed under "Chemicals" below.  Net historically
reported borrowings in 1994 relate principally to (i) $21 million of project
financing related to Medite's Irish MDF plant expansion and (ii) a net $11
million increase in term borrowings at Amalgamated for capital expenditures.

Net repayments of indebtedness in 1993 relate principally to (i) Valhi's
redemptions of $235 million principal amount of 12 1/2% Notes, (ii) Valcor's
issuance of $100 million of 9 5/8% Senior Notes, and (iii) net new borrowings of
approximately $39 million under Medite's U.S. bank credit agreement.

At December 31, 1995, unused revolving credit available under the existing
facilities aggregated $317 million.  Of such amount, (i) $87 million is
available only for permanently reducing NL's DM term loan or paying future
German income tax assessments, as discussed below, and (ii) $15 million is
available only to fund Valhi's purchases of NL common stock.  See Note 12 to the
Consolidated Financial Statements.  Valhi has not guaranteed any subsidiary
indebtedness.

CHEMICALS - NL INDUSTRIES

The TiO2 industry is cyclical, with the previous peak in selling prices in
early 1990 and the latest trough in the third quarter of 1993, and NL's
operations used significant amounts of cash during such TiO2 downturn cycle.
Reflecting the improvement in Kronos' operating results, NL generated $105
million in cash flow from operating activities before changes in assets and
liabilities in 1995 compared to $39 million in 1994.  Relative changes in NL's
inventories, receivables and payables (excluding the effect of currency
fluctuation) used cash in 1995 (primarily due to increased TiO2 inventory
levels) while providing cash in 1994.  Receipt of the tentative German income
tax refunds in 1994, discussed below, significantly increased NL's cash flow
from operating activities in 1994 and was a major factor in NL's improved
liquidity.

NL's capital expenditures during the past three years aggregated $149
million, including $73 million ($26 million in 1995) for NL's ongoing
environmental protection and compliance programs, including a Canadian waste
acid neutralization facility, a Norwegian onshore tailings disposal system and
various off-gas desulfurization systems.  NL's estimated 1996 capital
expenditures are $63 million and include $23 million in the area of
environmental protection and compliance, primarily related to the off-gas
desulfurization and water treatment chemical purification systems. NL spent $9
million in 1995, and plans to spend an additional $11 million in 1996 and $5
million in 1997, in capital expenditures related to a debottlenecking project at
its Leverkusen, Germany chloride process TiO2 facility that is expected to
increase NL's worldwide annual attainable TiO2 production capacity to about
400,000 metric tons in 1997.  The capital expenditures of the TiO2 manufacturing
joint venture are not included in NL's capital expenditures.

NL and its subsidiaries held $141 million of cash and cash equivalents (25%
held by non-U.S. subsidiaries at December 31, 1995), of which $10 million is
restricted.  In addition, NL had $5 million and $191 million available for
borrowing under existing U.S. and non-U.S. credit facilities, respectively, of
which $87 million is available only for (i) permanently reducing NL's DM term
loan or (ii) paying future German tax assessments, as described below.  In
January 1996, NL borrowed DM 30 million under the revolving credit portion of
KII's DM credit facility.

Based on NL's expectations for the TiO2 industry and anticipated demands on
its cash resources as discussed herein, NL expects to have sufficient liquidity
to meet its obligations including operations, capital expenditures and debt
service.  To the extent that actual developments differ from NL's expectations,
NL's liquidity could be adversely affected.  Terms of intercompany notes from
KII payable to NL mirror the terms of NL's publicly-traded debt and are designed
to facilitate the flow of funds from NL's subsidiaries to service such
indebtedness.  In February 1996, NL announced the resumption of a regular
quarterly dividend at the rate of $.10 per share.  At such rate, NL's annual
cash dividends would aggregate approximately $20 million, of which approximately
$11 million would be paid to Valhi.
Certain of NL's U.S. and non-U.S. income tax returns, including Germany,
are being examined and tax authorities have or may propose tax deficiencies.
During 1994, the German tax authorities withdrew certain proposed tax
deficiencies of DM 100 million and remitted tax refunds aggregating DM 225
million ($136 million when received), including interest, on a tentative basis
while examination of NL's German income tax returns continued.  NL has recently
reached agreement in principle with the German tax authorities regarding such
examinations which will resolve certain significant tax contingencies for years
through 1990.  NL expects to finalize assessments and pay tax deficiencies of
approximately DM 50 million ($35 million at December 31, 1995), including
interest, in settlement of these issues during the first half of 1996.  NL
considers the agreement in principle to be a favorable resolution of the
contingencies and the anticipated payment is within previously-accrued amounts
for such matters.

Certain other German tax contingencies remain outstanding and will continue
to be litigated.  No assurance can be given that this litigation will be
resolved in NL's favor in view of the inherent uncertainties involved in court
rulings.  Although NL believes that it will ultimately prevail in the
litigation, NL has granted a DM 100 million ($70 million at December 31, 1995)
lien on its Nordenham, Germany TiO2 plant in favor of the German tax authorities
until the litigation is resolved.  NL believes that it has adequately provided
accruals for additional income taxes and related interest expense which may
ultimately result from all such examinations and believes that the ultimate
disposition of such examinations should not have a material adverse effect on
its consolidated financial position, results of operations or liquidity.

At December 31, 1995, NL had recorded net deferred tax liabilities of $157
million.  NL, which is not a member of the Contran Tax Group, operates in
numerous tax jurisdictions, in certain of which it has temporary differences
that net to deferred tax assets (before valuation allowance).  NL has provided a
deferred tax valuation allowance of $196 million at December 31, 1995,
principally related to the U.S. and Germany, offsetting deferred tax assets
which NL believes do not currently meet the "more likely than not" recognition
criteria.

In addition to the chemicals businesses conducted through Kronos and Rheox,
NL also has certain interests and associated liabilities relating to certain
discontinued or divested businesses.

NL has been named as a defendant, PRP, or both, in a number of legal
proceedings associated with environmental matters, including waste disposal
sites currently or formerly owned, operated or used by NL, many of which
disposal sites or facilities are on the U.S. EPA's Superfund National Priorities
List or similar state lists.  On a quarterly basis, NL evaluates the potential
range of its liability at sites where it has been named as a PRP or defendant.
NL believes it has provided adequate accruals ($100 million at December 31,
1995) for reasonably estimable costs of such matters, but NL's ultimate
liability may be affected by a number of factors, including changes in remedial
alternatives and costs and the allocation of such costs among PRPs.  NL is also
a defendant in a number of legal proceedings seeking damages for personal injury
and property damage arising out of the sale of lead pigments and lead-based
paints.  NL has not accrued any amounts for the pending lead pigment litigation.
Although no assurance can be given that NL will not incur future liability in
respect of this litigation, based on, among other things, the results of such
litigation to date, NL believes that the pending lead pigment litigation is
without merit.  Liability that may result, if any, cannot reasonably be
estimatied.  NL currently believes the disposition of all claims and disputes,
individually or in the aggregate, should not have a material adverse effect on
its consolidated financial position, results of operations or liquidity.  There
can be no assurance that additional matters of these types will not arise in the
future.  See Item 3 - "Legal Proceedings" and Note 20 to the Consolidated
Financial Statements.

As discussed in "Results of Operations - Chemicals,"  NL has substantial
operations located outside the United States for which the functional currency
is not the U.S. dollar. As a result, the reported amount of NL's assets and
liabilities related to its non-U.S. operations, and therefore NL's consolidated
net assets, will fluctuate based upon changes in currency exchange rates.  The
carrying value of NL's net investment in its German operations is a net
liability due principally to its DM bank credit facility, while its net
investment in its other non-U.S. operations are net assets.

NL periodically evaluates its liquidity requirements, alternative uses of
capital, capital needs and availability of resources in view of, among other
things, its debt service and capital expenditure requirements and estimated
future operating cash flows.  As a result of this process, NL has in the past
and may in the future seek to reduce, refinance or restructure indebtedness,
raise additional capital, modify its dividend policy, restructure ownership
interests, sell interests in subsidiaries or other assets, or take a combination
of such steps or other steps to manage its liquidity and capital resources.  In
the normal course of its business, NL may review opportunities for the
acquisition of businesses and assets in the chemicals industry.  In the event of
any future acquisition, NL may consider using its available cash, issuing its
equity securities or increasing its indebtedness to the extent permitted by the
agreements governing NL's existing debt. In this regard, the Indentures
governing NL's publicly-traded debt contain provisions which limit the ability
of NL and its subsidiaries to incur additional indebtedness or hold
noncontrolling interests in business units.

REFINED SUGAR - AMALGAMATED
Amalgamated's cash requirements are seasonal in that a major portion of the
total payments for sugarbeets is made, and the costs of processing the
sugarbeets are incurred, in the fall and winter of each year.  Accordingly,
Amalgamated's operating activities generally use significant amounts of cash in
the first and fourth calendar quarters and provide significant cash flow in the
second and third quarters of each year.  Amalgamated's cash flow from operating
activities before changes in assets and liabilities was relatively stable during
the past three years.  However, generally reflecting relative changes in the
size of the sugarbeet crops, changes in assets and liabilities generated $19
million of cash in 1995, used $9 million in 1994 and used $26 million in 1993.

To meet its  seasonal cash needs, Amalgamated obtains short-term borrowings
pursuant to the Government's sugar price support loan program and bank credit
facilities.  Amalgamated expects to meet its seasonal cash needs for the
remainder of the 1995 crop year and for the 1996 crop through borrowings from
such sources and internally-generated funds.  The effective net Government loan
rate available to Amalgamated for refined sugar from the 1995 crop is
approximately 20.22/ per pound, down from 20.69/ per pound for the 1994 crop.
Borrowings under the Government loan program are secured by refined sugar
inventory and currently are otherwise nonrecourse to Amalgamated.  At December
31, 1995, Amalgamated had $22 million of borrowing availability under the
government loan program and existing revolving bank credit facilities.

Amalgamated's capital expenditures in the past three years, which
emphasized equipment to improve productivity, aggregated $62 million and were
financed principally from operations and $26 million of term loan borrowings.
Estimated 1996 capital expenditures approximate $10 million, including $5
million for sugar extraction enhancing equipment and $2 million for
environmental protection and improvement programs, principally air and water
treatment facilities.
BUILDING PRODUCTS - MEDITE

Medite completed construction of a second MDF production line in Ireland in
1994 and intends to continue the upgrading and debottlenecking of existing MDF
production facilities in Ireland and Oregon.  The Company understands that much
of the 1995/1996 industry capacity additions utilize the newer, more efficient
continuous press technology.  Approximately 30% of Medite's aggregate MDF
production capacity in Ireland and Oregon utilizes the newer technology and
Medite may need to upgrade certain of its older facilities over the next few
years in order to avoid certain competitive disadvantages.  Capital costs
associated with potential future facilities upgrades could, under certain
scenarios, be relatively significant.

Medite does not believe the closure of the New Mexico MDF plant in 1996
will have a material adverse effect on its financial position, results of
ongoing operations or liquidity.

At December 31, 1995, amounts available for borrowing under Medite's
existing bank credit agreements aggregated $17 million.

Medite has agreed to exchange certain property held for sale with a nominal
carrying amount and $1 million cash for approximately 660 acres of state-owned
timberlands containing over eight million board feet of timber.  Medite
currently expects to complete the transaction in early 1996.  Medite has also
granted a three-year option to a real estate development company to acquire
certain other of Medite's property held for sale.
HARDWARE PRODUCTS - NATIONAL CABINET LOCK

National Cabinet Lock's major plants have operated at a high rate of
capacity during the past few years and capital spending continues to address
market demands.  In this regard, an additional production facility was acquired
through the purchase of a Canadian competitor in August 1995.  The Company
continues to explore additional expansion and/or acquisition opportunities for
its hardware products business.

At December 31, 1995, National Cabinet Lock had $5.5 million of borrowing
availability under existing Canadian credit agreements.

FAST FOOD - SYBRA

Sybra, like most restaurant businesses, operates with nominal working
capital because sales are for cash, inventory turnover is rapid, and payments to
trade suppliers are generally not due for 30 days.  At December 31, 1995, Sybra
had $12 million of borrowing availability under its existing revolving credit
agreements.

Approximately one-half of Sybra's $5 million 1996 capital budget relates to
its continuing program to remodel and update existing stores.  The Company is
considering curtailing new store openings and, as a result, Sybra may not be in
compliance with the current terms of its CDA with Arby's, Inc. by the end of
1996.  There can be no assurance that Sybra could renegotiate the CDA in order
to retain its exclusive development rights, in which case other Arby's
competitors would be free to enter the Dallas/Ft. Worth and Tampa markets.
Other Arby's competitors operate in certain of Sybra's other markets and, while
there can be no assurance, Sybra does not believe that loss of its development
rights would have a material adverse effect on its financial position, results
of operations or liquidity.

WASTE MANAGEMENT - WASTE CONTROL SPECIALISTS

Waste Control Specialists estimated capital expenditures for projects in
process, substantially all of which relate to the construction of its new
facility in West Texas, are approximately $17 million and are expected to be
incurred principally in 1996.  Such capital expenditures, along with its
expected development stage operating losses, will be funded primarily from
Valhi's $25 million of capital contributions ($5 million in 1995, $15 million in
1996 and the remaining $5 million in 1997).  Waste Control Specialists does not
expect to begin to generate revenues from existing permits until 1997.

GENERAL CORPORATE - VALHI AND VALCOR

Valhi's operations are conducted principally through subsidiaries and
affiliates (NL Industries, Amalgamated, Valcor and Waste Control Specialists).
Valcor is an intermediate parent company with operations conducted through its
subsidiaries (Medite, National Cabinet Lock and Sybra).  Accordingly, Valhi's
and Valcor's long-term ability to meet their respective corporate obligations is
dependent in large measure on the receipt of dividends or other distributions
from their respective subsidiaries.  Various credit agreements to which
subsidiaries are parties contain customary limitations on the payment of
dividends, typically a percentage of net income or cash flow; however, such
restrictions have not significantly impacted the Company's ability to service
parent company level obligations.  Neither Valhi nor Valcor has guaranteed any
indebtedness of their respective subsidiaries.

Valhi's LYONs do not require current cash debt service.  Valhi owns 5.5
million shares of Dresser common stock, which shares are held in escrow for the
benefit of holders of the LYONs.  The LYONs are exchangeable, at the option of
the holder, for the Dresser shares owned by Valhi.  Exchanges of LYONs for
Dresser stock would result in the Company reporting income related to the
disposition of the Dresser stock for both financial reporting and income tax
purposes, although no cash proceeds would be generated by such exchanges.  Cash
income taxes that would be triggered by exchanges of LYONs for Dresser stock
were equivalent to approximately $6 per Dresser share as of December 31, 1995.
Valhi continues to receive regular quarterly Dresser dividends (presently $.17
per quarter) on the escrowed shares.

During 1995, Valhi purchased an additional 1.1 million NL shares at an
average cost of approximately $12.20 per share, and purchased an additional
274,000 NL shares in January 1996 at an average cost of $13.35 per share.  At
February 29, 1996, Valhi held approximately 54% of NL's outstanding common
stock.

NL resumed regular quarterly cash dividends in the first quarter of 1996 at
a rate of $.10 per NL share.  At such rate, Valhi would receive approximately
$11 million of annual dividends from NL.  Declaration and payment of future NL
dividends, and the amount thereof, will be dependent upon NL's results of
operations, financial condition, cash requirements for its businesses,
contractual requirements and restrictions (including limitations imposed by the
Indentures governing NL's publicly-traded indebtedness) and other factors deemed
relevant by NL's Board of Directors.

Valhi has committed to invest $25 million in Waste Control Specialists,
including $5 million contributed at formation in November 1995.  The remainder
is expected to be contributed during 1996 ($15 million) and early 1997 ($5
million).  Funds for the investment will be provided primarily by cash on hand
or available credit facilities.  At December 31, 1995, Valhi has two bank credit
facilities aggregating $65 million, the full amount of which was available for
borrowing.  Of such amount, $15 million can only be used to purchase additional
shares of NL common stock.

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 has in the past and may in the future seek to raise
additional capital, refinance or restructure indebtedness, modify its dividend
policy, consider the sale of interests in subsidiaries, affiliates, business
units, marketable securities or other assets, or take a combination of such
steps or other steps, to increase liquidity, reduce indebtedness and fund future
activities.  Such activities have in the past and may in the future involve
related companies.

The Company routinely evaluates acquisitions of interests in, or
combinations with, companies, including related companies, perceived by
management to be undervalued in the marketplace.  These companies may or may not
be engaged in businesses related to the Company's current businesses.  The
Company intends 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, its subsidiaries and related
companies.  From time to time, the Company and related entities also evaluate
the restructuring of ownership interests among their respective subsidiaries and
related companies.  In this regard, the Indentures governing the publicly-traded
debt of NL and Valcor contain provisions which limit the ability of NL, Valcor
and their respective subsidiaries to incur additional indebtedness or hold
noncontrolling interests in business units.
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" (page
F).

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

The information required by this Item is incorporated by reference to
Valhi's definitive Proxy Statement to be filed with the Securities and Exchange
Commission pursuant to Regulation 14A within 120 days after the end of the
fiscal year covered by this report (the "Valhi Proxy Statement").

ITEM 11.  EXECUTIVE COMPENSATION

The information required by this Item is incorporated by reference to the
Valhi Proxy Statement.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated by reference to the
Valhi Proxy Statement.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item is incorporated by reference to the
Valhi Proxy Statement.  See Note 19 to the Consolidated Financial Statements.

PART IV

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

(a) and (d)   Financial Statements and Schedules

The Registrant

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

50%-or-less owned persons

Consolidated financial statements of Waste Control Specialists are not
required pursuant to Rule 3.09 of Regulation S-X.

(b)           Reports on Form 8-K
Reports on Form 8-K filed for the quarter ended December 31, 1995
and the quarter ending March 31, 1996 (through March 15, 1996):

October 23, 1995    - Reported Items 5 and 7.
November 9, 1995    - Reported Items 5 and 7.
November 16, 1995   - Reported Items 5 and 7.
January 29, 1996    - Reported Items 5 and 7.
March 12, 1996      - Reported Items 5 and 7.
March 14, 1996      - Reported Items 5 and 7.

(c)           Exhibits

Included as exhibits are the items listed in the Exhibit Index.
Valhi will furnish a copy of any of the exhibits listed below
upon payment of $4.00 per exhibit to cover the costs to Valhi 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.

Page Number:
Manually
Item No.   Signed Copy                     Exhibit Index
- --------   -----------                     -------------
3.1                    Restated Articles of Incorporation of the Registrant -
incorporated by reference to Appendix A to the
definitive Prospectus/Joint Proxy Statement of The
Amalgamated Sugar Company and LLC Corporation (File
No. 1-5467) dated February 10, 1987.

3.2                    By-Laws of the Registrant as amended - incorporated by
reference to Exhibit 3.1 of the Registrant's Quarterly
Report on Form 10-Q for the quarter ended March 31,
1992.

4.1                    Form of Indenture between the Registrant and
NationsBank of Georgia, N.A., as Trustee, governing
Liquid Yield Option Notes due 2007 - incorporated by
reference to Exhibit 4.1 to a Registration Statement
on Form S-2 (No. 33-49866) filed by the Registrant.

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

4.3                    Indenture dated October 20, 1993 governing NL's
11 3/4% Senior Secured Notes due 2003, including form
of note, - incorporated by reference to Exhibit 4.1 of
NL's Quarterly Report on Form 10-Q (File No. 1-640)
for the quarter ended September 30, 1993.

4.4                    Indenture dated October 20, 1993 governing NL's 13%
Senior Secured Discount Notes due 2005, including form
of note - incorporated by reference to Exhibit 4.6 of
NL's Quarterly Report on Form 10-Q (File No. 1-640)
for the quarter ended September 30, 1993.

10.1                    Form of Intercorporate Services Agreement between the
Registrant and Contran Corporation - incorporated by
reference to Exhibit 10.1 of the Registrant's Annual
Report on Form 10-K (File No. 1-5467) for the year
ended December 31, 1992.

10.2                    Intercorporate Services Agreement by and between
Contran Corporation and NL effective as of January 1,
1995 - incorporated by reference to Exhibit 10.2 to
NL's Quarterly Report on Form 10-Q (File No. 1-640)
for the quarter ended March 31, 1995.

10.3                    Stock Purchase Agreement dated October 30, 1991
between the Registrant and Tremont Corporation -
incorporated by reference to Exhibit 28.1 of the
Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1991.

10.4*                   Valhi, Inc. 1987 Incentive Stock Option - Stock
Appreciation Rights Plan, as amended - incorporated by
reference to Exhibit 10.4 to the Registrant's Annual
Report on Form 10-K for the year ended December 31,
1994.

10.5*                   Valhi, Inc. 1990 Non-Employee Director Stock Option
Plan - incorporated by reference to Exhibit 4.1 of a
Registration Statement on Form S-8 (No. 33-41508)
filed by the Registrant.

10.6*                   Description of terms of an executive severance
agreement between NL and Joseph S. Compofelice
(Executive Vice President of the Registrant) -
incorporated by reference to the last paragraph of
page 16 entitled "Employment Agreements" of NL's
definitive proxy statement (File No. 1-640) dated
March 30, 1994.

10.7*                   1989 Long Term Performance Incentive Plan of NL
Industries, Inc. - incorporated by reference to
Exhibit A to NL's Proxy Statement on Schedule 14A
(File No. 1-640) for the annual meeting held on May 2,
1989.

10.8*                   Supplemental Executive Retirement Plan for Executives
and Officers of NL Industries, Inc. effective as of
January 1, 1991 - incorporated by reference to Exhibit
10.26 to NL's Annual Report on Form 10-K (File No. 1-
640) for the year ended December 31, 1992.

10.9                    Amended and Restated Loan Agreement dated October 15,
1993 among Kronos International, Inc., the Banks set
forth therein and Hypobank International S.A., as
Agent, and Banque Paribas, as Co-Agent - incorporated
by reference to Exhibit 10.17 of NL's Quarterly Report
on Form 10-Q (File No. 1-640) for the quarter ended
September 30, 1993.

10.10                   Formation Agreement dated as of October 18, 1993 among
Tioxide Americas Inc., Kronos Louisiana, Inc. and
Louisiana Pigment Company, L.P. - incorporated by
reference to Exhibit 10.2 of NL's Quarterly Report on
Form 10-Q (File No. 1-640) for the quarter ended
September 30, 1993.

10.11                   Joint Venture Agreement dated as of October 18, 1993
between Tioxide Americas Inc. and Kronos Louisiana,
Inc. - incorporated by reference to Exhibit 10.3 of
NL's Quarterly Report on Form 10-Q (File No. 1-640)
for the quarter ended September 30, 1993.

10.12                   Amendment No. 1 to Joint Venture Agreement dated as of
December 20, 1995 between Tioxide Americas Inc. and
Kronos Louisiana, Inc. - incorporated by reference to
Exhibit 10.20 of NL's Annual Report on Form 10-K (File
No. 1-640) for the year ended December 31 1995.

10.13                   Kronos Offtake Agreement dated as of October 18, 1993
by and between Kronos Louisiana, Inc. and Louisiana
Pigment Company, L.P. - incorporated by reference to
Exhibit 10.4 of NL's Quarterly Report on Form 10-Q
(File No. 1-640) for the quarter ended September 30,
1993.

10.14                   Amendment No. 1 to Kronos Offtake Agreement dated as
of December 20, 1995 between Kronos Louisiana, Inc.
and Louisiana Pigment Company, L.P. - incorporated by
reference to Exhibit 10.22 of NL's Annual Report on
Form 10-K (File No. 1-640) for the year ended December
31 1995.

10.15                   Master Technology and Exchange Agreement dated as of
October 18, 1993 among Kronos, Inc., Kronos Louisiana,
Inc., Kronos International, Inc., Tioxide Group
Limited and Tioxide Group Services Limited -
incorporated by reference to Exhibit 10.8 of NL's
Quarterly Report on Form 10-Q (File No. 1-640) for the
quarter ended September 30, 1993.

10.16                   Allocation Agreement dated as of October 18, 1993
between Tioxide Americas Inc., ICI American Holdings,
Inc., Kronos, Inc. and Kronos Louisiana, Inc. -
incorporated by reference to Exhibit 10.10 to NL's
Quarterly Report on Form 10-Q (File No. 1-640) for the
quarter ended September 30, 1993.

10.17                   Lease Contract dated June 21, 1952, between
Farbenfabrieken Bayer Aktiengesellschaft and
Titangesellschaft mit beschrankter Haftung (German
language version and English translation thereof) -
incorporated by reference to Exhibit 10.14 of NL's
Annual Report on Form 10-K (File No. 1-640) for the
year ended December 31, 1985.

10.18                   Agreement dated February 8, 1984 between Bayer AG and
Kronos Titan GmbH (German language version and English
translation thereof) - incorporated by reference to
Exhibit 10.16 of NL's Annual Report on Form 10-K (File
No. 1-640) for the year ended December 31, 1985.

10.19                   Contract on Supplies and Services among Bayer AG,
Kronos Titan GmbH and Kronos International, Inc. dated
June 30, 1995 (English translation from German
language document) - incorporated by reference to
Exhibit 10.1 of NL's Quarterly Report on Form 10-Q
(File No. 1-640) for the quarter ended September 30,
1995.

10.20                   Richards Bay Slag Sales Agreement dated May 1, 1995
between Richards Bay Iron and Titanium (Proprietary)
Limited and Kronos, Inc. - incorporated by reference
to Exhibit 10.17 to NL's Annual Report on Form 10-K
(File No. 1-640) for the year ended December 31, 1995.

10.21                   Registration Rights Agreement dated October 30, 1991,
by and between NL and Tremont - incorporated by
reference to Exhibit 4.3 of NL's Annual Report on Form
10-K (File No. 1-640) for the year ended December 31,
1991.

10.22                   Insurance Sharing Agreement, effective January 1,
1990, by and between NL, NL Insurance, Ltd. (an
indirect subsidiary of Tremont Corporation) and Baroid
Corporation - incorporated by reference to Exhibit
10.20 to NL's Annual Report on Form 10-K (File No. 1-
640) for the year ended December 31, 1991.

21.1                    Subsidiaries of the Registrant.

23.1                    Consent of Coopers & Lybrand L.L.P.
23.2                    Consent of KPMG Peat Marwick LLP.

23.3                    Consent of Arthur Andersen LLP.

27.1                    Financial Data Schedule for the year ended December
31, 1995.
[FN]
*  Management contract, compensatory plan or agreement.

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.

VALHI, INC.
(Registrant)

By: /s/ Harold C. Simmons
-------------------------------------

Harold C. Simmons, March 15, 1996
(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/ Norman S. Edelcup                    /s/ Harold C. Simmons
- ---------------------------------------  -------------------------------------

Norman S. Edelcup, March 15, 1996        Harold C. Simmons, March 15, 1996
(Director)                               (Chairman of the Board, President and
Chief Executive Officer)

/s/ Kenneth R. Ferris                      /s/ Glenn R. Simmons
- ---------------------------------------  -------------------------------------

Kenneth R. Ferris, March 15, 1996        Glenn R. Simmons, March 15, 1996
(Director)                               (Vice Chairman of the Board)

/s/ J. Walter Tucker, Jr.                 /s/ William C. Timm
- ---------------------------------------  -------------------------------------

J. Walter Tucker, Jr., March 15, 1996    William C. Timm, March 15, 1996
(Director)                               (Vice President-Finance and Treasurer
and Chief Financial Officer)

/s/ J. Thomas Montgomery, Jr.
-------------------------------------

J. Thomas Montgomery, Jr.,
March 15, 1996
(Vice President, Controller and Chief

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-1/F-3

Consolidated Balance Sheets - December 31, 1994 and 1995          F-4/F-5

Consolidated Statements of Operations - Years ended
December 31, 1993, 1994 and 1995                                 F-6/F-7

Consolidated Statements of Cash Flows - Years ended
December 31, 1993, 1994 and 1995                                 F-8/F-10

Consolidated Statements of Stockholders' Equity - Years ended
December 31, 1993, 1994 and 1995                                 F-11

Notes to Consolidated Financial Statements                        F-12/F-48

FINANCIAL STATEMENT SCHEDULES

Report of Independent Accountants                                 S-1

Schedule I  - Condensed financial information of Registrant       S-2/S-9

Schedule II - Valuation and qualifying accounts                   S-10/S-11

Schedules III and IV are omitted because they are not applicable.

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Board of Directors of Valhi, Inc.:

We have audited the accompanying consolidated balance sheets of Valhi, Inc.
and Subsidiaries as of December 31, 1994 and 1995, and the related consolidated
statements of operations, cash flows and stockholders' equity for each of the
three years in the period ended December 31, 1995.  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 certain wholly-owned subsidiaries (The
Amalgamated Sugar Company and Medite Corporation) constituting approximately 25%
and 23% of consolidated assets as of December 31, 1994 and 1995, respectively,
and approximately 80% of consolidated sales for each of the two years in the
period ended December 31, 1994 (38% of 1994 pro forma sales) and 38% of
consolidated sales for the year ended December 31, 1995.  These statements were
audited by other auditors whose reports thereon have been furnished to us, and
our opinion, insofar as it relates to amounts included for such subsidiaries, is
based solely upon their reports.

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 reports of other auditors provide a
reasonable basis for our opinion.

In our opinion, based upon our audits and the reports of other auditors,
the financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Valhi, Inc. and Subsidiaries as
of December 31, 1994 and 1995, and the consolidated results of their operations
and their cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.

As discussed in Note 17 to the consolidated financial statements, in 1993
the Company changed its method of accounting for certain investments in debt and
equity securities in accordance with Statement of Financial Accounting Standards
No. 115.

COOPERS & LYBRAND L.L.P.

Dallas, Texas
February 29, 1996, except for
Note 22, as to which the date
is March 14, 1996

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholder of The Amalgamated Sugar Company:

We have audited the balance sheets of The Amalgamated Sugar Company as of
December 31, 1994 and 1995, and the related statements of income and
shareholder's equity and cash flows for each of the three 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 financial statements (not presented separately herein)
referred to above present fairly, in all material respects, the financial
position of The Amalgamated Sugar Company at December 31, 1994 and 1995, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1995, in conformity with generally accepted accounting
principles.

KPMG PEAT MARWICK LLP

Salt Lake City, Utah
January 30, 1996

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholder of Medite Corporation:

We have audited the consolidated balance sheets of Medite Corporation as of
December 31, 1994 and 1995, and the related consolidated statements of income,
redeemable preferred stock and common stockholder's equity and cash flows for
each of the three 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,
1994 and 1995, and the consolidated results of its operations and cash flows for
each of the three years in the period ended December 31, 1995, in conformity
with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Portland, Oregon,
January 27, 1996

VALHI, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 1994 AND 1995

(IN THOUSANDS, EXCEPT PER SHARE DATA)

ASSETS
1994         1995
----         ----

Current assets:
Cash and cash equivalents                         $  170,747    $  170,908
Marketable securities                                 49,233          -
Accounts and other receivables                       202,172       228,940
Receivable from affiliates                             5,411         3,529
Inventories                                          498,097       518,304
Prepaid expenses                                       8,198         7,249
Deferred income taxes                                  2,276         2,636
----------    ----------

Total current assets                             936,134       931,566
----------    ----------

Other assets:
Marketable securities                                115,527       144,256
Investment in joint ventures                         187,480       190,518
Natural resource properties                           93,400        95,774
Prepaid pension cost                                  24,496        24,767
Goodwill                                             248,097       252,773
Deferred income taxes                                  2,827           788
Other assets                                          65,011        57,084
----------    ----------

Total other assets                               736,838       765,960
----------    ----------

Property and equipment:
Land                                                  38,393        43,313
Buildings                                            184,009       212,729
Equipment                                            809,758       913,763
Construction in progress                              18,267        20,709
----------    ----------

1,050,427     1,190,514
Less accumulated depreciation                        242,696       315,827
----------    ----------

Net property and equipment                       807,731       874,687
----------    ----------

$2,480,703    $2,572,213
==========    ==========

VALHI, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (CONTINUED)

DECEMBER 31, 1994 AND 1995

(IN THOUSANDS, EXCEPT PER SHARE DATA)

LIABILITIES AND STOCKHOLDERS' EQUITY
1994         1995
----         ----

Current liabilities:
Notes payable                                      $  124,893   $  145,932

Current maturities of long-term debt                   62,625       63,752
Accounts payable and accrued liabilities              424,693      393,119
Payable to affiliates                                  11,358       10,188
Income taxes                                           24,192       44,849
Deferred income taxes                                   8,461        4,496
----------   ----------

Total current liabilities                         656,222      662,336
----------   ----------

Noncurrent liabilities:
Long-term debt                                      1,086,654    1,084,284
Accrued pension cost                                   76,344       70,040
Accrued OPEB cost                                      83,300       78,410
Accrued environmental costs                            93,655      115,577
Deferred income taxes                                 226,789      239,444
Other                                                  56,890       44,765
----------   ----------

Total noncurrent liabilities                    1,623,632    1,632,520
----------   ----------

Minority interest in NL Industries                         -            -
Minority interest in NL foreign subsidiaries              2,425        3,066
----------   ----------

Stockholders' equity:
Preferred stock, $.01 par value; 5,000 shares
authorized; none issued                                 -            -
Common stock, $.01 par value; 150,000 shares

authorized; 124,475 and 124,633 shares issued          1,245        1,246
Additional paid-in capital                             33,341       34,604
Retained earnings                                     209,071      263,777
Adjustments:
Currency translation                                (12,128)      (7,430)
Marketable securities                                37,669       55,629
Pension liabilities                                    (506)      (2,881)
Treasury stock, at cost - 10,077 and 10,103 shares    (70,268)     (70,654)
----------   ----------

Total stockholders' equity                        198,424      274,291
----------   ----------

$2,480,703   $2,572,213
==========   ==========

[FN]
Commitments and contingencies (Notes 3, 16 and 20)
VALHI, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

(IN THOUSANDS, EXCEPT PER SHARE DATA)

PRO FORMA

1993       1994        1994*       1995
----       ----     ----------  ----------

(UNAUDITED)

Revenues and other income:
Net sales                       $ 781,154   $832,656  $1,720,610   $1,960,810
Other, net                         12,858      9,748      52,775       33,476
---------   --------  ----------   ----------

794,012    842,404   1,773,385    1,994,286
---------   --------  ----------   ----------

Costs and expenses:
Cost of sales                     592,979    633,388   1,293,812    1,426,689
Selling, general and
administrative                   113,107    119,519     339,129      330,644
Interest                           38,648     35,274     119,200      126,193
---------   --------  ----------   ----------

744,734    788,181   1,752,141    1,883,526
---------   --------  ----------   ----------

49,278     54,223      21,244      110,760
Equity in:
Waste Control Specialists            -          -           -            (554)
NL prior to consolidation        (136,441)   (25,078)       -           -
---------   --------  ----------   ----------

Income from continuing
operations before taxes        (87,163)    29,145      21,244      110,206

Income taxes                        (27,835)     9,476       9,750       41,069
Minority interest                      -          -            843          622
---------   --------  ----------   ----------

Income from continuing

operations                     (59,328)    19,669  $   10,651       68,515
==========

Discontinued operations              (4,796)    (8,069)                    -
Extraordinary items                 (15,390)      -                        -
Cumulative effect of change in
accounting principles                  429       -                        -
---------   --------               ----------

Net income (loss)             $ (79,085)  $ 11,600               $   68,515
=========   ========               ==========

[FN]
* Assuming the Company had consolidated NL Industries effective at the
beginning of 1994.  See Notes 1 and 3.
VALHI, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

(IN THOUSANDS, EXCEPT PER SHARE DATA)

PRO FORMA

1993       1994       1994*        1995
----       ----    ----------   ----------

(UNAUDITED)

Earnings per common share:
Continuing operations           $(.52)      $ .17       $.09         $.60
====

Discontinued operations          (.04)       (.07)                   -
Extraordinary items              (.13)        -                      -
Cumulative effect of change in
accounting principles            -           -                      -
-----       -----                  -----

Net income (loss)             $(.69)      $ .10                    $.60
=====       =====                    ====

Cash dividends per share          $ .05       $ .08                    $.12
=====       =====                    ====

Weighted average common shares
outstanding                      114,098     114,303    114,303       114,437
=======     =======    =======       =======

VALHI, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

(IN THOUSANDS)

PRO FORMA

1993      1994        1994*        1995
----      ----     ----------   ----------

(UNAUDITED)

Operating activities:
Net income (loss)                $(79,085)  $ 11,600   $ 10,651     $ 68,515
Depreciation, depletion and
amortization                      25,569     29,649     83,610       93,935
Noncash interest expense           10,267     10,959     29,030       31,346
Deferred income tax benefits      (44,693)    (7,260)    (4,813)     (11,667)
Prepayment of indebtedness          7,749       -          -            -
Other, net                         (2,159)     1,527       (496)     (12,339)
Equity in affiliates:
Waste Control Specialists          -          -          -             554
NL prior to consolidation       136,441     25,078       -            -
Discontinued operations, net      4,796      8,069       -            -
Extraordinary items, net         10,353       -          -            -
--------   --------   --------     --------

69,238     79,622    117,982      170,344

Change in assets & liabilities:
Accounts and other receivables   (4,257)    (2,660)   (15,812)     (15,177)
Inventories                     (10,863)   (35,934)   (18,006)     (10,383)
Accounts payable and accrued
liabilities:
Sugarbeet purchases            (6,135)    20,208     20,208      (63,611)
Other                         (14,020)    10,942     (6,401)      20,633
Income taxes                      1,027     (1,589)   107,654       15,540
Accounts with affiliates         (1,546)    (5,172)    (7,196)      (2,050)
Other, net                         (672)     2,041     36,187        7,823
Trading securities:
Sale proceeds                    -        29,375     44,905       51,286

Purchases                        -       (25,000)   (25,870)        (762)
--------   --------   --------     --------

Net cash provided by
operating activities        32,772     71,833    253,651      173,643
--------   --------   --------     --------

VALHI, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

(IN THOUSANDS)

PRO FORMA

1993       1994       1994*        1995
----       ----    ----------   ----------

(UNAUDITED)

Investing activities:
Capital expenditures           $ (39,086) $ (73,190)  $(110,121)   $(114,593)
Purchase of business unit          -           -           -          (5,982)
Purchases of NL common stock       -        (15,060)    (15,060)     (13,250)
Investment in Waste Control
Specialists                       -           -           -          (5,000)
Marketable securities:
Sale proceeds                 381,395        -           -            -
Purchases                    (281,795)       -           -            -
Loans to affiliates:
Loans                         (11,800)    (16,550)    (16,550)     (62,000)
Collections                    11,800      16,550      16,550       59,000
Other, net                         3,363      4,054       8,147          894
---------  ---------   ---------    ---------

Net cash provided (used)
by investing activities      63,877    (84,196)   (117,034)    (140,931)
---------  ---------   ---------    ---------

Financing activities:
Indebtedness:
Borrowings                    677,173     493,725     538,215      745,190
Principal payments           (790,308)   (455,827)   (631,713)    (772,537)
Loans from affiliates:
Loans                           5,400        -           -            -
Repayments                     (5,400)       -           -            -
Dividends                        (5,704)     (9,145)     (9,145)     (13,809)
Grants and other, net                 53      1,464         722        4,055
---------  ---------   ---------    ---------

Net cash provided (used)
by financing activities    (118,786)    30,217    (101,921)     (37,101)
---------  ---------   ---------    ---------

Net increase (decrease)          $ (22,137) $  17,854   $  34,696    $  (4,389)
=========  =========   =========    =========

[FN]
* Assuming the Company had consolidated NL Industries effective at the
beginning of 1994.  See Notes 1 and 3.
VALHI, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

(IN THOUSANDS)

PRO FORMA

1993       1994       1994*        1995
----       ----    ----------   ----------

(UNAUDITED)

Cash and cash equivalents:
Net increase (decrease) from:
Operating, investing and
financing activities         $(22,137)  $ 17,854    $ 34,696     $ (4,389)
Currency translation              (212)      (420)      7,269        4,550
Consolidation of NL               -       131,124        -            -
--------   --------    --------     --------

(22,349)   148,558      41,965          161
Balance at beginning of year      44,538     22,189     128,782      170,747
--------   --------    --------     --------

Balance at end of year          $ 22,189   $170,747    $170,747     $170,908
========   ========    ========     ========

Supplemental disclosures:
Cash paid for:
Interest, net of amounts
capitalized                  $ 37,028   $ 23,197    $ 89,998     $ 94,244
Income taxes (refund), net      14,764     23,307     (88,111)      38,672

Net assets of NL consolidated:
Cash and cash equivalents                $131,124
Other current assets                      356,173
Goodwill                                  242,769
Property and equipment                    560,926
Other noncurrent assets                   301,891
Current liabilities                      (245,241)

Long-term debt                           (746,762)
Other noncurrent liabilities             (536,573)
Minority interest                          (2,425)
---------

Net investment in NL at
date of consolidation                $  61,882
=========

VALHI, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

(IN THOUSANDS)

ADDITIONAL
COMMON      PAID-IN      RETAINED
STOCK       CAPITAL      EARNINGS
--------    ----------    --------

Balance at December 31, 1992              $1,243      $33,300      $307,599

Net loss                                    -            -          (79,085)
Cash dividends                              -            -           (5,704)
Adjustments, net                            -            -             -
Cumulative effect of change in
accounting principle                       -            -             -
Other, net                                     1          109          -
------      -------      --------

Balance at December 31, 1993               1,244       33,409       222,810

Net income                                  -            -           11,600
Cash dividends                              -            -           (9,145)
Dividend - Tremont common stock             -            -          (16,194)
Adjustments, net                            -            -             -
Other, net                                     1          (68)         -
------      -------      --------

Balance at December 31, 1994               1,245       33,341       209,071

Net income                                  -            -           68,515
Cash dividends                              -            -          (13,809)
Adjustments, net                            -            -             -
Other, net                                     1        1,263          -
------      -------      --------

Balance at December 31, 1995              $1,246      $34,604      $263,777
======      =======      ========

ADJUSTMENTS                                     TOTAL
-----------------------------------------

CURRENCY       MARKETABLE      PENSION        TREASURY     STOCKHOLDERS'
TRANSLATION     SECURITIES    LIABILITIES       STOCK          EQUITY
-----------     ----------    -----------     ----------    -------------

Balance at December 31, 1992               $(10,277)        $   (232)     $  -             $(72,509)     $259,124

Net loss                                       -                -            -                 -          (79,085)
Cash dividends                                 -                -            -                 -           (5,704)
Adjustments, net                             (7,499)            (221)      (1,619)             -           (9,339)
Cumulative effect of change in
accounting principle                          -              41,528         -                 -           41,528
Other, net                                     -                -            -                  867           977
--------         --------      -------          --------      --------

Balance at December 31, 1993                (17,776)          41,075       (1,619)          (71,642)      207,501

Net income                                     -                -            -                 -           11,600
Cash dividends                                 -                -            -                 -           (9,145)
Dividend - Tremont common stock               1,439               73          445              -          (14,237)
Adjustments, net                              4,209           (3,479)         668              -            1,398
Other, net                                     -                -            -                1,374         1,307
--------         --------      -------          --------      --------

Balance at December 31, 1994                (12,128)          37,669         (506)          (70,268)      198,424

Net income                                     -                -            -                 -           68,515
Cash dividends                                 -                -            -                 -          (13,809)
Adjustments, net                              4,698           17,960       (2,375)             -           20,283
Other, net                                     -                -            -                 (386)          878
--------         --------      -------          --------      --------

Balance at December 31, 1995               $ (7,430)        $ 55,629      $(2,881)         $(70,654)     $274,291
========         ========      =======          ========      ========

VALHI, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Organization.  Valhi, Inc. (NYSE: VHI) is a subsidiary of Contran
Corporation which 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 sole trustee.  Mr.
Simmons, the Chairman of the Board and Chief Executive Officer of Valhi and
Contran, may be deemed to control such companies.

Management's estimates.  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.

Principles of consolidation.  The consolidated financial statements include
the accounts of Valhi and its majority-owned subsidiaries (collectively, the
"Company"). All material intercompany accounts and balances have been
eliminated.  Certain prior year amounts have been reclassified to conform to the
current year presentation.

Pro forma information (unaudited).  The accompanying consolidated financial
statements include certain pro forma financial information as if the Company's
December 31, 1994 consolidation of NL Industries, Inc. (see Note 3) had occurred
as of January 1, 1994.  All such pro forma information is unaudited.

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 taxes, are accumulated
in the currency translation adjustments component of stockholders' equity.
Currency transaction gains and losses are recognized in income currently.

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

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 43% of total inventories at December 31, 1995 (1994 - 55%).  Other
inventory costs are generally based on average cost.

Under the terms of its contracts with sugarbeet growers, the Company's cost
of sugarbeets is based on average sugar sales prices during the beet crop
purchase contract year, which begins in October and ends the following
September.  Any differences between the sugarbeet cost estimated at the end of
the fiscal year and the amount ultimately paid is an element of cost of sales in
the succeeding year.

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.  Cash and cash equivalents at December 31, 1994 and 1995 include
$16 million and $10 million, respectively, which is restricted pursuant to
outstanding letters of credit and certain indebtedness agreements.

Marketable securities and securities transactions.  Marketable debt and
equity securities are carried at market, based upon quoted market prices.
Unrealized gains and losses on trading securities are recognized in income
currently.  Unrealized gains and losses on available-for-sale securities are
accumulated in the marketable securities adjustment component of stockholders'
equity, net of related deferred income taxes.  Realized gains and losses are
based upon the specific identification of the securities sold.  Prior to the
adoption of Statement of Financial Accounting Standards ("SFAS") No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" effective
December 31, 1993, marketable securities were generally carried at the lower of
aggregate market or amortized cost and unrealized net gains were not recognized.

Investment in joint ventures.  Investments in more than 20%-owned but less
than majority-owned companies are accounted for by the equity method.
Differences between the cost of each investment and the Company's pro rata share
of the entity's separately-reported net assets, if any, are allocated among the
assets and liabilities of the entity based upon estimated relative fair values.
Such differences, which were not material at December 31, 1995, are charged or
credited to income as the entities depreciate, amortize or dispose of the
related net assets.

Natural resource properties and depletion.  Timber and timberlands and
mining properties are stated at cost less accumulated depletion.  Depletion is
computed primarily 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 not more than 40 years (weighted average remaining life of 30 years at
December 31, 1995) and is stated net of accumulated amortization of $9.4 million
at December 31, 1995 (1994 - $1.2 million).  Substantially all goodwill relates
to NL Industries.  The Company's criteria for evaluating the recoverability of
goodwill includes consideration of the fair value of the applicable subsidiary.
At December 31, 1995, the quoted market price of NL common stock ($12.13 per
share) was in excess of the Company's net investment in NL at that date ($5.55
per NL share held).

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 benefitted and are stated net of accumulated amortization of $11.5 million
at December 31, 1995 (1994 - $7.4 million).

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
capitalized as a component of construction costs were $420,000 in 1993, $783,000
in 1994 (pro forma 1994 - $2 million) and $1.4 million in 1995.

Depreciation is computed principally by the straight-line and unit-of-
production methods over the estimated useful lives of eight to 40 years for
buildings and three to 20 years for equipment.

Long-term debt.  Long-term debt is stated net of unamortized original issue
discount ("OID").  OID is amortized over the period during which interest is not
paid and deferred financing costs are amortized over the term of the applicable
issue, both by the interest method.  Capital lease obligations are stated net of
imputed interest.

Income taxes.  Valhi and its qualifying subsidiaries 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 make payments to or
receive payments from Contran 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.  NL is a separate U.S. taxpayer and is not a member
of the Contran Tax Group.  Waste Control Specialists LLC is treated as a
partnership for federal income tax purposes.

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 subsidiaries and affiliates not included in the
Contran Tax Group.

Earnings per share.  Earnings per share of common stock is based upon the
weighted average number of common shares outstanding.  Common stock equivalents
are excluded from the computation because the dilutive effect is either not
material or antidilutive.

Other.  Advertising costs, expensed as incurred, aggregated $10 million in
1993, $10 million in 1994 (pro forma 1994 - $12 million) and $13 million in
1995.

Research and development costs, expensed as incurred, were $854,000 in
1993, $899,000 in 1994 (pro forma 1994 - $11 million) and $12 million in 1995.

Deferred technology fee income is being amortized by the straight-line
method over three years through October 1996.

Accounting and funding policies for retirement plans and postretirement
benefits other than pensions ("OPEB") are described in Note 18.
NOTE 2 -BUSINESS AND GEOGRAPHIC SEGMENTS:
% OWNED AT
BUSINESS SEGMENT              PRINCIPAL ENTITIES            DECEMBER 31, 1995
- -------------------     --------------------------------     -----------------

Chemicals             NL Industries, Inc.                          53%
Refined sugar         The Amalgamated Sugar Company               100%
Building products     Medite Corporation                          100%
Hardware products     National Cabinet Lock, Inc.                 100%
Fast food             Sybra, Inc.                                 100%
Waste Management*     Waste Control Specialists LLC                50%

* Unconsolidated equity affiliate

YEARS ENDED DECEMBER 31,
--------------------------------------------

PRO FORMA

1993      1994        1994*        1995
----      ----     ----------   ----------

(UNAUDITED)
(IN MILLIONS)

Net sales:
Chemicals                       $   -      $   -      $  888.0     $1,023.9
Refined sugar                     430.8      457.3       457.3        541.3
Building products                 174.3      189.9       189.9        200.0
Hardware products                  64.4       70.0        70.0         80.2
Fast food                         111.6      115.5       115.5        115.4
-------    -------    --------     --------

$ 781.1     $832.7    $1,720.7     $1,960.8
=======     ======    ========     ========

Operating income:
Chemicals                       $   -      $   -      $   91.9     $  178.5
Refined sugar                      37.5       31.6        31.6         26.8
Building products                  26.3       36.4        36.4         25.2
Hardware products                  17.5       20.9        20.9         19.9
Fast food                           9.7        9.0         9.0          7.5
-------    -------    --------     --------

91.0       97.9       189.8        257.9
Equity in losses of Waste Control    -          -          -              (.5)
General corporate items:
Securities earnings                 6.4        4.0         7.9         12.9
General expenses and other, net    (9.5)     (12.4)      (57.2)       (33.9)
Interest expense                  (38.6)     (35.3)     (119.2)      (126.2)
-------    -------    --------     --------

49.3       54.2        21.3        110.2
-------    -------    --------     --------

Equity in NL Industries prior to
consolidation:
Operations                        (52.4)     (25.1)      -           -
Provision for market value
impairment of NL common stock    (84.0)      -          -           -
-------    -------    --------    --------

(136.4)     (25.1)      -           -
-------    -------    --------    --------

Income from continuing
operations before taxes      $ (87.1)   $  29.1    $   21.3     $  110.2
=======    =======    ========     ========

YEARS ENDED DECEMBER 31,
--------------------------------------------

PRO FORMA

1993       1994       1994*        1995
----       ----    ----------   ----------

(UNAUDITED)
(IN MILLIONS)

Depreciation, depletion and
amortization:
Chemicals                        $  -      $  -      $   53.7     $   60.0
Refined sugar                       9.0      12.2        12.2         13.8
Building products                   8.5       9.6         9.6         11.5
Hardware products                   1.7       1.8         1.8          2.2
Fast food                           6.2       5.9         5.9          6.0
Corporate                            .2        .1          .4           .4
------    ------    --------     --------

$ 25.6    $ 29.6    $   83.6     $   93.9
======    ======    ========     ========

Capital expenditures:
Chemicals                        $  -      $  -      $   36.8     $   64.2
Refined sugar                      11.1      26.8        26.8         24.0
Building products                  20.8      32.0        32.0         12.3
Hardware products                   2.7       3.4         3.4          2.0
Fast food                           4.3      10.8        10.8         12.0
Corporate                            .2        .2          .3           .1
------    ------    --------     --------

$ 39.1    $ 73.2    $  110.1     $  114.6
======    ======    ========     ========

Geographic segments

Net sales - point of origin:
United States                  $692.3    $727.7    $1,031.2     $1,135.1
Europe                           47.1      58.8       646.1        786.4
Canada                           41.7      46.2       169.1        197.5
Eliminations                     -          -        (125.7)      (158.2)
------     ------    --------     --------

$781.1    $832.7    $1,720.7     $1,960.8
======    ======    ========     ========

Net sales - point of
destination:
United States                  $686.8    $724.0    $  962.6     $1,050.8
Other North America              22.0      26.7        95.8        100.3
Europe                           44.2      58.5       527.4        663.7
Other                            28.1      23.5       134.9        146.0
------    ------    --------     --------

$781.1    $832.7    $1,720.7     $1,960.8
======    ======    ========     ========

Operating income:
United States                  $ 74.0    $ 72.5    $  120.6     $  124.6
Europe                            6.4      12.3        46.2        100.8
Canada                           10.6      13.1        23.0         32.5
------    ------    --------     --------

$ 91.0    $ 97.9    $  189.8     $  257.9
======    ======    ========     ========

[FN]
(*) Assuming the Company had consolidated NL effective at the beginning of
1994.  See Notes 1 and 3.

Identifiable assets                                          DECEMBER 31,
-------------------

1994       1995
----       ----

(IN MILLIONS)

Business segments:
Chemicals                                           $1,467.6   $1,586.6
Refined sugar                                         419.6       386.7
Building products                                     208.1       200.4
Hardware products                                      37.8        44.4
Fast food                                              68.6        74.4
Waste management                                        -           4.6
--------   --------

2,201.7     2,297.1
Corporate and eliminations                             279.0      275.1
--------   --------

$2,480.7   $2,572.2
========   ========

Geographic segments:
United States                                       $  991.3   $  971.6
Europe                                              1,006.6     1,100.7
Canada                                                 203.8      224.8
--------   --------

2,201.7     2,297.1
Corporate and eliminations                               279.0      275.1
--------   --------

$2,480.7   $2,572.2
========   ========

NL's chemicals operations are conducted through Kronos, Inc. (titanium
dioxide pigments or "TiO2") and Rheox, Inc. (specialty chemicals).  The
Company's building products (Medite), hardware products (National Cabinet Lock)
and fast food (Sybra) subsidiaries are owned by Valcor, Inc., a wholly-owned
subsidiary of Valhi.  Each of NL (NYSE: NL) and Valcor are subject to the
periodic reporting requirements of the Securities Exchange Act of 1934, as
amended.

Capital expenditures include additions to property and equipment and timber
and timberlands, excluding amounts attributable to business units acquired in
business combinations accounted for by the purchase method.

Corporate assets consist principally of cash, cash equivalents and
marketable securities.  At December 31, 1995, approximately 27% of corporate
assets were held by NL (1994 - 35%).  Valhi has a wholly-owned captive insurance
company ("Valmont") registered in Vermont.  Valmont's operations, which are not
significant, are included in general expenses and other, net.

At December 31, 1995, the net assets of non-U.S. subsidiaries included in
consolidated net assets approximated $498 million.

NOTE 3 -  BUSINESS COMBINATIONS AND DISCONTINUED OPERATIONS:

NL Industries, Inc. (NYSE: NL).  At the beginning of 1993, Valhi held 48%
of NL's outstanding common stock and accounted for its interest in NL by the
equity method during the two years in the period ended December 31, 1994.  The
Company's losses attributable to NL in 1993 include an $84 million first quarter
charge for an "other than temporary" decline in the market value of NL common
stock.  Under current accounting rules, a market value writedown of an
investment accounted for by the equity method is not reversed if the market
value subsequently recovers.

During 1994, Valhi purchased additional NL shares in market transactions
for an aggregate of approximately $15 million, and thereby increased its direct
ownership of NL to more than 50% in mid-December 1994.  The Company accounted
for such increase in its interest in NL by the purchase method (step purchase)
and, accordingly, consolidated NL's financial position as of December 31, 1994
and consolidated NL's results of operations and cash flows beginning in 1995.
During 1995, the Company purchased additional NL shares in market transactions
for an aggregate of approximately $13 million and increased its ownership of NL
to 53% at December 31, 1995.  NL's separate financial statements reflect a
stockholders' deficit of approximately $209 million at December 31, 1995 and,
accordingly, no minority interest in NL is reported in the Company's
consolidated financial statements.  Until such time as NL reports positive
stockholders' equity, all undistributed income or loss and other undistributed
changes in NL's reported stockholders' equity will accrue to the Company for
financial reporting purposes.  In the first quarter of 1996, NL resumed regular
quarterly dividends at the rate of $.10 per NL share.  At such rate, dividends
to NL's minority shareholders would aggregate approximately $9.4 million
annually and would be reported by Valhi as minority interest in NL's earnings.

Tremont Corporation (NYSE: TRE).  At the beginning of 1993, Valhi held 48%
of Tremont's outstanding common stock and accounted for its interest in Tremont
by the equity method.  In December 1994, Valhi's Board of Directors declared a
special dividend on its common stock of all of its 48% interest in Tremont (3.5
million Tremont shares) (the `Distribution'').  Valhi stockholders received
approximately .03 (three one-hundreds) of a share of Tremont for each Valhi
share held.  The Distribution of Tremont common stock was accounted for as a
spin-off (recorded at book value, net of tax).  The Distribution was currently
taxable for federal income tax purposes to both Valhi and Valhi stockholders
based upon the aggregate fair market value ($11.19 per Tremont share) of the
Tremont common stock distributed.  The Company's equity in losses of Tremont's
titanium metals operations during 1993 and 1994, net of allocable deferred
income tax benefit, are reported as discontinued operations.

Contran and certain of its subsidiaries, which held approximately 90% of
Valhi's outstanding common stock at the time of the Distribution, received
approximately 3.2 million Tremont shares in the Distribution (44% of Tremont's
outstanding common stock), and may be deemed to control Tremont.  Tremont holds
18% of NL's outstanding common stock and accounts for its interest in NL by the
equity method due to the common control of Contran and certain of its
subsidiaries.  As discussed above, Valhi continues to own an interest in NL,
and, accordingly, the Company's pro rata portion of Tremont's equity in NL is
included, for all periods presented prior to the Distribution, in continuing
operations as a component of the Company's equity in losses of NL prior to
consolidation.

Waste Control Specialists LLC.  In November 1995, Valhi acquired a 50%
interest in newly-formed Waste Control Specialists LLC, currently a development

stage enterprise.  See Note 7.  Valhi has committed to contribute $25 million to
Waste Control Specialists through early 1997 for its 50% interest, including $5
million contributed at formation in 1995.    The other 50%-owner contributed
certain assets, primarily land and certain operating permits for the facility
site, and Waste Control Specialists also assumed certain indebtedness of the
other owner.  Valhi accounts for its interest in Waste Control Specialists by
the equity method.

Valhi is entitled to a 20% cumulative preferential return on its $25
million investment after which earnings are generally split 50/50.  The
liabilities of the other 50%-owner assumed by Waste Control Specialists exceeded
the carrying value of the assets contributed.  Accordingly, all of Waste Control
Specialists' net income or loss will accrue to Valhi for financial reporting
purposes until Waste Control Specialists reports positive equity attributable to
the other 50%-owner.

Other.  In August 1995, National Cabinet Lock's Canadian subsidiary
purchased certain assets, principally property, equipment and inventory, of a
Canadian competitor for approximately $6 million cash.

NOTE 4 -MARKETABLE SECURITIES:

DECEMBER 31,
-------------------

1994      1995
----      ----

(IN THOUSANDS)

Current assets (trading securities):
U.S. Treasury securities                               $ 25,165   $   -
Global bond investments                                  24,068       -
--------   --------

$ 49,233   $   -
========   ========

Noncurrent assets (available-for-sale):
Dresser Industries common stock                        $103,243   $130,366
Other common stocks                                      12,284     13,890
--------   --------

$115,527   $144,256
========   ========

Valhi holds 5.5 million shares of Dresser common stock (cost - $44
million) with a quoted market price of $24.38 at December 31, 1995, or an
aggregate market value of $133 million (1994 - $18.88 per share, or $103
million).  The Company's Dresser stock is exchangeable for the Company's LYONs
at the option of the LYONs holder, and the carrying value of the Dresser stock
is limited to the accreted LYONs obligation.  See Note 12.  The other available-
for-sale common stocks have an aggregate cost of $15.8 million at December 31,
1995 (1994 - $15.4 million), and the amortized cost of the Company's portfolio
of trading securities approximated $50.4 million at December 31, 1994.

NOTE 5 -ACCOUNTS AND OTHER RECEIVABLES:

DECEMBER 31,
-------------------

1994       1995
----       ----

(IN THOUSANDS)

Accounts receivable                                      $198,511  $225,385
Notes receivable                                            6,317     3,400
Accrued interest                                              591       149
Refundable income taxes                                     1,187     4,978
Allowance for doubtful accounts                            (4,434)   (4,972)
--------  --------

$202,172  $228,940
========  ========

NOTE 6 -INVENTORIES:

DECEMBER 31,
-------------------

1994       1995
----       ----

(IN THOUSANDS)

Raw materials:
Chemicals                                              $ 30,118  $ 35,075
Sugarbeets                                               86,868    47,420
Building products                                        13,050    12,404
Hardware products                                         1,313     1,927
Fast food                                                 1,426     1,379
--------  --------

132,775    98,205
--------  --------

In process products:
Chemicals                                                 7,654     9,132
Refined sugar                                            54,700    57,967
Building products                                         1,481     2,187
Hardware products                                         4,437     4,320
--------  --------

68,272    73,606
--------  --------

Finished products:
Chemicals                                               113,276   173,195
Refined sugar and by-products                           107,236    90,492
Building products                                         2,711     6,131
Hardware products                                         2,510     2,921
--------  --------

225,733   272,739
--------  --------

Supplies                                                   71,317    73,754
--------  --------

$498,097  $518,304
========  ========

The current cost of LIFO inventories exceeded the net carrying value of
such inventories by approximately $36 million at December 31, 1995 (1994 - $37
million).  The effect of reductions in certain LIFO inventory quantities
increased (decreased) operating income by $.5 million in 1993, $3.2 million in
1994 and $(.4) million in 1995.

NOTE 7 -INVESTMENT IN JOINT VENTURES:

DECEMBER 31,
-------------------

1994       1995
----       ----

(IN THOUSANDS)

Ti02 manufacturing joint venture                         $185,122   $183,129
Waste Control Specialists LLC                                -         4,625
Other                                                       2,358      2,764
--------   --------

$187,480   $190,518
========   ========

TiO2 manufacturing joint venture.  A Kronos TiO2 subsidiary (Kronos
Louisiana, Inc., or "KLA") and Tioxide Group, Ltd., a wholly-owned subsidiary of
Imperial Chemicals Industries PLC ("Tioxide"), are equal owners of a
manufacturing joint venture (Louisiana Pigment Company, L.P., or `LPC'') that
owns and operates a TiO2 plant in Louisiana.  LPC has long-term debt which is
collateralized by the partnership interests of the partners and substantially
all joint venture assets.  The long-term debt consists of two tranches, one
attributable to each partner, and each tranche is serviced through (i) the
purchase of the plant's TiO2 output in equal quantities by the partners and (ii)
cash capital contributions.  KLA is required to purchase one-half of the TiO2
produced by LPC.  Kronos' tranche of LPC's debt is reflected as outstanding
indebtedness of the Company because Kronos has guaranteed the purchase
obligation relative to the debt service of such tranche.  See Note 12.

The manufacturing joint venture is intended to be operated on a break-even
basis and, accordingly, Kronos' acquisition transfer price for its share of the
TiO2 produced is equal to its share of the joint venture's production costs and
interest expense.  Kronos' share of the production costs is reported as TiO2
cost of sales while Kronos' share of joint venture interest expense is reported
as a component of interest expense.

A summary income statement of the TiO2 joint venture for the year ended
December 31, 1995 is shown below.

AMOUNT
------------

(IN THOUSANDS)

Revenues and other income:
Kronos                                                          $ 76,365
Tioxide                                                           75,241
Interest income                                                      653
--------

152,259
--------

Cost and expenses:
Cost of sales                                                    140,103
General and administrative                                           385
Interest                                                          11,771
--------

152,259
--------

Net income                                                    $   -
========

Summary balance sheets of the TiO2 joint venture is shown below.

DECEMBER 31,
-------------------

1994       1995
----       ----

ASSETS                                        (IN THOUSANDS)

Current assets                                           $ 38,027   $ 49,398
Other assets                                                1,969      1,553
Property and equipment, net                               344,806    335,254
--------   --------

$384,802   $386,205
========   ========

LIABILITIES AND PARTNERS' EQUITY

Long-term debt, including current portion:
Kronos tranche                                         $ 88,715   $ 73,286
Tioxide tranche                                          81,000     59,400
Other liabilities, primarily current                       12,330     17,719
--------   --------

182,045    150,405

Partners' equity                                          202,757    235,800
--------   --------

$384,802   $386,205
========   ========

Waste Control Specialists LLC.  Waste Control Specialists, formed in
November 1995, is a development stage enterprise currently constructing a
facility in West Texas for the processing, treatment, storage and disposal of
certain hazardous and toxic wastes.  Waste Control Specialists has been issued
permits by the Texas Natural Resource Conservation Commission covering
acceptance of wastes governed by the Resource Conservation Recovery Act
(`RCRA'') and the Toxic Substances Control Act (``TSCA'') and expects to begin
reporting revenues in 1997.  Waste Control Specialists intends to seek other
operating permits to accept wastes regulated under other environmental laws and
regulations.

Waste Control Specialists is equally owned by Valhi and KNB Holdings, Ltd.,
a limited partnership controlled by the Chief Executive Officer of Waste Control
Specialists.

Waste Control Specialists reported a net loss of $.5 million during the
last two months of 1995, all of which accrued to Valhi for financial reporting
purposes.  See Note 3.  At December 31, 1995, total assets were $7.3 million and
total Members' equity was $1.4 million.

NOTE 8 -NATURAL RESOURCE PROPERTIES AND OTHER NONCURRENT ASSETS:

DECEMBER 31,
------------------

1994       1995
----       ----

(IN THOUSANDS)

Natural resource properties:
Timber and timberlands                                  $53,114   $53,099
Mining properties                                        40,286    42,675
-------   -------

$93,400   $95,774
=======   =======

Other assets:
Franchise fees and other intangible assets              $27,831   $24,786
Deferred financing costs                                 23,102    19,537
Other                                                    14,078    12,761
-------   -------

$65,011   $57,084
=======   =======

NOTE 9 -ACCOUNTS PAYABLE AND ACCRUED LIABILITIES:

DECEMBER 31,
-------------------

1994       1995
----       ----

(IN THOUSANDS)

Accounts payable:
Sugarbeet purchases                                    $146,638  $ 83,027
Other                                                   120,409   153,946
--------  --------

267,047   236,973
--------  --------

Accrued liabilities:
Employee benefits                                        50,929    63,067
Sugar processing costs                                   20,132    21,569
Environmental costs                                      13,276     6,109
Interest                                                 11,363    13,208
Miscellaneous taxes                                       9,080     4,275
Other                                                    52,866    47,918
--------  --------

157,646   156,146
--------  --------

$424,693  $393,119
========  ========

NOTE 10 - OTHER NONCURRENT LIABILITIES:
DECEMBER 31,
------------------

1994       1995
----       ----

(IN THOUSANDS)

Insurance claims and expenses                             $18,155    $15,354
Employee benefits                                          15,440     16,626
Deferred technology fee income                             18,305      8,456
Other                                                       4,990      4,329
-------    -------

$56,890    $44,765
=======    =======

NOTE 11 -   OTHER INCOME:

YEARS ENDED DECEMBER 31,
--------------------------------------------

PRO FORMA

1993       1994       1994         1995
----       ----    ----------   ----------

(UNAUDITED)
(IN THOUSANDS)

Securities earnings:
Dividends and interest          $ 5,211    $ 6,033     $11,108      $11,701
Securities transactions           1,167     (2,054)     (3,274)       1,225
-------    -------     -------      -------

6,378      3,979       7,834       12,926
Litigation settlement gains, net     -          -         22,978         -
Technology fee income                -          -         10,344       10,660
Currency transactions, net           (188)       911       2,646          982
Other, net                          6,668      4,858       8,973        8,908
-------    -------     -------      -------

$12,858    $ 9,748     $52,775      $33,476
=======    =======     =======      =======

NOTE 12 -   NOTES PAYABLE AND LONG-TERM DEBT:

DECEMBER 31,
---------------------

1994        1995
----        ----

(IN THOUSANDS)

Notes payable:
Amalgamated:
United States Government loans                    $   79,893  $   64,685
Bank credit agreements                                45,000      42,000
----------  ----------

124,893     106,685
Kronos - bank credit agreements (DM 56,000)               -         39,247
----------  ----------

$  124,893  $  145,932
==========  ==========

Long-term debt:
Valhi - Liquid Yield Option NotesTM ("LYONsTM")     $  119,096  $  130,366
----------  ----------

NL Industries:
Senior Secured Notes                                 250,000     250,000
Senior Secured Discount Notes                        116,409     132,034
Deutsche mark bank credit facility (DM 397,610)      255,703     276,895
Joint venture term loan                               88,715      73,286
Rheox bank term loan                                  67,500      37,263
Other                                                 11,322      14,225
----------  ----------

789,649     783,703
----------  ----------

Amalgamated - bank term loan                            26,000      24,000
----------  ----------

Valcor:
Valcor - Senior Notes*                               100,000      99,000
----------   ---------

Medite:
Bank term loans                                     89,411      73,770
Bank working capital facilities                      8,802      10,830
Other                                                4,360       4,117
----------  ----------

102,573      88,717
----------  ----------

Other:
Sybra bank credit agreements                         5,500      16,770
Sybra capital lease obligations                      6,321       5,382
Other                                                  140          98
----------  ----------

11,961      22,250
----------  ----------

1,149,279   1,148,036
Less current maturities                                 62,625      63,752
----------  ----------

$1,086,654  $1,084,284
==========  ==========

[FN]
*At December 31, 1995 stated net of $1 million of Senior Notes held by
Valhi.

Valhi.  The zero coupon Senior Secured LYONs, $379 million principal amount
at maturity in October 2007, were issued with significant OID to represent a
yield to maturity of 9.25%.  No periodic interest payments are required.  Each
$1,000 in principal amount at maturity of the LYONs is exchangeable, at any
time, for 14.4308 shares of Dresser common stock held by Valhi.  The LYONs are
redeemable at the option of the holder in October 1997 or October 2002 at
$404.84 or $636.27, respectively, per $1,000 principal amount (the issue price
plus accrued OID through such purchase dates).  Such redemptions may be paid, at
Valhi's option, in cash, Dresser common stock, or a combination thereof.  The
LYONs are not redeemable at Valhi's option prior to October 1997 unless the
market price of Dresser common stock exceeds $35.70 per share for specified time
periods.  At December 31, 1994 and 1995, the net carrying value of the LYONs per
$1,000 principal amount at maturity was $314 and $344, respectively, and the
quoted market price was $320 and $378, respectively.

The LYONs are secured by the 5.5 million shares of Dresser common stock
held by Valhi, which shares are held in escrow for the benefit of holders of the
LYONs.  Valhi receives the regular quarterly dividend on the escrowed Dresser
shares.

Valhi has a (i) $50 million revolving bank credit facility which matures in
August 1996, generally bears interest at LIBOR plus 1% and is collateralized
principally by all of the outstanding common stock of Amalgamated and (ii) a $15
million revolving bank credit facility which matures in December 1996, generally
bears interest at LIBOR plus 1.5% and is collateralized by 4.8 million shares of
NL common stock held by Valhi.  Borrowings under the $15 million facility can
only be used to fund purchases of additional shares of NL common stock.  Both
agreements limit additional indebtedness of Valhi and contain other provisions

customary in lending transactions of this type.  At December 31, 1995, the full
amount of these facilities was available for borrowing.

NL Industries.  NL's $250 million principal amount of 11.75% Senior Secured
Notes due 2003 and $188 million principal amount at maturity ($100 million
proceeds at issuance) of 13% Senior Secured Discount Notes due 2005
(collectively, the "NL Notes") are collateralized by a series of intercompany
notes from Kronos International, Inc. ("KII"), a wholly-owned subsidiary of
Kronos, to NL, the terms of which mirror those of the respective NL Notes (the
"NL Mirror Notes").  The 11.75% Notes are also collateralized by a first
priority lien on the stock of Kronos and a second priority lien on the stock of
Rheox.

The 11.75% Notes and the 13% Discount Notes are redeemable, at NL's option,
after October 2000 and October 1998, respectively, except that up to one-third
of the aggregate principal amount of the 13% Discount Notes are redeemable (at
113% of the accreted value) upon any NL common stock offering, as defined, prior
to October 1996.  For redemptions, other than redemptions pursuant to any NL
common stock offering, the redemption prices range from 101.5% (starting October
2000) declining to 100% (after October 2001) of the principal amount for the
11.75% Notes and range from 106% (starting October 1998) declining to 100%
(after October 2001) of the accreted value of the 13% Discount Notes.  In the
event of an NL change of control, as defined, NL would be required to make an
offer to purchase the NL Notes at 101% of the principal amount of the 11.75%
Notes and 101% of the accreted value of the 13% Discount Notes.  The NL Notes
are issued pursuant to indentures which contain a number of covenants and
restrictions which, among other things, restrict the ability of NL and its
subsidiaries to incur debt, incur liens, pay dividends or merge or consolidate

with, or sell or transfer all or substantially all of its assets to, another
entity.  The 13% Discount Notes do not require cash interest payments until
April 1999.  At December 31, 1994 and 1995, the net carrying value of the 13%
Discount Notes per $1,000 principal amount of maturity was $621 and $704,
respectively, (quoted market price - $613 and $809, respectively) and the quoted
market price of the 11.75% Notes was $988 and $1,071, respectively, per $1,000
principal amount.

The DM credit facility consists of a DM 398 million term loan due from 1997
to 1999 and a DM 250 million revolving credit facility due no later than 2000.
Borrowings bear interest at DM LIBOR plus 1.625% (6.9% and 5.5% at December 31,
1994 and 1995, respectively).  NL and Kronos have agreed, under certain
circumstances, to provide KII with up to DM 125 million through January 1, 2001.
The DM credit facility is collateralized by pledges of the stock of certain KII
subsidiaries.

Borrowings under KLA's tranche of the joint venture term loan bear interest
at LIBOR plus 1.625% (8.125% and 7.315% at December 31, 1994 and 1995,
respectively) and are repayable in quarterly installments through September
2000.  See Note 7.

Rheox has a credit agreement providing for a seven-year term loan due in
quarterly installments through December 1997 and a $5 million revolving
credit/letter of credit facility due September 1996.  Borrowings bear interest,
at Rheox's option, at prime rate plus 1.5% or LIBOR plus 2.5% (9.0% and 8.3% at
December 31, 1994 and 1995, respectively), and are collateralized principally by
the stock of Rheox and its U.S. assets.

Notes payable outstanding at December 31, 1995 consists of DM 56 million of
short-term borrowings due in 1996 from non-U.S. banks with interest rates
ranging from 4.3% to 4.9%.

At December 31, 1995, unused lines of credit available for borrowings under
the Rheox U.S. facility and under non-U.S. NL subsidiary credit facilities
approximated $5 million and $191 million, respectively.  Approximately $87
million (DM 125 million) of such non-U.S. amount is available only to (i)
permanently reduce the DM term loan or (ii) pay certain future German income tax
assessments.

Amalgamated.  The United States Government loans are made under the sugar
price support loan program, which program extends through the 1997 crop year
ending September 30, 1998.  These short-term nonrecourse loans are
collateralized by refined sugar inventories and are payable at the earlier of
the date the refined sugar is sold or upon maturity.  At December 31, 1995, the
weighted average interest rate on Government loans was 5.6% (1994 - 6.0%).

Amalgamated's principal bank credit agreement (the "Sugar Credit
Agreement") provides for a revolving credit facility in varying amounts up to
$85 million, with advances based upon formula-determined amounts of accounts
receivable and inventories, and a term loan.  Borrowings under the revolving
credit facility bear interest, at Amalgamated's option, at the prime rate or
LIBOR plus 1.25% and mature not later than September 30, 1997.  The term loan
bears interest, at Amalgamated's option, at the prime rate plus .25% or LIBOR
plus 1.5% and matures in July 1998.  The Sugar Credit Agreement may be
terminated by the lenders in the event the sugar price support loan program is
abolished or materially and adversely modified, and borrowings are

collateralized by substantially all of Amalgamated's assets.  Amalgamated also
has a $5 million unsecured line of credit with the agent bank for the Sugar
Credit Agreement.  At December 31, 1995, the weighted average interest rate on
Amalgamated's outstanding bank borrowings was 7.2% (1994 - 7.7%).

At December 31, 1995, unused credit available to Amalgamated under its bank
credit agreements and the sugar price support loan program aggregated
approximately $22 million.

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, as defined, or certain asset
dispositions, as defined, Valcor would be required to make an offer to purchase
the Valcor Notes at 101% and 100%, respectively, of principal amount.  At
December 31, 1995, the quoted market price of the Valcor Notes per $1,000
principal amount was $990 (1994 - $896).  The indenture governing the Valcor
Notes, among other things, limits dividends and additional indebtedness, and
prohibits Valcor from co-investing with affiliates.

Medite.  Medite's U.S. bank credit agreement provides for (i) term loan
financing ($59 million outstanding at December 31, 1995) due in annual
installments of $8 million through 1999 with the balance due in 2000, and (ii) a
$15 million revolving working capital facility ($4 million outstanding at
December 31, 1995) through September 1997.  Borrowings generally bear interest
at rates 1.5% to 2% over LIBOR and are collateralized by Medite's timber and
timberlands.  Borrowings under the working capital facility are also
collateralized by Medite's U.S. receivables and inventories.  Medite has entered

into interest rate swaps to mitigate the impact of changes in interest rates for
$26 million of the term loan due in 1998-2000 that results in a weighted average
interest rate of 7.6% for such borrowings.  The Company is exposed to interest
rate risk in the event of nonperformance by the other parties to the agreements,
although it does not anticipate nonperformance by such parties.  See Note 15.

Medite's Irish subsidiary, Medite of Europe Limited, has bank credit
agreements providing for (i) a bank term loan ($14.8 million outstanding at
December 31, 1995) repayable in installments through 2000 and (ii) a $12 million
multi-currency revolving working capital facility ($6.8 million outstanding at
December 31, 1995) through April 1997.  Borrowings under both facilities are
collateralized by substantially all of Medite/Europe's assets.  The term loan
bears interest at a weighted average fixed rate of 8.3% while borrowings under
the revolving facility bear interest at rates based upon LIBOR.

At December 31, 1995, the weighted average interest rates on Medite's
outstanding U.S. and non-U.S. bank borrowings, including the effect of the
interest rate swaps discussed above, were 7.6% and 7.8%, respectively, (1994 -
7.8% and 7.9%, respectively.  Amounts available for borrowing under the existing
bank credit facilities aggregated approximately $17 million at December 31,
1995.

Other Medite indebtedness consists principally of a State of Oregon term
loan that matures in monthly installments through March 2008, bears interest at
6.9% and is collateralized by certain property and equipment.

Other Valcor.  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 1997.
At December 31, 1995, the weighted average interest rate on outstanding
revolving borrowings was 7.5% (1994 - 7.7%).  Amounts available for borrowing
aggregated approximately $12 million at December 31, 1995.  Future minimum
payments under Sybra's capital lease obligations at December 31, 1995, including
amounts representing interest, are approximately $1.4 million in each of the
next three years, $.6 million in each of the following two years and an
aggregate of $3.2 million thereafter.

National Cabinet Lock has a Canadian bank credit agreement which currently
provides for approximately $5.5 million of U.S. or Canadian dollar borrowings,
with interest generally at LIBOR plus .5% and collateralized by substantially
all of National Cabinet Lock's Canadian assets.  At December 31, 1995, the full
amount of these facilities was available for borrowing.

Aggregate maturities of long-term debt at December 31, 1995

Years ending December 31,                                         Amount
- -------------------------                                         ------

(In thousands)

1996                                                           $   64,369
1997                                                              299,617
1998                                                              131,535
1999                                                              150,273
2000                                                               22,335
2001 and thereafter                                               561,725
----------

1,229,854
Less:
Unamortized Valhi LYONs OID                                      23,085
Unamortized NL Senior Secured Discount Notes OID                 55,466
Amounts representing interest on capital leases                   3,267
----------

$1,148,036
==========

The LYONs are reflected in the above table as due October 1997, the first
of the two dates they are redeemable at the option of the holder, at the
aggregate redemption price on such date of $153.5 million ($404.84 per $1,000
principal amount at maturity in October 2007).

Other.  In addition to the NL Notes and the Valcor Notes discussed above,
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, 1995, the restricted net assets of consolidated subsidiaries
approximated $235 million.

NOTE 13 - EXTRAORDINARY ITEMS:

Extraordinary items in 1993 consist of (i) prepayments of Valhi 12 1/2%
Senior Subordinated Notes ($7.7 million loss less allocable income tax benefit
of $2.7 million) and (ii) the Company's equity in NL's prepayments of certain
indebtedness ($15.9 million loss less allocable deferred income tax benefit of
$5.5 million).

NOTE 14 - STOCKHOLDERS' EQUITY:

SHARES OF COMMON STOCK
--------------------------------

ISSUED    TREASURY  OUTSTANDING
------    --------  -----------

(IN THOUSANDS)

Balance at December 31, 1992                124,290     (10,237)    114,053

Issued                                          145          55         200
-------     -------     -------

Balance at December 31, 1993                124,435     (10,182)    114,253

Issued                                           40          32          72
Other                                          -             73          73
-------     -------     -------

Balance at December 31, 1994                124,475     (10,077)    114,398

Issued                                          158        -            158
Other                                          -            (26)        (26)
-------     -------     -------

Balance at December 31, 1995                124,633     (10,103)    114,530
=======     =======     =======

Common stock issued includes 47,800 shares in 1993 and 20,000 shares in
1994 to pay accrued employee benefits of $239,000 and $98,000, respectively.

Treasury stock includes the Company's proportional interest in 1.2 million
Valhi shares held by NL.  Under Delaware Corporation Law, all shares held by a
majority-owned company are considered to be treasury stock.  As a result, shares
outstanding for financial reporting purposes differ from those outstanding for
legal purposes.

Options and restricted stock.  Valhi has an incentive stock option plan
that provides for the discretionary grant of qualified incentive stock options,
nonqualified stock options, restricted stock and stock appreciation rights.  Up
to nine million shares of Valhi common stock may be issued pursuant to this
plan.  Options are granted at a price not less than 85% of fair market value on
the date of grant, generally vest ratably over a five-year period beginning one
year from the date of grant and expire 10 years from the date of grant.
Restricted stock, forfeitable unless certain periods of employment are
completed, is held in escrow in the name of the grantee until the restriction
period expires.  At December 31, 1995, a nominal amount of restricted shares
which will vest in June 1996 is included in outstanding shares.  No stock
appreciation rights have been granted.

Pursuant to Valhi's Non-Employee Director Stock Option Plan, under which
authorized future grants expired in 1995, options were automatically granted
once a year to each non-employee director of Valhi at a price equal to the fair
market value on the date of grant.  Such options vest one year from the date of
grant and expire five years from the date of grant.

AMOUNT
EXERCISE     PAYABLE
PRICE PER      UPON
SHARES      SHARE      EXERCISE
------   -----------   --------

(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)

Outstanding at December 31, 1992              3,910   $3.51-15.00    $30,959

Granted                                         620          5.00      3,102
Exercised                                        (5)         3.61        (18)
Cancelled                                        (1)         3.51         (3)
------   -----------    -------

Outstanding at December 31, 1993              4,524    3.51-15.00     34,040

Granted                                       2,308    5.21- 6.89     13,520
Exercised                                       (40)   3.51- 5.63       (172)
Cancelled                                    (1,456)   5.00-12.50     (7,724)
------   -----------    -------

Outstanding at December 31, 1994              5,336    5.00-15.00    $39,664

Adjustment for Tremont Distribution            -           -          (1,603)
Granted                                         103    7.75- 8.00        822
Exercised                                      (158)   4.76- 7.75       (873)
Cancelled                                       (69)   4.76-14.66       (745)
------   -----------    -------

Outstanding at December 31, 1995              5,212   $4.76-14.66    $37,265
======   ===========    =======

At December 31, 1995, options to purchase 4.2 million Valhi shares were
exercisable (1.9 million shares at prices lower than the December 31, 1995
market price of $6.38 per share), options to purchase 340,000 shares are
scheduled to become exercisable in 1996, and an aggregate of 2.8 million shares
were available for future grants.  During 1994, options to purchase 1.4 million
shares at fixed prices ranging from $5.21 to $6.89 per share were granted in
exchange for cancellation of an equal number of variable price options
previously granted at initial prices ranging from $5.00 to $5.50 per share.
During 1995, under terms of the incentive stock option plan, the exercise price
of all options outstanding at December 31, 1994 was reduced by amounts ranging
from $.24 to $.34 per share as a result of the Tremont Distribution.

NL maintains incentive stock option plans that provide for the
discretionary grant of NL restricted common stock, stock options and stock
appreciation rights.  At December 31, 1995, there were an aggregate of 2.4
million options outstanding to purchase NL common stock at prices ranging from
$4.81 per share to $24.19 per share (aggregate amount payable to NL upon
exercise - $27 million).  At December 31, 1995, options to purchase 693,000 NL
shares were exercisable at prices lower than the December 31, 1995 quoted market
price of $12.13 per NL share.  The aggregate number of outstanding options to
purchase NL common stock at December 31, 1995 represented approximately 5% of
NL's outstanding common shares at that date.

Valhi and NL each expect to elect the disclosure alternative proscribed by
SFAS No. 123, `Accounting for Stock-Based Compensation'' and to continue to
account for stock-based employee compensation in accordance with Accounting
Principles Board Opinion No. 25, `Accounting for Stock Issued to Employees''
and its various interpretations.  Under APBO No. 25, no compensation cost is
generally recognized for fixed stock options in which the exercise price is not
less than the market price on the grant date.  Under the disclosure alternative
of SFAS No. 123, the Company and NL will disclose, beginning in 1996, their
respective pro forma net income and earnings per share as if the fair value

based accounting method of SFAS No. 123 had been used to account for stock-based
compensation cost for all awards granted after 1994.

NOTE 15 - FINANCIAL INSTRUMENTS:

DECEMBER 31,
-------------------------------------------

1994                    1995
-------------------     -------------------

CARRYING      FAIR       CARRYING      FAIR
AMOUNT       VALUE       AMOUNT       VALUE
---------      -----     ---------      -----

(IN MILLIONS)

Cash and cash equivalents                                          $170.7      $170.7       $170.9      $170.9
Marketable securities:
Trading securities                                                 49.2        49.2          -           -
Available-for-sale securities                                     115.5       115.5        144.3       147.2

Notes payable and long-term debt (excluding
capitalized leases):
Publicly-traded fixed rate debt:
Valhi LYONs                                                    $119.1      $121.3       $130.4      $143.1
NL Senior Secured Notes                                         250.0       247.1        250.0       267.7
NL Senior Secured Discount Notes                                116.4       114.8        132.0       151.8
Valcor Senior Notes                                             100.0        89.6         99.0        98.0
Medite debt with rates fixed via interest rate swaps               26.0        23.3         26.0        26.0
Other fixed-rate debt                                              26.8        26.0         18.9        19.2
Variable rate debt                                                630.4       630.4        632.3       632.3

Minority interest in NL common stock                               $  -        $314.9       $  -        $289.6

Valhi common stockholders' equity                                  $198.4      $872.3       $274.3      $730.1

Fair values of marketable securities and publicly traded debt are based
upon quoted market prices.  See Notes 4 and 12.  The fair value of the 47%
minority interest in NL Industries and of Valhi's common stockholders' equity
are based upon quoted market prices for NL common stock (1994 - $12.63 per
share; 1995 - $12.13 per share) and Valhi common stock (1994 - $7.63 per share;
1995 - $6.38 per share).

The fair value of Medite debt on which interest rates have been effectively
fixed through the use of interest rate swaps is deemed to approximate the book
value of the debt plus or minus the fair value of the related swaps.  See Note
12.  Fair values of Medite's interest rate swaps are estimated to be a $2.7
million receivable at December 31, 1994 and approximate the contract amount at
December 31, 1995.  Such fair values represent the estimated amounts Medite
would receive if it terminated the swap agreements at those dates, and are 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.

At December 31, 1994, Medite had entered into certain currency forward
contracts to eliminate certain exchange rate fluctuation risk of approximately
$1 million of equipment purchase commitments denominated principally in Deutsche
Marks.  Such currency forward contracts effectively fixed the U.S. dollar cost
of the related equipment and matured during 1995.

NOTE 16 - INCOME TAXES:

YEARS ENDED DECEMBER 31,
--------------------------------------------

PRO FORMA

1993      1994        1994         1995
----      ----     ----------   ----------

(UNAUDITED)
(IN MILLIONS)

Components of pre-tax income:
United States:
Contran Tax Group             $  32.8    $ 29.7       $ 29.7       $  5.7
NL Tax Group                     -         -            (7.6)        41.8
Equity in NL prior to
consolidation                 (136.4)    (25.1)        -           -
-------    ------       ------      ------

(103.6)      4.6         22.1         47.5
Non-U.S. subsidiaries              16.5      24.5          (.9)        62.7
-------    ------       ------       ------

$ (87.1)   $ 29.1       $ 21.2       $110.2
=======    ======       ======       ======

Expected tax provision, at U.S.
federal statutory income tax
rate of 35%                      $ (30.5)   $ 10.2       $  7.4       $ 38.6
Non-U.S. tax rates                   (1.8)     (2.4)       (10.0)       (10.6)
Incremental U.S. tax and rate
differences on equity in
earnings of non-tax group
companies                            3.6       1.7        (11.1)        25.9
U.S. state income taxes, net          1.8        .9          1.5          1.7
Change in NL's deferred income
tax valuation allowance             -         -            24.3         (9.6)
No tax benefit for goodwill

amortization                          .1        .1          2.7          2.9
Settlement of U.S. tax audits        -         -            (5.4)        -
Rate change adjustment of
deferred taxes                       (.1)     -            -            (7.6)
Other, net                            (.9)     (1.0)          .4          (.2)
-------    ------       ------       ------

$ (27.8)   $  9.5       $  9.8       $ 41.1
=======    ======       ======       ======

Components of income tax expense:
Currently payable:
U.S. federal and state        $  14.7    $ 11.9       $  7.1       $  7.0
Non-U.S.                          4.3       4.9          7.5         45.7
-------    ------       ------       ------

19.0      16.8         14.6         52.7
-------    ------       ------       ------

Deferred income taxes:
U.S. federal and state          (46.7)     (8.7)        (9.4)        11.4
Non-U.S.                          (.1)      1.4          4.6        (23.0)
-------    ------       ------       ------

(46.8)     (7.3)        (4.8)       (11.6)
-------    ------       ------       ------

$ (27.8)   $  9.5       $  9.8       $ 41.1
=======    ======       ======       ======

Comprehensive provision for
income taxes allocable to:

Pre-tax income                  $ (27.8)    $  9.5      $  9.8       $ 41.1
======

Discontinued operations            (2.6)      (4.3)                    -
Extraordinary items                (8.3)      -                        -
Stockholders' equity,
principally deferred taxes
allocable to adjustments
components                        (4.9)        .5                     10.7
-------     ------                   ------

$ (43.6)    $  5.7                   $ 51.8
=======     ======                   ======

The components of the net deferred tax liability are summarized in the
following table.  At December 31, 1994 and 1995, all of the deferred tax
valuation allowance relates to NL tax jurisdictions, principally the U.S. and
Germany.  During 1995, NL's gross deferred tax assets and the offsetting
valuation allowance were both increased by $34 million as a result of
recharacterization of certain tax attributes due primarily to changes in certain
tax return elections.  In addition, the valuation allowance increased during
1995 by $6.5 million due to foreign currency translation and was reduced by $9.6
million due to recognition of the future tax benefit of certain tax credits
which NL believes satisfies the `more-likely-than-not'' recognition criteria as
a result of NL's return to profitability.

DECEMBER 31,
------------------------------------------

1994                  1995
--------------------  ---------------------

ASSETS  LIABILITIES   ASSETS   LIABILITIES
------  -----------   ------   -----------

(IN MILLIONS)

Tax effect of temporary differences relating to:
Inventories                                                        $   4.3    $ (11.8)   $   5.3     $ (14.0)
Marketable securities                                                  -        (18.5)       -         (28.7)
Natural resource properties                                            -        (18.3)       -         (17.8)
Property and equipment                                                  .4     (186.2)        .6      (195.6)
Accrued OPEB cost                                                     32.3      -           30.7         -
Accrued environmental liabilities and other deductible
differences                                                          90.8      -           89.7         -
Other taxable differences                                              -       (178.5)       -        (137.1)
Investments in subsidiaries and affiliates not
members of the consolidated tax group                                78.7      (22.0)      54.9       (22.2)
Tax loss and tax credit carryforwards                                163.1      -          189.3         -
Valuation allowance                                                   (164.5)    -          (195.6)        -
-------  ---------    -------     -------

Adjusted gross deferred tax assets (liabilities)                   205.1     (435.3)     174.9      (415.4)
Netting of items by tax jurisdiction                                  (200.0)     200.0     (171.5)      171.5
-------    -------    -------     -------

5.1     (235.3)       3.4      (243.9)
Less net current deferred tax asset (liability)                          2.3       (8.5)       2.6        (4.5)
-------    -------    -------     -------

Net noncurrent deferred tax asset (liability)                    $   2.8    $(226.8)   $    .8     $(239.4)
=======    =======    =======     =======

Certain U.S. and non-U.S. income tax returns of the Contran Tax Group
(including non-U.S. subsidiaries thereof) are being examined 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.

Certain of NL's U.S. and non-U.S. income tax returns, including Germany,
are being examined and tax authorities have or may propose tax deficiencies.
During 1994, the German tax authorities withdrew certain proposed tax
deficiencies of DM 100 million and remitted tax refunds aggregating DM 225
million ($136 million when received), including interest, on a tentative basis
while examination of NL's German income tax returns continued.  NL recently
reached agreement in principle with the German tax authorities which will
resolve certain significant tax contingencies for years through 1990.  NL
expects to finalize assessments and pay tax deficiencies of approximately DM 50
million ($35 million), including interest, in settlement of these issues during
the first half of 1996.  NL considers the agreement in principle to be a
favorable resolution of the contingencies and the anticipated payment is within
previously-accrued amounts for such matters.

Certain other German tax contingencies of NL remain outstanding and will
continue to be litigated.  No assurance can be given that this litigation will
be resolved in NL's favor in view of the inherent uncertainties involved in
court rulings.  Although NL believes that it will ultimately prevail in the
litigation, NL has granted a DM 100 million ($70 million at December 31, 1995)
lien on its Nordenham, Germany TiO2 plant until the litigation is resolved.  The
Company believes that NL has adequately provided accruals for additional income
taxes and related interest expense which may ultimately result from all such
examinations and believes that the ultimate disposition of such examinations

should not have a material adverse effect on its consolidated financial
position, results of operations or liquidity.

During 1995, NL utilized $14 million of foreign tax credit carryforwards
and U.S. net operating loss carryforwards to reduce its current year U.S.
federal income tax expense.  At December 31, 1995, for U.S. federal income tax
purposes, NL had approximately $27 million of foreign tax credit carryforwards
expiring during 1997 through 1999 and approximately $9 million of alternative
minimum tax credit carryforwards with no expiration date.  NL also had
approximately $350 million of income tax loss carryforwards in Germany with no
expiration date.

NOTE 17 -   CHANGE IN ACCOUNTING PRINCIPLES - MARKETABLE SECURITIES:

Early compliance with SFAS No. 115 was elected effective December 31, 1993.
The amounts attributable to the Company's investment in affiliates consist of
the Company's equity in the respective amounts reported by NL and Tremont.

AMOUNT REFLECTED IN
-------------------

EQUITY
EARNINGS  COMPONENT
--------  ---------

(IN THOUSANDS)

Increase (decrease) in net assets at December 31, 1993:
Marketable securities                                    $ -     $ 64,550
Investment in affiliates                                   661       (661)
Deferred income taxes                                     (232)   (22,361)
-----   --------

$ 429   $ 41,528
=====   ========

NOTE 18 - EMPLOYEE BENEFIT PLANS:

Company-sponsored plans

The Company maintains various defined benefit and defined contribution
pension plans covering substantially all full-time employees.  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 policies for U.S. defined
benefit plans are to contribute amounts satisfying funding requirements of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA").  Non-U.S.
defined benefit plans are funded in accordance with applicable statutory
requirements.

Defined contribution plans.  A majority 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 approximated $2.6 million in 1993, $2.8 million in 1994 (pro forma 1994
- - $3 million) and $3.1 million in 1995.

Defined benefit plans.  The funded status of the Company's defined benefit
pension plans and the components of net periodic defined benefit pension cost
are set forth below.  The rates used in determining the actuarial present value
of benefit obligations were (i) discount rate - principally 7.5% (1994 - 8.5%),
and (ii) rate of increase in future compensation levels - 3.5% to 6% (1994 - 4%
to 6%).  The expected long-term rates of return on assets used ranged from 7.5%
to 10%.  Variances from actuarially assumed rates will result in increases or
decreases in accumulated pension obligations, 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, 1995 by approximately $39 million.

Plan assets are primarily investments in U.S. and non-U.S. corporate equity
and debt securities, short-term investments, mutual funds and group annuity
contracts.  Approximately 13% of the aggregate plan assets at December 31, 1995
(1994 - 10%) consist of units in a combined investment fund for employee benefit
plans sponsored by Valhi and its affiliates, including Contran and certain
Contran affiliates.  Assets of the combined investment fund are primarily
investments in corporate equity and debt securities, short-term cash investments
and notes collateralized by residential and commercial real estate.

Approximately 65% of the unfunded amounts of plans for which plan assets
are less than the accumulated benefit obligation at December 31, 1995 relate to
certain of NL's non-U.S. plans, 33% relates to certain of NL's U.S. plans and 2%
relates to Medite's U.S. plan.

YEARS ENDED DECEMBER 31,
--------------------------------------------

PRO FORMA

1993       1994       1994         1995
----       ----    ----------   ----------

(UNAUDITED)
(IN THOUSANDS)

Net periodic pension cost:
Service cost benefits           $ 2,291    $ 2,517     $  7,422    $  6,600
Interest cost on PBO              3,467      3,744       19,115      21,936
Actual return on plan assets     (6,012)     1,253       (6,786)    (25,266)
Net amortization and deferral     1,766     (5,739)     (11,679)      1,732
-------    -------     --------    --------

$ 1,512    $ 1,775     $  8,072    $  5,002
=======    =======     ========    ========

PLAN ASSETS EXCEED       ACCUMULATED BENEFITS
ACCUMULATED BENEFITS       EXCEED PLAN ASSETS
--------------------      --------------------

December 31,              December 31,
--------------------      --------------------

1994        1995         1994         1995
----        ----         ----         ----

(IN THOUSANDS)

Actuarial present value of benefit obligations:
Vested benefits                                              $ 77,519     $ 73,309     $132,419     $176,659
Nonvested benefits                                              7,136        8,579        2,155        3,032
--------     --------     --------     --------

Accumulated benefit obligations                                84,655       81,888      134,574      179,691
Effect of projected salary increases                           15,146       18,183       19,620       22,758
--------     --------     --------     --------

Projected benefit obligations ("PBO")                          99,801      100,071      154,194      202,449
Plan assets at fair value                                       112,657      108,559      108,377      144,408
--------     --------     --------     --------

Plan assets over (under) PBO                                     12,856        8,488      (45,817)     (58,041)
Unrecognized net loss (gain) from experience different from
actuarial assumptions                                            9,056       14,769      (32,808)     (16,313)
Unrecognized prior service cost (credit), net                     3,959        3,751       (3,255)      (2,308)
Unrecognized net obligations (assets) being amortized
over periods of 9 to 18 years                                     (440)         263        2,606        2,175
Adjustment to recognize minimum liability                          -            -          (1,635)      (5,914)
--------     --------     --------     --------

Total prepaid (accrued) pension cost                             25,431       27,271      (80,909)     (80,401)
Current portion and reclassification, net                          (935)      (2,504)       4,565       10,361
--------     --------     --------     --------

Noncurrent prepaid (accrued) pension cost                  $ 24,496     $ 24,767     $(76,344)    $(70,040)
========     ========     ========     ========

Postretirement benefits other than pensions.  Certain subsidiaries
currently provide certain health care and life insurance benefits for eligible
retired employees.  Medical claims are funded as incurred, net of any
contributions by the retirees.  Under plans currently in effect, some currently
active employees of NL, Amalgamated and Medite may become eligible for
postretirement health care benefits if they reach retirement age while working
for the applicable subsidiary.  At December 31, 1995, about three-fourths of the
Company's aggregate accrued OPEB cost relates to NL, and substantially all of
the remainder relates to Amalgamated.  In 1989, NL began phasing out OPEB
benefits for currently active U.S. employees over a ten-year period.  The
majority of NL retirees, and substantially all Amalgamated and Medite retirees,
are required to contribute a portion of the cost of their benefits.  Health care
benefits for certain current and future NL retirees are reduced at age 65, and
certain current and all future retirees of Amalgamated and Medite either cease
to be eligible for health care benefits at age 65 or are thereafter eligible
only for limited benefits.

The components of the periodic OPEB cost and accumulated OPEB obligation
are set forth below.  The rates used in determining the actuarial present value
of the accumulated OPEB obligations at December 31, 1995, were (i) discount rate
7.5% (1994 - 8.5%), (ii) rate of increase in future compensation levels - 4% to
4.5% (1994 - 4% to 6%), (iii) expected return on plan assets - 9% and (iv) rate
of increase in future health care costs - 9% to 13% in 1996, gradually declining
to 5% to 6% in 2016 and thereafter.

Variances from actuarially-assumed rates will result in additional
increases or decreases in accumulated OPEB obligations, net periodic OPEB cost
and funding requirements in future periods.  If the health care cost trend rate
was increased by one percentage point for each year, OPEB expense would have
increased $429,000 in 1995, and the actuarial present value of accumulated OPEB
obligations at December 31, 1995 would have increased $4.5 million.  A one
percentage point decrease in the discount rate would increase the aggregate
actuarial present value of accumulated benefit obligations at December 31, 1995
by approximately $6 million.

YEARS ENDED DECEMBER 31,
--------------------------------------------

HISTORICAL        PRO FORMA   HISTORICAL
----------------

1993       1994       1994         1995
----       ----    ----------   ----------

(UNAUDITED)
(IN MILLIONS)

Service cost benefits earned
during the year                   $  527    $  499      $   598      $   568
Interest cost on accumulated
OPEB obligation                    1,139     1,117        5,455        5,608
Return on plan assets                -         -            (688)        (637)
Net amortization and deferral         (86)     (110)      (1,605)      (2,053)
------    ------      -------      -------

$1,580    $1,506      $ 3,760      $ 3,486
======    ======      =======      =======

DECEMBER 31,
------------------

1994       1995
----       ----

(IN THOUSANDS)

Actuarial present value of accumulated OPEB obligations:
Retiree benefits                                        $58,586   $60,373
Other fully eligible active plan participants             4,357     4,906
Other active plan participants                            6,543     8,329
-------   -------

69,486    73,608
Plan assets at fair value                                   7,217     7,103
-------   -------

62,269    66,505
Unrecognized net gain from experience different
from actuarial assumptions                                13,403     6,957
Unrecognized prior service credit                          13,672    12,199
-------   -------

Total accrued OPEB cost                                    89,344    85,661
Less current portion                                        6,044     7,251
-------   -------

Noncurrent accrued OPEB cost                            $83,300   $78,410
=======   =======

Multiemployer pension plans

A small minority of the Company's employees are covered by union-sponsored,
collectively-bargained multiemployer pension plans.  Contributions to
multiemployer plans based upon collectively-bargained agreements were less than
$100,000 in each of the past three years.  Based upon information provided by
the multiemployer plans' administrators, the Company's share of such plans'
unfunded vested benefits is not significant.

NOTE 19 - RELATED PARTY TRANSACTIONS:

The Company may be deemed to be controlled by Harold C. Simmons.  See
Note 1.  Corporations that may be deemed to be controlled by or affiliated with
Mr. Simmons sometimes engage in (a) intercorporate transactions such as
guarantees, management and expense sharing arrangements, shared fee
arrangements, joint ventures, partnerships, loans, options, advances of funds on
open account, and sales, leases and exchanges of assets, including securities
issued by both related and unrelated parties, and (b) common investment and
acquisition strategies, business combinations, reorganizations,
recapitalizations, securities repurchases, and purchases and sales (and other
acquisitions and dispositions) of subsidiaries, divisions or other business
units, which transactions have involved both related and unrelated parties and
have included transactions which resulted in the acquisition by one related
party of a publicly-held minority equity interest in another related party.  The
Company continuously considers, reviews and evaluates, and understands that
Contran and related entities consider, review and evaluate such transactions.
Depending upon the business, tax and other objectives then relevant, it is
possible that the Company might be a party to one or more such transactions in
the future.

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.

Receivables from affiliates at December 31, 1995 include $.5 million of
refundable income taxes due from Contran (1994 - $5.3 million) and a $3 million
demand loan to Contran (1994 - nil).  Payables to affiliates at December 31,
1995 include $6.7 million payable to Louisiana Pigment Company (1994 - $6.5
million), primarily for the purchase of TiO2 (see Note 7), and $3.5 million
payable to Tremont (1994 - $4.8 million) related to NL's Insurance Sharing
Agreement discussed below.

Loans are made between the Company and related parties, including Contran,
pursuant to term and demand notes, principally for cash management purposes.
Related party loans generally bear interest at rates related to credit
agreements with unrelated parties.  Interest income on loans to related parties
was $73,000 in 1993, $398,000 in 1994 and $1.1 million in 1995 and related party
interest expense was $39,000 in 1993.

Contran has a $20 million bank credit agreement which includes a $10
million letter of credit facility.  Pursuant to such agreement, Contran may
authorize the banks to issue letters of credit on behalf of Valmont ($438,000
outstanding at December 31, 1995).  Obligations under this Contran credit
agreement are collateralized by certain securities held by Contran.

Under the terms of Intercorporate Services Agreements ("ISAs") with
Contran, Contran provides certain management, administrative and aircraft
maintenance services to the Company, and the Company provides various

administrative and other services to Contran, on a fee basis.  The net ISA fees
charged by Contran to the Company (including amounts charged to Tremont prior to
1995 and to NL) were approximately $1.2 million in 1993, $480,000 in 1994 and
$360,000 in 1995.  Fees charged by Valhi to affiliates reported by the equity
method pursuant to similar ISA agreements aggregated $1.0 million in 1993 and
$.4 million in 1994.  Purchases in the ordinary course of business from
unconsolidated joint ventures, principally the TiO2 manufacturing joint venture,
were $79 million in 1995.  Other charges from corporate related parties for
services provided in the ordinary course of business were less than $250,000 in
each of the past three years.  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.  The Company has
established a policy whereby the Board of Directors will consider the payment of
additional management fees to Contran for certain financial advisory and other
services provided by Contran beyond the scope of the ISAs.  No such payments
were made in the past three years.

NL and a wholly-owned insurance subsidiary of Tremont that was a subsidiary
of NL prior to 1988 ("TRE Insurance"), are parties to an Insurance Sharing
Agreement with respect to certain loss payments and reserves established by TRE
Insurance that (i) arise out of claims against other entities for which NL is
responsible and (ii) are subject to payment by TRE Insurance under certain
reinsurance contracts.  Also, TRE Insurance will credit NL with respect to
certain underwriting profits or credit recoveries that TRE Insurance receives
from independent reinsurers that relate to retained liabilities.

COAM Company is a partnership, formed prior to 1993, which has sponsored
research agreements with the University of Texas Southwestern Medical Center at

Dallas (the "University") to develop and commercially market a safe and
effective treatment for arthritis (the "Arthritis Research Agreement") and to
develop and commercially market patents and technology resulting from a cancer
research program (the "Cancer Research Agreement").  At December 31, 1995, COAM
partners are Contran, Valhi and another Contran subsidiary.  Harold C. Simmons
is the manager of COAM.  The Arthritis Research Agreement, as amended, provides
for payments by COAM of up to $7 million over the next nine years and the Cancer
Research Agreement, as amended, provides for funds of up to $17 million over the
next 15 years.  Funding requirements pursuant to the Arthritis and Cancer
Research Agreements are without recourse to the COAM partners and the
partnership agreement provides that no partner shall be required to make capital
contributions.  The Company's contributions to COAM were approximately $2
million in each of 1993 and 1994 and nil in 1995.

NOTE 20 - COMMITMENTS AND CONTINGENCIES:

Legal proceedings

Lead pigment litigation.  Since 1987, NL, other past manufacturers of lead
pigments for use in paint and lead-based paint and the Lead Industries
Association have been named as defendants in various legal proceedings seeking
damages for personal injury and property damage allegedly caused by the use of
lead-based paints.  Certain of these actions have been filed by or on behalf of
large United States cities or their public housing authorities and certain
others have been asserted as class actions.  These legal proceedings seek
recovery under a variety of theories, including negligent product design,
failure to warn, breach of warranty, conspiracy/concert of action, enterprise

liability, market share liability, intentional tort, and fraud and
misrepresentation.

The plaintiffs in these actions generally seek to impose on the defendants
responsibility for lead paint abatement and asserted health concerns associated
with the use of lead-based paints, which was permitted for interior residential
use in the United States until 1973, including damages for personal injury,
contribution and/or indemnification for medical expenses, medical monitoring
expenses and costs for educational programs.  Most of these legal proceedings
are in various pre-trial stages; several are on appeal.

NL believes these actions are without merit, intends to continue to deny
all allegations of wrongdoing and liability and to defend all actions
vigorously.  NL has not accrued any amounts for the pending lead pigment
litigation.  Considering NL's previous involvement in the lead and lead pigment
businesses, there can be no assurance that additional litigation similar to that
currently pending will not be filed.

Environmental matters and litigation.  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
and believes that its operations generally 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.

Some of NL's current and former facilities, including several divested
secondary lead smelters and former mining locations, are the subject of civil
litigation, administrative proceedings or of investigations arising under
federal and state environmental laws.  Additionally, in connection with past
disposal practices, NL has been named a potentially responsible party ("PRP")
pursuant to CERCLA in approximately 80 governmental enforcement and private
actions associated with hazardous waste sites and former mining locations, some
of which are on the U.S. EPA's Superfund National Priorities List.  These
actions seek cleanup costs and/or damages for personal injury or property
damage.  While NL may be jointly and severally liable for such costs, in most
cases, it is only one of a number of PRPs who are also jointly and severally
liable.  In addition, NL is a party to a number of lawsuits filed in various
jurisdictions alleging CERCLA or other environmental claims.  At December 31,
1995, NL had accrued $100 million with respect to those environmental matters
which are reasonably estimable.  It is not possible to estimate the range of
costs for certain sites.  The upper end of range of reasonably possible costs to
NL for sites for which it is possible to estimate costs is approximately $169
million.  NL's estimates of such liabilities have not been discounted to present
value, and NL has not recognized any potential insurance recoveries.  The
imposition of more stringent standards or requirements under environmental laws
or regulations, new developments or changes respecting site cleanup costs or
allocation of such costs among PRPs, or a determination that NL is potentially
responsible for the release of hazardous substances at other sites, could result
in expenditures in excess of amounts currently estimated by NL to be required
for such matters.  No assurance can be given that actual costs will not exceed
accrued amounts or the upper end of the range for sites for which estimates have
been made, and no assurance can be given that costs will not be incurred with
respect to sites as to which no estimate presently can be made.  Further, there

can be no assurance that additional environmental matters will not arise in the
future.

Certain other information relating to regulatory and environmental matters
pertaining to NL is included in Item 1 - "Business - Chemicals" of this Annual
Report on Form 10-K.

In 1995, Medite was named as a defendant in a complaint filed in the New
Mexico District Court (New Mexico Environmental Department (`NMED'') v. Medite
Corporation, No. SF 95-2581(C)).  The complaint involved certain violations of
state air quality emission standards at Medite's New Mexico MDF facility.  In
December 1995, Medite entered into a settlement agreement with the NMED wherein
Medite paid fines of $200,000 to settle prior violations of air quality
standards and agreed to submit an application for new operating permits for the
facility and related compliance plans as necessary to the NMED during 1996.
Medite will incur fines of $750 per day of operation without a new operating
permit.  See Note 22.

At December 31, 1995, the Company has also accrued approximately $2 million
in respect of non-NL environmental cleanup matters, principally related to one
Superfund site in Indiana where the Company, as a result of former operations,
has been named as a PRP.  Such accrual does not reflect any amounts which the
Company could potentially recover from insurers or other third parties and is
near the upper end of the range of the Company's estimate of reasonably possible
costs for such matters.  The imposition of more strict standards or requirements
under environmental laws or regulations, new developments or changes in site
cleanup costs or allocations of such costs could result in expenditures in
excess of amounts currently estimated to be required for such matters.

Other litigation.  In November 1992, a complaint was filed in the U.S.
District Court for the District of Utah against Valhi, Amalgamated and the
Amalgamated Retirement Plan Committee (American Federation of Grain Millers
International, et al. v. Valhi, Inc. et al., No. 29-NC-129J).  The complaint, a
purported class action on behalf of certain current and retired hourly employees
of Amalgamated, alleges, among other things, that the defendants breached their
fiduciary duties under ERISA by amending certain provisions of a retirement plan
for hourly employees maintained by Amalgamated to permit the reversion of excess
plan assets to Amalgamated in 1986.  The complaint seeks a variety of remedies,
including, among other things, orders requiring a return of all reverted funds
(alleged to be in excess of $8 million) and any profits earned thereon, a
distribution of such funds to the plan participants, retirees and their
beneficiaries and enhancement of the benefits under the plan, and an award of
costs and expenses, including attorney fees.  In January 1996, the Court granted
the Company's motion for summary judgment with respect to certain counts and
denied the Company's motion for summary judgment with respect to other counts.
The Company believes it has adequately accrued for the estimated effect of the
ultimate resolution of this matter.

In November 1991, a purported derivative complaint was filed in the Court
of Chancery of the State of Delaware, New Castle County (Alan Russell Kahn v.
Tremont Corporation, et al., No. 12339), in connection with Tremont's agreement
to purchase 7.8 million NL common shares from Valhi.  In addition to Tremont,
the complaint names as defendants the members of Tremont's board of directors
and Valhi.  The complaint alleges, among other things, that Tremont's purchase
of the NL shares constitutes a waste of Tremont's assets and that Tremont's
board of directors breached their fiduciary duties to Tremont's public

stockholders and seeks, among other things, to rescind Tremont's consummation of
the purchase of the NL shares and award damages to Tremont for injuries
allegedly suffered as a result of the defendants' wrongful conduct.  Valhi
believes, and understands that Tremont and the other defendants believe, that
the action is without merit.  Trial was held in June 1995, and the Company is
awaiting the court's ruling.

Medite's Irish subsidiary has been named as a defendant in a complaint
filed in the High Court for the Republic of Ireland (Woodfab Limited v. Coillte
Teoranta and Medite of Europe Limited, 1995 No. 1154P).  The complaint alleges
that a timber supply contract entered into in 1981 between Medite/Europe and
Coillte violate certain provisions of the Competition Act of 1991 and the
European Community Treaty.  The complaint seeks to, among other things, declare
that the timber supply contract is invalid and therefore should be rescinded.
Hearings for this matter are currently expected in June 1996 although no trial
date has been set.  Medite believes that the allegations are without merit and
intends to defend this action vigorously.

NL has been named as a defendant in various lawsuits alleging personal
injuries as a result of exposure to asbestos in connection with formerly-owned
operations.  Various of these actions remain pending.  One such case, In re:
Monongalia Mass II, (Circuit Court of Monongalia County, West Virginia Nos. 93-
C-362, et al.), involving approximately 1,800 plaintiffs, is scheduled to begin
trial in August 1996.  NL is aware that claims on behalf of approximately 400
additional plaintiffs have been filed, but NL has not yet been served with those
claims.  NL intends to defend these matters vigorously.

In July 1995, twelve plaintiffs brought an action against NL and various
other defendants, Rhodes, et al. v. ACF Industries, Inc., et al.  (Circuit Court
of Putnam County, West Virginia, No. 95-C-261).  Plaintiffs allege that they
were employed by demolition and disposal contractors, and claim that as a result
of the defendants' negligence they were exposed to asbestos during demolition
and disposal of materials from the defendants' premises in West Virginia.
Plaintiffs allege personal injuries and seek compensatory damages totaling $18.5
million and punitive damages totaling $55.5 million.  NL has filed an answer
denying plaintiffs' allegations.  Discovery is proceeding.

In addition to the litigation described above, the Company is also involved
in various other environmental, contractual, product liability and other claims
and disputes incidental to its present and former businesses.  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 its
consolidated financial position, results of operations or liquidity.

Concentrations of credit risk.  Sales of TiO2 accounted for approximately
90% of NL's sales in each of the past three years.  TiO2 is sold to the paint,
paper and plastics industries, which are generally considered "quality-of-life"
markets whose demand for TiO2 is influenced by the relative economic well-being
of the various geographic regions.  TiO2 is sold to over 5,000 customers, none
of which represents a significant portion of NL's sales.  In 1995, approximately
one-half of NL's TiO2 sales by volume were to Europe with approximately one-
third attributable to North America.

Amalgamated sells refined sugar primarily in the North Central and
Intermountain Northwest regions of the United States.  Amalgamated does not

believe it is dependent upon one or a few customers; however, major food
processors are substantial customers and represent an important portion of
refined sugar segment sales.  Amalgamated's ten largest customers accounted for
about one-third of its sales in each of the past three years.

Medite's sales are made primarily to wholesalers of building materials
located principally in the western United States, Pacific Rim, European
countries and Mexico.  In each of the past three years, Medite's ten largest
customers accounted for approximately one-fifth of its sales with at least six
of such customers in each year located in the U.S.

National Cabinet Lock's sales are 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 hardware 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, 1995, consolidated cash and cash equivalents includes $103
million invested in U.S. Treasury securities purchased under short-term
agreements to resell (1994 - $80 million), of which $88 million are held in
trust for the Company by a single U.S. bank (1994 - $73 million).

Operating leases.  Kronos' principal German operating subsidiary leases the
land under its Leverkusen TiO2 production facility pursuant to a lease expiring
in 2050.  The Leverkusen facility, with approximately one-third of Kronos'
current TiO2 production capacity, is located within the lessor's extensive

manufacturing complex, and Kronos is the only unrelated party so situated.
Under a separate supplies and services agreement expiring in 2011, the lessor
provides some raw materials, auxiliary and operating materials and utilities
services necessary to operate the Leverkusen facility.  Both the lease and the
supplies and services agreements restrict NL's ability to transfer ownership or
use of the Leverkusen facility.

The Company also leases various fast food retail and other manufacturing
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, such
leases will be renewed or replaced by other leases.

Net rent expense approximated $6 million in each of 1993 and 1994 (pro
forma 1994 - $14 million) and $15 million in 1995.  Contingent rentals based
upon gross sales of individual fast food restaurants were less than $.5 million
in each of the past three years.  At December 31, 1995, future minimum payments
under noncancellable operating leases having an initial or remaining term of
more than one year were as follows:

Years ending December 31,                         REAL ESTATE     EQUIPMENT
- -------------------------                         -----------     ---------

(IN THOUSANDS)

1996                                              $ 6,850        $ 2,213
1997                                                5,732          1,539
1998                                                5,034            747
1999                                                4,067            239
2000                                                2,951             33
2001 and thereafter                                22,067           -
-------        -------

46,701          4,771
Less minimum rentals due under noncancellable
subleases                                          2,520           -
-------        -------

Net minimum commitments                       $44,181        $ 4,771
=======        =======

Capital expenditures.  At December 31, 1995, the estimated cost to complete
capital projects in process approximated $59 million, including $44 million
related to environmental protection and compliance programs and productivity-
enhancing equipment at certain of NL's TiO2 facilities.

TiO2 raw material supply contract.  NL has long-term supply contracts that
provide for NL's chloride-process TiO2 feedstock requirements through 2000.  The
agreements require NL to purchase certain minimum quantities of feedstock with
average minimum annual purchase commitments aggregating approximately $115
million.

Timber cutting contracts.  Deposits are made on timber cutting contracts
with public and private sources from which Medite obtains a portion of its
timber requirements.  Medite records only the cash deposits and advances on
these contracts because it does not obtain title to the timber until it has been
harvested.  At December 31, 1995, timber and log purchase obligations aggregated
$10 million under agreements expiring through 1997.

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 franchisor based upon a percentage of gross sales, as
specified in the franchise agreement related to each individual restaurant.
NOTE 21 -   QUARTERLY RESULTS OF OPERATIONS (UNAUDITED):

QUARTER ENDED
---------------------------------------

MARCH 31   JUNE 30  SEPT. 30   DEC. 31
--------   -------  --------   -------

(IN MILLIONS, EXCEPT PER SHARE DATA)

YEAR ENDED DECEMBER 31, 1995
Net sales                            $467.6   $513.5     $494.5    $485.2
Operating income                       60.2     73.6       62.2      61.9

Net income                           $ 12.4   $ 17.4     $ 13.7    $ 25.0

Net income per common share           $ .11     $ .15     $ .12     $ .22

YEAR ENDED DECEMBER 31, 1994
1994 Pro forma (*)
Net sales                            $390.7   $448.0     $457.8    $424.2
Operating income                       36.2     50.1       48.2      55.3

Income from continuing operations    $ (2.3)  $  (.8)    $  5.4    $  8.4

Per common share                     $ (.02)   $ (.01)   $  .05    $  .07

1994 Historical
Net sales                            $188.9   $210.8     $232.6    $200.4
Operating income                       18.6     28.6       26.1      24.6

Income from continuing operations    $   .2   $  4.0     $  7.3    $  8.2
Discontinued operations                 (.9)    (1.0)      (2.7)     (3.5)
------   ------     ------    ------

Net income (loss)                $  (.7)  $  3.0     $  4.6    $  4.7
======   ======     ======    ======

Per common share:
Continuing operations              $ -       $  .04    $  .06    $  .07
Discontinued operations              (.01)     (.01)     (.02)     (.03)
------    ------    ------    ------

Net income (loss)                $ (.01)   $  .03    $  .04    $  .04
======    ======    ======    ======

F-200

[FN]
(*) Pro forma assuming the Company had consolidated NL's results of operations
effective January 1, 1994.  See Note 3.

Net income in the fourth quarter of 1995 includes an aggregate of $13
million ($.11 per share) of net deferred income tax benefits resulting from
changes in the U.S./Canada income tax treaty and a reduction of NL's deferred
income tax valuation allowance to recognize the future benefit of certain tax
credits.

NOTE 22 - SUBSEQUENT EVENT:

On March 14, 1996, the Company announced it plans to close Medite's Las
Vegas, New Mexico MDF operations by May 13, 1996.  In connection with the
closure, the Company will record a pre-tax charge of approximately $24 million
($15 million net of income tax benefits, or $.13 per share) in the first quarter
of 1996.

As discussed in Note 20, the New Mexico MDF facility is operating without
an environmental permit with respect to certain air quality emission standards.
In March 1996, Medite received the report of its third-party environmental
engineering consultants which indicated that (i) Medite's planned technological
solution would not achieve an acceptable reduction in emissions and (ii) the
estimated cost of alternative control technology, both in terms of capital
expenditures and increased ongoing operating expenses, would not be economically
feasible for this facility.

The plant closure decision was based upon the additional capital and
operating costs which the March 1996 consultants' reports indicated would be

required to seek and obtain long-term operating permits, which costs Medite
considers prohibitive and does not believe could be recovered, particularly in
light of other economic factors (MDF market/pricing outlook and cost structure)
relative to this plant.

Medite is presently evaluating alternatives for disposition of the plant's
assets.  In 1995, the New Mexico MDF plant generated sales of approximately $28
million.  Closure of the facility is not expected to have a material adverse
effect on Medite's financial position, results of ongoing operations or
liquidity.

REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES

To the Stockholders and Board of Directors of Valhi, Inc.:

Our report on the consolidated financial statements of Valhi, Inc. and
Subsidiaries as of December 31, 1994 and 1995 and for each of the three years in
the period ended December 31, 1995, which report is based in part upon the
reports of other auditors, is herein included on this Annual Report on Form 10-
K.  As discussed in Note 17 to the consolidated financial statements, in 1993
the Company changed its method of accounting for certain investments in debt and
equity securities in accordance with Statements of Financial Accounting
Standards No. 115.  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 reports of other auditors,
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
February 29, 1996

VALHI, INC. AND SUBSIDIARIES

SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT

CONDENSED BALANCE SHEETS

DECEMBER 31, 1994 AND 1995

(IN THOUSANDS)

1994      1995
----      ----

Current assets:
Cash and cash equivalents                              $ 15,292   $  8,411
Marketable securities                                    24,068       -
Accounts and notes receivable                             1,413      1,398
Demand loans to affiliates                                 -         3,000
Receivable from subsidiaries and affiliates                 930        751
Deferred income taxes                                      -         1,101
Other                                                       661        534
--------   --------

Total current assets                                 42,364     15,195
--------  ---------

Other assets:
Marketable securities                                   103,243    130,873
Investment in subsidiaries and affiliates               129,729    244,832
Deferred income taxes                                    55,120     20,807
Other assets                                              4,831      4,373
Property and equipment, net                                 416      3,110
--------   --------

Total other assets                                  293,339    403,995
--------   --------

$335,703   $419,190
========   ========

Current liabilities:
Accounts payable and accrued liabilities               $  9,315   $  5,400
Payable to subsidiaries and affiliates                      446      3,169
Income taxes                                              1,461      1,466

Deferred income taxes                                     4,124       -
--------   --------

Total current liabilities                            15,346     10,035
--------   --------

Noncurrent liabilities:
Long-term debt - LYONs                                  119,096    130,366
Other                                                     2,837      4,498
--------   --------

Total noncurrent liabilities                        121,933    134,864
--------   --------

Stockholders' equity                                      198,424    274,291
--------   --------

$335,703   $419,190
========   ========

VALHI, INC. AND SUBSIDIARIES

SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (CONTINUED)

CONDENSED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

(IN THOUSANDS)

1993       1994       1995
----       ----       ----

Revenues and other income:
Securities earnings, net                   $   6,281   $  3,348   $  4,034
Other, net                                       826      1,317      1,991
---------   --------   --------

7,107      4,665      6,025
---------   --------   --------

Costs and expenses:
General and administrative                     9,139      9,449      6,845
Interest                                      26,563     10,437     11,892
Other, net                                     1,476        843        231
---------   --------   --------

37,178     20,729     18,968
---------   --------   --------

(30,071)   (16,064)   (12,943)
Equity in subsidiaries & affiliates            (88,500)    19,909     97,431
---------   --------   --------

Income before income taxes                  (118,571)     3,845     84,488

Provision for income taxes (benefit)           (59,243)   (15,824)    15,973
---------   --------   --------

Income from continuing operations            (59,328)    19,669     68,515

Discontinued operations                         (4,796)    (8,069)      -
Extraordinary items                            (15,390)      -          -
Cumulative effect of changes in accounting
principles                                        429       -          -
---------   --------   --------

Net income (loss)                      $ (79,085)  $ 11,600   $ 68,515
=========   ========   ========

VALHI, INC. AND SUBSIDIARIES

SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (CONTINUED)

CONDENSED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

(IN THOUSANDS)

1993        1994        1995
----        ----        ----

Cash flows from operating activities:
Net income (loss)                         $(79,085)   $ 11,600   $  68,515
Noncash interest expense                    10,110      10,437      11,421
Deferred income taxes                      (54,636)    (13,531)     23,153
Equity in subsidiaries & affiliates:
Continuing operations                     88,500     (19,909)    (97,431)
Discontinued operations                    7,378      12,414        -
Extraordinary items                       15,928        -           -
Dividends from subsidiaries & affiliates   164,454      25,707       8,298
Prepayments of indebtedness                  7,749        -           -
Other, net                                     489       1,045       2,371
--------    --------   ---------

160,887      27,763      16,327
Net change in assets and liabilities        (8,140)      2,368      (7,044)
Net sales of trading securities               -          4,375      24,184
--------    --------   ---------

Net cash provided by operating
activities                            152,747      34,506      33,467
--------    --------   ---------

Cash flows from investing activities:
Purchases of NL common stock                  -        (15,060)    (13,250)
Capital contributed to subsidiaries
and affiliates                               -        (10,000)    (10,000)
Loans to subsidiaries & affiliates:
Loans                                    (11,800)    (34,550)   (132,000)
Collections                               13,800      34,550     129,000
Marketable securities:
Sale proceeds                            381,395        -           -
Purchases                               (281,795)       -           -

Other, net                                   3,574       3,906      (1,164)
--------    --------   ---------

Net cash provided (used) by
investing activities                  105,174     (21,154)    (27,414)
--------    --------   ---------

VALHI, INC. AND SUBSIDIARIES

SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (CONTINUED)

CONDENSED STATEMENTS OF CASH FLOWS (CONTINUED)

YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995

(IN THOUSANDS)

1993        1994        1995
----        ----        ----

Cash flows from financing activities:
Indebtedness:
Borrowings                            $    -        $  -       $ 60,000
Principal payments                     (241,715)       -        (60,000)
Loans from subsidiaries & affiliates:
Loans                                    27,631        -           -
Repayments                              (58,895)       -           -
Dividends                                  (5,704)     (9,145)    (13,809)
Other, net                                     53         229         875
---------     -------    --------

Net cash used by financing
activities                          (278,630)     (8,916)    (12,934)
---------     -------    --------

Cash and cash equivalents:
Net increase (decrease)                   (20,709)      4,436      (6,881)
Balance at beginning of year               31,565      10,856      15,292
---------     -------    --------

Balance at end of year                  $  10,856     $15,292    $  8,411
=========     =======    ========

Supplemental disclosures:
Cash paid for:
Interest                              $  26,817     $  -       $    470
Income taxes (received)                 (16,482)     (6,171)     (4,154)

Non-cash dividend from subsidiary       $    -        $  -       $  2,657

VALHI, INC. AND SUBSIDIARIES

SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT (CONTINUED)

NOTES TO CONDENSED FINANCIAL INFORMATION

NOTE 1 -BASIS OF PRESENTATION:

The Consolidated Financial Statements of Valhi, Inc. and Subsidiaries are
incorporated herein by reference.

NOTE 2 -MARKETABLE SECURITIES:

DECEMBER 31,
------------------

1994       1995
----       ----

(IN THOUSANDS)

Current assets (trading securities):
U.S. Treasury securities                               $   -    $   -
Global bond investments                                  24,068     -
-------- --------

$ 24,068 $   -
======== ========

Noncurrent assets (available-for-sale):
Dresser Industries common stock                        $103,243 $130,366
Other                                                      -         507
-------- --------

$103,243 $130,873
======== ========

NOTE 3 -INVESTMENT IN SUBSIDIARIES AND AFFILIATES:

DECEMBER 31,
------------------

1994       1995
----       ----

(IN THOUSANDS)

NL Industries                                            $ 61,882  $150,743
Amalgamated                                                32,997    44,240
Valcor                                                     34,850    45,224
Waste Control Specialists                                    -        4,625
--------  --------

$129,729  $244,832
========  ========

NOTE 4 -LONG-TERM DEBT:

Long-term debt consists of Valhi's zero coupon LYONs, $379 million
principal amount at maturity in October 2007.  The LYONs were issued with
significant original issue discount ("OID") to represent a yield to maturity of
9.25%.  No periodic interest payments are required.  The LYONs are secured by
the 5.5 million shares of Dresser common stock held by Valhi, which shares are
held in escrow for the benefit of holders of the LYONs.  Each $1,000 in
principal amount at maturity of the LYONs is exchangeable, at any time, for
14.4308 shares of Dresser common stock held by the Company.  The LYONs are
redeemable at the option of the holder in October 1997 or October 2002 at the
issue price plus accrued OID through such purchase date.  The aggregate
redemption price in October 1997 approximates $154 million.  Such redemptions
may be paid, at Valhi's option, in cash, Dresser common stock, or a combination
thereof.  The LYONs are not redeemable at Valhi's option prior to October 1997
unless the market price of Dresser common stock exceeds $35.70 per share for
specified time periods.

Valhi also has a (i) $50 million revolving bank credit facility which
matures in August 1996, generally bears interest at LIBOR plus 1% and is
collateralized by all of the outstanding common stock of Amalgamated and (ii) a
$15 million revolving bank credit facility which matures in December 1996,
generally bears interest at LIBOR plus 1.5% and is collateralized by 4.8 million
shares of NL common stock held by Valhi.  Borrowings under the $15 million
facility can only be used to fund Valhi's purchases of NL common stock.  Both
agreements limit additional indebtedness of Valhi and contain other provisions
customary in lending transactions of this type.  At December 31, 1995, no
amounts were outstanding and the full amount of these facilities was available
for borrowing.

NOTE 5 -DIVIDENDS FROM SUBSIDIARIES AND AFFILIATES:

YEARS ENDED DECEMBER 31,
----------------------------

1993      1994      1995
----      ----      ----

(IN THOUSANDS)

Cash dividends:
Amalgamated                                   $ 15,522  $16,137    $ -
Valcor                                         148,932    9,570     8,298
NL Industries                                     -        -         -
Waste Control Specialists                         -        -         -
--------  -------    ------

$164,454  $25,707    $8,298
========  =======    ======

Non-cash dividend - Amalgamated                 $   -     $  -       $2,657

Cash dividends from Valcor in 1993 include $135 million from the proceeds
of new borrowings.  NL reinstated quarterly cash dividends in the first quarter
of 1996.

NOTE 6 -INCOME TAXES:

YEARS ENDED DECEMBER 31,
----------------------------

1993      1994      1995
----      ----      ----

(IN THOUSANDS)

Provision for income taxes (benefit)
attributable to continuing operations:
Currently refundable                          $(10,649) $ (6,638)  $(7,180)
Deferred income taxes                          (48,594)   (9,186)   23,153
--------  --------   -------

$(59,243) $(15,824)  $15,973
========  ========   =======

Cash received from income taxes, net:
Received from subsidiaries                    $ 25,630  $ 20,479   $ 8,828
Paid to Contran                                 (8,845)  (14,425)   (4,623)
Paid to tax authorities, net                      (303)      117       (51)
--------  --------   -------

$ 16,482  $  6,171   $ 4,154
========  ========   =======

Waste Control Specialists LLC is treated as a partnership for federal
income tax purposes.  NL Industries is a separate U.S. taxpayer and is not a
member of the Contran Tax Group.

DEFERRED TAX
ASSET (LIABILITY)
------------------

DECEMBER 31,
------------------

1994       1995
----       ----

(IN THOUSANDS)

Components of the net deferred tax asset:
Tax effect of temporary differences related to:
Marketable securities                                $(21,469)  $(31,190)
Investment in subsidiaries and affiliates not
members of the Contran Tax Group                      81,182     55,983
Accrued liabilities and other deductible differences    5,869      5,514
Other taxable differences                             (14,586)    (8,399)
--------   --------

$ 50,996   $ 21,908
========   ========

Current deferred tax asset (liability)                 $ (4,124)  $  1,101
Noncurrent deferred tax asset                            55,120     20,807
--------   --------

$ 50,996   $ 21,908
========   ========

NOTE 7 -EQUITY IN EARNINGS OF SUBSIDIARIES AND AFFILIATES:

YEARS ENDED DECEMBER 31,
-----------------------------

1993      1994       1995
----      ----       ----

(IN THOUSANDS)

Continuing operations:
NL Industries:
Operations                                $ (52,426) $(25,078)   $69,539
Writedown of NL common stock                (84,015)     -          -
---------  --------    -------

(136,441)  (25,078)    69,539
Valcor                                         28,350    31,098     19,546
Amalgamated                                    19,591    13,889      8,900
Waste Control Specialists                        -         -          (554)
---------  --------    -------

$ (88,500) $ 19,909    $97,431
=========  ========    =======

Discontinued operations - Tremont             $  (7,378) $(12,414)   $  -

Extraordinary items - NL Industries           $ (15,928) $   -          -

VALHI, INC. AND SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

(IN THOUSANDS)

ADDITIONS
BALANCE AT   CHARGED TO
BEGINNING     COSTS AND
DESCRIPTION                           OF YEAR      EXPENSES
- ---------------------------------               ----------   ----------

Year ended December 31, 1993:
Allowance for doubtful accounts                 $1,323       $    31
======       =======

Amortization of intangibles:
Goodwill                                      $  842       $   166
Franchise fees and other                       5,424         1,571
------       -------

$6,266       $ 1,737
======       =======

Year ended December 31, 1994:
Allowance for doubtful accounts                 $  974       $   213
======       =======

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

$7,856       $ 1,595
======       =======

Deferred income tax valuation allowance         $ -          $  -
======       =======

[FN]
(a)  Consolidation of NL Industries, Inc. effective December 31, 1994.

BALANCE
AT END
DESCRIPTION                          DEDUCTIONS    OTHER(A)   OF YEAR
- ---------------------------------               ----------    --------   -------

Year ended December 31, 1993:
Allowance for doubtful accounts                  $  (380)   $   -     $    974
=======    ========  ========

Amortization of intangibles:
Goodwill                                       $  -       $   -     $  1,008
Franchise fees and other                          (147)       -        6,848
-------    --------  --------

$  (147)   $   -     $  7,856
=======    ========  ========

Year ended December 31, 1994:
Allowance for doubtful accounts                  $  (502)   $  3,749  $  4,434
=======    ========  ========

Amortization of intangibles:
Goodwill                                       $  -       $   -     $  1,180
Franchise fees and other                          (900)       -        7,371
-------    --------  --------

$  (900)   $   -     $  8,551
=======    ========  ========

Deferred income tax valuation allowance          $  -       $164,500  $164,500
=======    ========  ========

[FN]
(a)  Consolidation of NL Industries, Inc. effective December 31, 1994.
VALHI, INC. AND SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (CONTINUED)

(IN THOUSANDS)

ADDITIONS
BALANCE AT  CHARGED TO
BEGINNING    COSTS AND
DESCRIPTION               OF YEAR     EXPENSES    DEDUCTIONS
- ---------------------------------   ----------  ----------   ----------

Year ended December 31, 1995:

Allowance for doubtful accounts    $  4,434     $   665        $(294)
========     =======        =====

Amortization of intangibles:
Goodwill                         $  1,180     $ 8,172        $ -
Franchise fees and other            7,371       4,549         (453)
--------     -------        -----

$  8,551     $12,721        $(453)
========     =======        =====

Deferred income tax valuation
allowance

$164,500     $(9,588)       $ -
========     =======        =====

[FN]
(a)Direct offset to the increase in gross deferred tax assets resulting from
rechartization of certain tax attributes primarily due to changes in certain
tax return elections.

BALANCE
CURRENCY                AT END
DESCRIPTION              TRANSLATION   OTHER(A)   OF YEAR
- ---------------------------------   -----------   --------   -------

Year ended December 31, 1995:

Allowance for doubtful accounts      $  167     $  -      $  4,972
======     =======   ========

Amortization of intangibles:
Goodwill                           $ -        $  -      $  9,352
Franchise fees and other               (8)       -        11,459
------     -------   --------

$   (8)    $  -      $ 20,811
======     =======   ========

Deferred income tax valuation
allowance

$6,451     $34,206   $195,569
======     =======   ========

[FN]
(a)Direct offset to the increase in gross deferred tax assets resulting from
rechartization of certain tax attributes primarily due to changes in certain

EXHIBIT 21.1   SUBSIDIARIES OF THE REGISTRANT
- ------------   ------------------------------

Jurisdiction of     % of Voting
Incorporation or     Securities
Name of Corporation                               Organization         Held (2)
- ----------------------------------------        ----------------     -----------

Amcorp, Inc.                                    Delaware                   100%
The Amalgamated Sugar Company                 Utah                       100
Amalgamated Research, Inc.                    Idaho                      100

Valcor, Inc.                                    Delaware                   100
Medite Corporation                            Delaware                   100
Medford International Holdings              Republic of Ireland        100
Medite of Europe Limited                  Republic of Ireland        100
Medite Timber Acquisitions Corporation      Delaware                   100
National Cabinet Lock, Inc.                   Delaware                   100
Waterloo Furniture Components Limited       Canada                     100
National Cabinet Lock of Canada Inc.      Canada                     100
Sybra, Inc.                                   Michigan                   100

Other wholly-owned
Valmont Insurance Company                     Vermont                    100
New England Insurance Services Company      Vermont                    100
Impex Realty Holding, Inc.                    Delaware                   100
Medco FSC, Inc.                               U.S. Virgin Islands        100

NL Industries, Inc. (1)                         New Jersey                  53

Andrews County Holdings, Inc.                   Delaware                   100
Waste Control Specialists LLC                 Delaware                    50
Waste Control Specialists, Inc.             Texas                      100

(1) Subsidiaries of NL are incorporated by reference to Exhibit 21.1 of NL's
Annual Report on Form 10-K for the year ended December 31, 1995 (File No.
1-640).

(2) Held by the Registrant or the indicated subsidiary of the Registrant.

Exhibit 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in Valhi, Inc.'s (i)
Registration Statement (Form S-8 Nos. 33-53633, 33-48146, 33-41507 and 33-21758)
and related Prospectus pertaining to the Valhi, Inc. 1987 Incentive Stock Option
- - Stock Appreciation Rights Plan, and (ii) Registration Statement (Form S-8 No.
33-41508) and related Prospectus pertaining to the Valhi, Inc. 1990 Non-Employee
Director Stock Option Plan, of our reports dated February 29, 1996, except for
Note 22, as to which the date is March 14, 1996, on our audits of the
consolidated financial statements and financial statement schedules of Valhi,
Inc. and Subsidiaries included in this Annual Report on Form 10-K for the year
ended December 31, 1995.

COOPERS & LYBRAND L.L.P.

Dallas, Texas
March 15, 1996

Exhibit 23.2

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

We consent to the incorporation by reference in Valhi, Inc.'s (i)
Registration Statement (Form S-8 Nos. 33-53633, 33-48146, 33-41507 and 33-21758)
and related Prospectus pertaining to the Valhi, Inc. 1987 Incentive Stock Option
- - Stock Appreciation Rights Plan, and (ii) Registration Statement (Form S-8 No.
33-41508) and related Prospectus pertaining to the Valhi, Inc. 1990 Non-Employee
Director Stock Option Plan, of our report dated January 30, 1996, relating to
the financial statements (not presented separately herein) of The Amalgamated
Sugar Company for each of the three years in the period ended December 31, 1995,
which report is included in this Annual Report on Form 10-K of Valhi, Inc. for
the year ended December 31, 1995.

KPMG PEAT MARWICK LLP

Salt Lake City, Utah
March 15, 1996

Exhibit 23.3

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation
by reference of our report related to Medite Corporation dated January 27, 1996,
included in this Annual Report on Form 10-K of Valhi, Inc. for the year ended
December 31, 1995, into Valhi, Inc.'s previously filed  (i) Registration
Statement (Form S-8 Nos. 33-53633, 33-48146, 33-41507 and 33-21758) and related
Prospectus pertaining to the Valhi, Inc. 1987 Incentive Stock Option - Stock
Appreciation Rights Plan, and (ii) Registration Statement (Form S-8 No. 33-
41508) and related Prospectus pertaining to the Valhi, Inc. 1990 Non-Employee
Director Stock Option Plan.

ARTHUR ANDERSEN LLP

Portland, Oregon,

Exhibit 23.3

<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM VALHI, INC.'S
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1995, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          DEC-31-1995
<PERIOD-START>                             JAN-01-1995
<PERIOD-END>                               DEC-31-1995
<CASH>                                         170,908
<SECURITIES>                                         0
<RECEIVABLES>                                  228,785
<ALLOWANCES>                                     4,972
<INVENTORY>                                    518,304
<CURRENT-ASSETS>                               931,566
<PP                                       1,190,514
<DEPRECIATION>                                 315,827
<TOTAL-ASSETS>                               2,572,213
<CURRENT-LIABILITIES>                          662,336
<BONDS>                                      1,084,284
<COMMON>                                         1,246
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<OTHER-SE>                                     273,045
<TOTAL-LIABILITY-AND-EQUITY>                 2,572,213
<SALES>                                      1,960,810
<TOTAL-REVENUES>                             1,960,810
<CGS>                                        1,426,689
<TOTAL-COSTS>                                1,426,689
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                   665
<INTEREST-EXPENSE>                             126,193
<INCOME-PRETAX>                                110,206
<INCOME-TAX>                                    41,069
<INCOME-CONTINUING>                             68,515
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                    68,515
<EPS-PRIMARY>                                      .60
<EPS-DILUTED>                                        0