SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

  X    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
-----  EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2006

                                       OR

       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
-----  EXCHANGE ACT OF 1934


                         Commission file number 0-28538


                           Titanium Metals Corporation
    ------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


                    Delaware                                13-5630895
--------------------------------------------------    -----------------------
(State or other jurisdiction of incorporation or   (IRS Employer Identification
                  organization)                                No.)



              5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240-2697
-------------------------------------------------------------------------------
                (Address of principal executive offices) (Zip Code)


Registrant's telephone number, including area code:      (972) 233-1700
                                                     ------------------------


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


Indicate by check mark whether the  registrant is large  accelerated  filer,  an
accelerated  filer or a  non-accelerated  filer (as defined in Rule 12b-2 of the
Exchange Act).

Large accelerated filer__ Accelerated filer X Non-accelerated filer__.


Indicate by check mark whether the  registrant is a shell company (as defined by
rule 12b-2 of the Exchange Act).

                           Yes                No        X
                                    --------        --------


Number of shares of common stock outstanding on August 1, 2006: 161,125,557

<PAGE>

                           TITANIUM METALS CORPORATION

                                      INDEX


<TABLE>
<CAPTION>
                                                                                                            Page
                                                                                                            Number

PART I.       FINANCIAL INFORMATION

     Item 1.     Condensed Consolidated Financial Statements

                 Condensed Consolidated Balance Sheets as of June 30, 2006 (unaudited)
<S>                                                                                                           <C>
                     and December 31, 2005................................................................    2

                 Condensed Consolidated Statements of Income for the three and
                     six months ended June 30, 2006 and 2005 (unaudited)..................................    4

                 Condensed Consolidated Statements of Comprehensive Income for the
                     three and six months ended June 30, 2006 and 2005 (unaudited)........................    5

                 Condensed Consolidated Statements of Cash Flows for the six months
                     ended June 30, 2006 and 2005 (unaudited).............................................    6

                 Condensed Consolidated Statement of Changes in Stockholders'
                     Equity for the six months ended June 30, 2006 (unaudited)............................    8

                 Notes to Condensed Consolidated Financial Statements.....................................    9

     Item 2.     Management's Discussion and Analysis of Financial Condition
                     and Results of Operations............................................................   19

     Item 3.     Quantitative and Qualitative Disclosures About Market Risk...............................   31

     Item 4.     Controls and Procedures..................................................................   31

PART II.     OTHER INFORMATION

     Item 1.     Legal Proceedings........................................................................   33

     Item 1A.    Risk Factors.............................................................................   33

     Item 4.     Submission of Matters to a Vote of Security Holders......................................   33

     Item 6.     Exhibits.................................................................................   33
</TABLE>


                                     - 1 -
<PAGE>
                           TITANIUM METALS CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                      (In thousands, except per share data)


<TABLE>
<CAPTION>
                                                                                 June 30,              December 31,
ASSETS                                                                             2006                    2005
                                                                            --------------------    --------------------
                                                                                 (Unaudited)
Current assets:
<S>                                                                         <C>                     <C>
   Cash and cash equivalents                                                $          13,754       $          17,605
   Restricted cash and cash equivalents                                                   146                     146
   Accounts and other receivables, less allowance
      of $1,865 and $1,983, respectively                                              196,758                 142,902
   Inventories                                                                        436,489                 365,696
   Prepaid expenses and other                                                           2,966                   4,486
   Deferred income taxes                                                               12,299                  19,435
                                                                            --------------------    --------------------

       Total current assets                                                           662,412                 550,270

Marketable securities                                                                  50,806                  46,477
Investment in joint ventures                                                           32,613                  25,978
Property and equipment, net                                                           276,401                 252,990
Prepaid pension cost                                                                   25,927                  22,337
Deferred income taxes                                                                   7,025                   8,009
Other                                                                                   1,115                   1,203
                                                                            --------------------    --------------------

       Total assets                                                         $       1,056,299       $         907,264
                                                                            ====================    ====================
</TABLE>





     See accompanying Notes to Condensed Consolidated Financial Statements.
                                     - 2 -
<PAGE>


                           TITANIUM METALS CORPORATION
                CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
                      (In thousands, except per share data)


<TABLE>
<CAPTION>
                                                                                 June 30,              December 31,
LIABILITIES, MINORITY INTEREST AND                                                 2006                    2005
                                                                            --------------------    --------------------
STOCKHOLDERS' EQUITY                                                             (Unaudited)

Current liabilities:
<S>                                                                         <C>                     <C>
   Accounts payable                                                         $          75,221       $          61,457
   Accrued liabilities                                                                 67,271                  75,698
   Customer advances                                                                   12,719                  15,577
   Income taxes payable                                                                10,508                  13,151
   Other                                                                                1,027                     967
                                                                            --------------------    --------------------

       Total current liabilities                                                      166,746                 166,850

Long-term debt                                                                         48,436                  51,359
Accrued OPEB cost                                                                      16,625                  15,580
Accrued pension cost                                                                   62,649                  58,450
Accrued environmental cost                                                              1,948                   1,948
Deferred income taxes                                                                  27,709                  27,445
Debt payable to TIMET Capital Trust I                                                       -                   5,852
Other                                                                                   4,828                   4,089
                                                                            --------------------    --------------------

       Total liabilities                                                              328,941                 331,573
                                                                            --------------------    --------------------

Minority interest                                                                      16,157                  13,523
                                                                            --------------------    --------------------

Stockholders' equity:
  Series A Preferred Stock, $.01 par value; $85,778
   liquidation preference; 4,025 shares authorized; 1,716
   and 2,983 shares issued and outstanding, respectively                               76,210                 132,493
  Common stock, $.01 par value; 200,000 shares
   authorized; 161,084 and 141,930 shares
   issued, respectively                                                                 1,611                   1,419
  Additional paid-in capital                                                          482,311                 400,348
  Retained earnings                                                                   176,913                  66,179
  Accumulated other comprehensive loss                                                (25,844)                (38,271)
                                                                            --------------------    --------------------

         Total stockholders' equity                                                   711,201                 562,168
                                                                            --------------------    --------------------

         Total liabilities, minority interest and
          stockholders' equity                                              $       1,056,299       $         907,264
                                                                            ====================    ====================
</TABLE>

Commitments and contingencies (Note 11)




     See accompanying Notes to Condensed Consolidated Financial Statements.
                                     - 3 -
<PAGE>


                           TITANIUM METALS CORPORATION
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                      (In thousands, except per share data)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                 Three months ended                  Six months ended
                                                                      June 30,                           June 30,
                                                          ---------------------------------- ----------------------------------
                                                               2006               2005            2006               2005
                                                          ---------------    --------------- ---------------    ---------------

<S>                                                       <C>                <C>             <C>                <C>
Net sales                                                 $      300,941     $     183,746   $      587,837     $      338,981
Cost of sales                                                    194,640           135,866          373,216            262,146
                                                          ---------------    --------------- ---------------    ---------------

   Gross margin                                                  106,301            47,880          214,621             76,835

Selling, general, administrative and
 development expense                                              17,365            12,978           32,619             25,339
Equity in earnings of joint ventures                               4,067             1,344            6,325              2,145
Other income (expense), net                                          566               690              366              2,676
                                                          ---------------    --------------- ---------------    ---------------

  Operating income                                                93,569            36,936          188,693             56,317

Interest expense                                                     632               943            1,627              1,617
Other non-operating income (expense), net                         (1,672)           15,426           (1,382)            16,169
                                                          ---------------    --------------- ---------------    ---------------

  Income before income taxes and
   minority interest                                              91,265            51,419          185,684             70,869

Income tax expense (benefit)                                      32,849            13,339           66,104             (9,540)
Minority interest in after tax earnings                            2,243             1,181            4,561              2,105
                                                          ---------------    --------------- ---------------    ---------------

   Net income                                                     56,173            36,899          115,019             78,304

Dividends on Series A Preferred Stock                              1,855             3,298            3,929              6,597
                                                          ---------------    --------------- ---------------    ---------------

   Net income attributable to
     common stockholders                                  $       54,318     $      33,601   $      111,090     $       71,707
                                                          ===============    =============== ===============    ===============

Earnings per share attributable to common stockholders:
     Basic                                                $         0.36     $         0.26  $         0.75     $         0.56
     Diluted                                              $         0.31     $         0.20  $         0.63     $         0.43

Weighted average shares outstanding:
     Basic                                                       152,085            127,941         149,027            127,687
     Diluted                                                     184,101            181,272         183,743            181,067
</TABLE>



     See accompanying Notes to Condensed Consolidated Financial Statements.
                                     - 4 -
<PAGE>


                           TITANIUM METALS CORPORATION
            CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                 (In thousands)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                             Six months ended June 30,
                                                                                      ----------------------------------------
                                                                                            2006                  2005
                                                                                      ------------------    ------------------


<S>                                                                                   <C>                   <C>
Net income                                                                            $      115,019        $       78,304
                                                                                      ------------------    ------------------

Other comprehensive income (loss), net of tax:

   Currency translation adjustment                                                             7,744                (8,110)

   Unrealized gains (losses) on marketable securities                                          4,329                  (167)

   TIMET's share of VALTIMET SAS's unrealized net gains on
    derivative financial instruments qualifying as cash flow hedges                              354                   116
                                                                                      ------------------    ------------------

    Total other comprehensive income (loss)                                                   12,427                (8,161)
                                                                                      ------------------    ------------------

  Comprehensive income                                                                $      127,446        $       70,143
                                                                                      ==================    ==================
</TABLE>












     See accompanying Notes to Condensed Consolidated Financial Statements.
                                     - 5 -



<PAGE>


                           TITANIUM METALS CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                     Six months ended June 30,
                                                                              ----------------------------------------
                                                                                     2006                 2005
                                                                              -------------------   ------------------

Cash flows from operating activities:
<S>                                                                           <C>                   <C>
   Net income                                                                 $       115,019       $        78,304
   Depreciation and amortization                                                       16,852                15,767
   Non-cash impairment of equipment                                                         -                 1,251
   Loss (gain) on disposal of fixed assets                                                 59               (13,655)
   Equity in earnings of joint ventures, net
     of distributions                                                                  (5,244)               (2,145)
   Deferred income taxes                                                                8,672               (18,473)
   Excess tax benefit of stock option exercises                                        (9,552)                    -
   Minority interest, net of tax                                                        4,561                 2,105
   Other, net                                                                               9                   (50)
   Change in assets and liabilities:
     Receivables                                                                      (49,382)              (37,660)
     Inventories                                                                      (63,166)              (53,621)
     Prepaid expenses and other                                                           651                (1,006)
     Accounts payable and accrued liabilities                                           6,756                 9,339
     Customer advances                                                                 (3,482)               23,425
     Income taxes                                                                       6,724                 5,190
     Deferred revenue                                                                  (5,920)                  421
     Accrued OPEB and pension costs                                                     1,045                   408
     Other, net                                                                          (705)                  253
                                                                              -------------------   ------------------
      Net cash provided by operating activities                                        22,897                 9,853
                                                                              -------------------   ------------------

Cash flows from investing activities:
   Capital expenditures                                                               (34,904)              (26,842)
   Purchase of marketable securities                                                        -                (2,223)
   Proceeds from sale of property                                                           -                 1,289
   Other, net                                                                            (660)                  576
                                                                              -------------------   ------------------
       Net cash used in investing activities                                          (35,564)              (27,200)
                                                                              -------------------   ------------------

Cash flows from financing activities:
   Indebtedness:
     Borrowings                                                                       330,517               155,161
     Repayments                                                                      (334,675)             (131,666)
   Dividends paid on Series A Preferred Stock                                          (4,285)               (6,597)
   Dividend paid to minority shareholder                                               (2,994)               (2,216)
   Issuance of common stock                                                            10,591                 1,107
   Excess tax benefit of stock option exercises                                         9,552                     -
   Other, net                                                                            (755)                  (10)
                                                                              -------------------   ------------------
       Net cash provided by financing activities                                        7,951                15,779
                                                                              -------------------   ------------------

Net cash used in operating, investing and financing activities                $        (4,716)      $        (1,568)
                                                                              ===================   ==================
</TABLE>



     See accompanying Notes to Condensed Consolidated Financial Statements.
                                     - 6 -

<PAGE>


                           TITANIUM METALS CORPORATION
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                                 (In thousands)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                     Six months ended June 30,
                                                                              ----------------------------------------
                                                                                    2006                  2005
                                                                              ------------------    ------------------

Cash and cash equivalents:
   Net decrease from:
<S>                                                                           <C>                   <C>
     Operating, investing and financing activities                            $        (4,716)      $       (1,568)
     Effect of exchange rate changes on cash                                              865                 (688)
                                                                              ------------------    ------------------
                                                                                       (3,851)              (2,256)
   Cash and cash equivalents at beginning of period                                    17,605                7,194
                                                                              ------------------    ------------------

   Cash and cash equivalents at end of period                                 $        13,754       $        4,938
                                                                              ==================    ==================


Supplemental disclosures:
   Cash paid for:
     Interest                                                                 $         1,114       $        1,228
     Income taxes, net                                                        $        50,524       $        3,737

   Noncash investing and financing activities:
     Capital lease obligations incurred on certain leases
       entered into for new equipment                                         $           516       $            -
</TABLE>




     See accompanying Notes to Condensed Consolidated Financial Statements.
                                     - 7 -
<PAGE>


                           TITANIUM METALS CORPORATION
       CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                     FOR THE SIX MONTHS ENDED JUNE 30, 2006
                                 (In thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                     Accumulated
                                                          Series A    Additional                        Other
                                  Common        Common   Preferred      Paid-in       Retained      Comprehensive
                                  Shares         Stock     Stock        Capital       Earnings           Loss           Total
                                 ----------  ---------- -----------  ------------    ----------    ---------------    --------

<S>                                <C>       <C>        <C>          <C>             <C>         <C>              <C>
Balance at December 31, 2005       141,930   $   1,419  $  132,493   $   400,348     $  66,179   $      (38,271)  $   562,168
   Net income                            -           -           -              -      115,019                -       115,019
   Other comprehensive
    income                               -           -           -              -            -           12,427        12,427
   Issuance of common stock          2,260          23           -        10,627                              -        10,650
   Conversion of Series A
    Preferred Stock                 16,894         169     (56,283)       61,784             -                -         5,670
   Tax benefit of stock options
    exercised                            -           -           -         9,552             -                -         9,552
   Dividends declared on
    Series A Preferred Stock             -           -           -             -        (4,285)               -        (4,285)
                                 ----------  ---------- -----------  ------------    ----------  ---------------  -------------

Balance at June 30, 2006           161,084   $   1,611  $   76,210   $    482,311    $ 176,913   $      (25,844)  $   711,201
                                 ==========  ========== ===========  ============    ==========  ===============  =============
</TABLE>




     See accompanying Notes to Condensed Consolidated Financial Statements.
                                     - 8 -

<PAGE>
                           TITANIUM METALS CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

Note 1 - Basis of presentation and organization

     Basis of  presentation.  The  unaudited  Condensed  Consolidated  Financial
Statements  contained in this  Quarterly  Report have been  prepared on the same
basis as the audited  Consolidated  Financial Statements in our Annual Report on
Form 10-K for the year ended December 31, 2005 that we filed with the Securities
and Exchange  Commission  ("SEC") on March 24, 2006 (our "2005 Annual  Report").
They include the accounts of Titanium Metals  Corporation and its majority owned
subsidiaries  (collectively  referred  to as "TIMET")  except the TIMET  Capital
Trust I ("Capital Trust"). Unless otherwise indicated, references in this report
to "we",  "us" or "our" refer to TIMET and its  subsidiaries,  taken as a whole.
All  material   intercompany   transactions   and  balances  with   consolidated
subsidiaries  have been eliminated.  In our opinion,  we have made all necessary
adjustments (which include only normal recurring  adjustments) in order to state
fairly, in all material respects, our consolidated  financial position,  results
of operations and cash flows as of the dates and for the periods  presented.  We
have condensed the Consolidated  Balance Sheet at December 31, 2005 contained in
this  Quarterly  Report  as  compared  to  our  audited  Consolidated  Financial
Statements at that date,  and we have condensed or omitted  certain  information
and footnote  disclosures  (including those related to the Consolidated  Balance
Sheet at December 31, 2005) normally included in financial  statements  prepared
in accordance with accounting principles generally accepted in the United States
of America  ("GAAP").  Our results of operations  for the interim  periods ended
June 30, 2006 may not be indicative of our operating  results for the full year.
The Condensed  Consolidated  Financial  Statements  contained in this  Quarterly
Report  should  be read in  conjunction  with  the 2005  Consolidated  Financial
Statements  contained  in our 2005 Annual  Report.  In preparing  our  Condensed
Consolidated  Statements of Cash Flows, any significant capital expenditure with
extended  payment  terms is reflected as a capital  expenditure  included in the
determination  of cash  flows  from  investing  activities  when  paid.  We have
conformed our Condensed  Consolidated Statement of Cash Flows for the six months
ended June 30, 2005 for this,  and as a result,  the amounts  shown in this Form
10-Q for cash flows provided by operating  activities,  capital expenditures and
cash flows used in  investing  activities  for such period are each $8.0 million
lower than previously reported. Our first three fiscal quarters reported are the
approximate  13-week periods ending on the Saturday  generally  nearest to March
31, June 30 and September  30. Our fourth fiscal  quarter and fiscal year always
end on December 31. For  presentation  purposes,  our financial  statements  and
accompanying  notes have been presented as ended on March 31, June 30, September
30 and December 31, as applicable.

     Organization.  At June 30, 2006, Valhi, Inc. and subsidiaries held 35.1% of
our  outstanding  common  stock  and  0.9% of our  6.75%  Series  A  Convertible
Preferred Stock. At June 30, 2006, Contran Corporation held, directly or through
subsidiaries, approximately 92% of Valhi's outstanding common stock. At June 30,
2006,  the Combined  Master  Retirement  Trust  ("CMRT"),  a trust  sponsored by
Contran to permit the  collective  investment by trusts that maintain the assets
of  certain  employee  benefit  plans  adopted by Contran  and  certain  related
companies,  held  9.5%  of our  common  stock.  Substantially  all of  Contran's
outstanding  voting  stock is held by  trusts  established  for the  benefit  of
certain children and grandchildren of Harold C. Simmons, of which Mr. Simmons is
sole trustee,  or is held by Mr. Simmons or persons or other entities related to
Mr.  Simmons.  In  addition,  Mr.  Simmons is the sole trustee of the CMRT and a
member of the trust  investment  committee for the CMRT.  At June 30, 2006,  Mr.
Simmons  directly owned 2.6% of our  outstanding  common stock and Mr.  Simmons'
spouse  owned 93.3% of our  outstanding  Series A Preferred  Stock and a nominal
number of shares of our common stock. Consequently, Mr. Simmons may be deemed to
control each of Contran, Valhi and us.

                                     - 9 -
<PAGE>

     Stock  split.  We  effected  two-for-one  splits  of our  common  stock  on
September 5, 2005,  February 16, 2006 and May 15, 2006.  All share and per share
disclosures  contained in this report have been adjusted for all periods to give
effect to these stock splits.

Recent Accounting Pronouncements

     Share-based payments. On January 1, 2006, we adopted Statement of Financial
Accounting Standards ("SFAS") No. 123 (revised 2004), Share-Based Payment ("SFAS
123R"), which requires all employee share-based payments to employees, including
grants of  employee  stock  options,  to be  accounted  for under the fair value
method and  eliminates  the ability to account for these  instruments  under the
intrinsic value method prescribed by Accounting Principles Board ("APB") Opinion
No. 25,  Accounting  for Stock Issued to Employees,  which was allowed under the
original provisions of SFAS 123, Accounting for Stock-Based Compensation.  Prior
to the  adoption  of SFAS  123R  and as  permitted  by SFAS  123 and  SFAS  148,
Accounting for Stock-Based Compensation Transition and Disclosure, we elected to
follow APB 25 and related  interpretations  in accounting for our employee stock
options and implemented the disclosure-only provisions of SFAS 123 and SFAS 148.

     We adopted  SFAS 123R using the  modified  prospective  method.  Under this
transition  method,  stock  compensation  expense would include the cost for all
share-based payments granted prior to, but not yet vested, as of January 1 2006,
as well as those share-based  payments granted  subsequent to December 31, 2005.
All of our  outstanding  options were fully vested as of our adoption  date, and
all compensation  costs previously  measured under SFAS 123 have been previously
reported in our pro forma disclosures.  Our adoption of SFAS 123R did not have a
material effect on our consolidated financial position or results of operations.
If we were to grant a  significant  number of options or modify,  repurchase  or
cancel existing  options in the future,  we could recognize  material amounts of
compensation  cost  related  to  such  options  in  our  consolidated  financial
statements.  If we had accounted for our  stock-based  employee  compensation in
accordance with the fair value-based  recognition provisions of SFAS 123 for all
awards granted  subsequent to January 1, 1995, there would have been no material
effect on our reported net income and related per share  amounts,  for the three
and six months ended June 30, 2005.  Also upon  adoption of SFAS 123R,  we began
reflecting the excess tax benefits from the exercise of stock-based compensation
awards in cash flows from financing activities.  SFAS 123R also requires certain
expanded disclosures regarding share-based  compensation,  and we provided these
expanded disclosures in our 2005 Annual Report.

     Inventory costs. On January 1, 2006, we adopted SFAS 151,  Inventory Costs,
an amendment  of ARB No. 43,  Chapter 4. SFAS 151  clarifies  the types of costs
that should be expensed  rather than  capitalized  as inventory.  This statement
also clarifies the  circumstances  under which fixed  overhead costs  associated
with  operating   facilities   involved  in  inventory   processing   should  be
capitalized.  Our  adoption  of SFAS 151 did not have a  material  impact on our
consolidated  financial  position  or  results  of  operations  as our  existing
production cost accounting already conforms to the requirements of SFAS 151.

     Purchases and sales of inventory  with the same  counterparty.  On April 1,
2006, we adopted Emerging Issues Task Force ("EITF") Issue 04-13, Accounting for
Purchases and Sales of Inventory with the Same  Counterparty.  The EITF requires
inventory  purchases and sales  transactions  with the same  counterparty  to be
combined  for  financial  reporting  purposes  if  they  were  entered  into  in
contemplation of each other.  The EITF provided  indicators to be considered for
purposes  of  determining   whether  such   transactions  are  entered  into  in
contemplation  of each other.  Guidance was also  provided on the  circumstances
under which nonmonetary  exchanges of inventory within the same line of business
should be  recognized  at fair value.  The adoption of EITF 04-13 did not have a
material impact on our consolidated financial position or results of operations.

                                     - 10 -

<PAGE>

     Uncertain tax positions. In the second quarter of 2006 the FASB issued FASB
Interpretation  ("FIN") No. 48,  Accounting for Uncertain Tax  Positions,  which
will become  effective for us on January 1, 2007.  FIN 48 clarifies when and how
much of a benefit we can recognize in our consolidated  financial statements for
certain positions taken in our income tax returns under SFAS 109, Accounting for
Income  Taxes,  and  enhances  the  disclosure  requirements  for our income tax
policies  and  reserves.  Among  other  things,  FIN 48  will  prohibit  us from
recognizing   the  benefits  of  a  tax   position   unless  we  believe  it  is
more-likely-than-not   our  position  will  prevail  with  the   applicable  tax
authorities and limits the amount of the benefit to the largest amount for which
we believe  the  likelihood  of  realization  is greater  than 50%.  FIN 48 also
requires  companies to accrue  penalties and interest on the difference  between
tax  positions  taken on their tax returns and the amount of benefit  recognized
for  financial  reporting  purposes  under  the new  standard.  We will  also be
required to classify  any future  reserves  for  uncertain  tax  positions  in a
separate  current or  noncurrent  liability,  depending on the nature of the tax
position.  We are currently  evaluating the impact of FIN 48 on our consolidated
financial statements.

Note 2 - Inventories

<TABLE>
<CAPTION>
                                                                                June 30,              December 31,
                                                                                  2006                    2005
                                                                          ---------------------    -------------------
                                                                                        (In thousands)

<S>                                                                       <C>                      <C>
Raw materials                                                             $          115,655       $        89,956
Work-in-process                                                                      209,704               169,856
Finished products                                                                     75,992                73,395
Inventory consigned to customers                                                      18,208                20,000
Supplies                                                                              16,930                12,489
                                                                          ---------------------    -------------------

         Total inventories                                                $          436,489       $       365,696
                                                                          =====================    ===================
</TABLE>

Note 3 - Marketable securities

     The following  table  summarizes our  marketable  securities as of June 30,
2006 and December 31, 2005:

<TABLE>
<CAPTION>
                                                            June 30, 2006                   December 31, 2005
                                                    ------------------------------    ------------------------------
                                                                        Market                            Market
              Marketable security                      Shares            Value           Shares            Value
------------------------------------------------    --------------    ------------    --------------   -------------
                                                                        (Dollars in thousands)

<S>                                                    <C>            <C>                <C>           <C>
CompX International, Inc. ("CompX") (1)                2,696,420      $    48,266        2,696,420     $    43,197
NL Industries, Inc. ("NL")                               222,100            2,388          222,100           3,129
Kronos Worldwide, Inc. ("Kronos")                          5,203              152            5,203             151
                                                                      ------------                     -------------

         Total marketable securities                                  $    50,806                      $   46,477
                                                                      ============                     =============

--------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)  We directly  held 483,600  shares of CompX as of June 30, 2006 and December
     31, 2005. The remaining 2,212,800 shares are held through CompX Group Inc.

     As of June 30, 2006 and December 31, 2005,  the aggregate cost basis of our
marketable  securities  was $36.9 million.  We recognized an unrealized  gain of
$4.3  million  (net of taxes)  for the six  months  ended  June 30,  2006 and an
unrealized  loss of $0.2 (net of tax benefits) for the six months ended June 30,
2005 in  stockholders'  equity  as a  component  of other  comprehensive  income
(loss).

                                     - 11 -
<PAGE>

Note 4 - Property and equipment
<TABLE>
<CAPTION>
                                                                                 June 30,              December 31,
                                                                                   2006                    2005
                                                                            --------------------    ------------------
                                                                                         (In thousands)

<S>                                                                         <C>                     <C>
Land and improvements                                                       $           8,808       $         8,922
Buildings and improvements                                                             38,094                37,259
Information technology systems                                                         64,294                61,175
Manufacturing equipment and other                                                     363,478               348,080
Construction in progress                                                               54,087                31,488
                                                                            --------------------    ------------------

Total property and equipment                                                          528,761               486,924
Less accumulated depreciation                                                         252,360               233,934
                                                                            --------------------    ------------------

         Total property and equipment, net                                  $         276,401       $       252,990
                                                                            ====================    ==================
</TABLE>

Note 5 - Accrued liabilities
<TABLE>
<CAPTION>
                                                                                 June 30,              December 31,
                                                                                   2006                    2005
                                                                           ---------------------    ------------------
                                                                                         (In thousands)

<S>                                                                        <C>                      <C>
OPEB cost                                                                  $           2,093        $         2,181
Pension cost                                                                           5,739                  5,353
Payroll and vacation                                                                   6,251                  6,227
Incentive compensation                                                                10,758                 20,091
Other employee benefits                                                               13,256                  9,938
Deferred revenue                                                                       8,617                 14,525
Environmental costs                                                                      978                  1,718
Taxes, other than income                                                               7,079                  5,318
Other                                                                                 12,500                 10,347
                                                                           ---------------------    ------------------

         Total accrued liabilities                                         $          67,271        $        75,698
                                                                           =====================    ==================
</TABLE>

Note 6 - Bank debt and capital lease obligations

     On February 17, 2006, we entered into a new $175 million  long-term  credit
agreement, replacing the previous U.S. credit agreement terminated on that date.
We incurred $0.7 million of financing costs related to this new credit agreement
that were deferred and are being amortized over the five-year term of the credit
agreement. As of June 30, 2006, the weighted average interest rate on borrowings
outstanding  under our U.S.  credit  agreement  was 6.1% and 5.6% under our U.K.
credit facility.


                                     - 12 -
<PAGE>

<TABLE>
<CAPTION>
                                                                                 June 30,           December 31, 2005
                                                                                   2006
                                                                           ---------------------    ------------------
                                                                                         (In thousands)

Long-term debt:
<S>                                                                        <C>                      <C>
  U.S. credit facility                                                     $          45,173        $        40,255
  U.K. credit facility                                                                 3,263                 11,104
                                                                           ---------------------    ------------------

         Total long-term debt                                              $          48,436        $        51,359
                                                                           =====================    ==================

Capital lease obligations:
  Current                                                                  $             196        $            19
  Non-current                                                                            461                    138
                                                                           ---------------------    ------------------

         Total capital lease obligations                                   $             657        $           157
                                                                           =====================    ==================
</TABLE>

     As of June 30, 2006,  we had $4.1 million of letters of credit  outstanding
under our U.S.  credit  facility  required by various  utilities and  government
entities for  performance and insurance  guarantees,  and we had $3.7 million of
letters of credit outstanding under our European credit facilities as collateral
under certain inventory purchase  contracts.  These letters of credit reduce our
borrowing  availability  under  our  credit  facilities.  The  amount we show as
outstanding  under our U.S.  credit  facility  at June 30, 2006  includes  $10.2
million of outstanding  checks.  GAAP requires us to classify these  outstanding
checks as borrowings under this facility.  Our borrowing  availability under our
U.S. and European  credit  facilities,  including the effect of our  outstanding
checks, was $179.7 million as of June 30, 2006.

Note 7 - Capital Trust

     Prior to March 3, 2006,  the  Capital  Trust was our  wholly-owned  finance
subsidiary that issued our 6.625% mandatorily  redeemable  convertible preferred
securities,  beneficial unsecured  convertible  securities ("BUCS"). On March 3,
2006, we called all of the outstanding BUCS for redemption. The redemption price
equaled 100.6625% of the $50.00 liquidation  amount per BUCS, or $50.3313,  plus
accrued  distributions  to the March  24,  2006  redemption  date of the BUCS of
$0.2116  per BUCS.  Subsequent  to March 3,  2006 and  through  March 20,  2006,
substantially  all of the 113,400  outstanding  BUCS were converted into 607,356
shares of our common stock,  and a nominal number of BUCS were redeemed for cash
on  March  24,  2006.  Subsequently,   the  Capital  Trust  was  dissolved  and,
accordingly,  our  investment in the common  securities of the Capital Trust was
reduced to zero.


                                     - 13 -
<PAGE>

Note 8 - Employee benefits

     Defined benefit pension plans.  The components of the net periodic  pension
expense are set forth below:

<TABLE>
<CAPTION>
                                                      Three months ended                  Six months ended
                                                           June 30,                           June 30,
                                               ---------------------------------    ------------------------------
                                                    2006               2005             2006             2005
                                               ----------------    -------------    -------------    -------------
                                                                         (In thousands)

<S>                                            <C>                 <C>              <C>              <C>
Service cost                                   $         1,125     $        940     $     2,222      $      1,897
Interest cost                                            3,436            3,462           6,804             6,952
Expected return on plan assets                          (4,556)          (3,756)         (9,040)           (7,547)
Amortization of net losses                                 811            1,229           1,599             2,454
Amortization of unrecognized prior
 service cost                                              139              139             278               278
                                               ----------------    -------------    -------------    -------------

  Total pension expense                        $           955     $      2,014     $     1,863      $      4,034
                                               ================    =============    =============    =============
</TABLE>

     We contributed an aggregate of $4.6 million to our defined  benefit pension
plans during the first six months of 2006, and we expect to make additional cash
contributions of approximately $4.6 million to our defined benefit pension plans
during the remaining six months of 2006.

     Postretirement benefits other than pensions ("OPEB"). The components of net
OPEB expense are set forth below:

<TABLE>
<CAPTION>
                                                    Three months ended                   Six months ended
                                                          June 30,                            June 30,
                                               -------------------------------    -------------------------------
                                                   2006              2005             2006              2005
                                               --------------    -------------    --------------    -------------
                                                                         (In thousands)

<S>                                            <C>               <C>              <C>               <C>
Service cost                                   $        251      $        160     $        426      $        331
Interest cost                                           490               359              899               826
Amortization of unrecognized prior
 service cost                                           474              (116)             358              (232)
Amortization of net losses                             (116)              166              117               490
                                               --------------    ------------- -- --------------    -------------

  Total OPEB expense                           $      1,099      $        569     $      1,800      $      1,415
                                               ==============    =============    ==============    =============
</TABLE>


                                     - 14 -
<PAGE>


Note 9 - Other income and expense

<TABLE>
<CAPTION>
                                                           Three months ended                   Six months ended
                                                                 June 30,                           June 30,
                                                      -------------------------------    -------------------------------
                                                          2006             2005              2006             2005
                                                      -------------    --------------    -------------    --------------
                                                                               (In thousands)
Other operating income (expense):
<S>                                                   <C>              <C>               <C>              <C>
   Settlement of customer claim                       $          -     $          -      $          -     $      1,800
   Boeing take-or-pay                                            -              444                 -              444
   Other, net                                                  566              246               366              432
                                                      -------------    --------------    -------------    --------------

         Total other operating income, net            $        566     $        690      $        366     $      2,676
                                                      =============    ==============    =============    ==============

Other non-operating income (expense):
   Dividends and interest                             $        711     $        462      $      1,455     $        949
   Gain on sale of property                                      -           13,881                 -           13,881
   Foreign exchange gain (loss), net                        (1,104)           1,272            (1,495)           1,532
   Surety bond guarantee                                    (1,332)               -            (1,332)             (40)
   Other, net                                                   53             (189)              (10)            (153)
                                                      -------------    --------------    -------------    --------------

         Total other non-operating income
            (expense), net                            $     (1,672)    $     15,426      $     (1,382)    $     16,169
                                                      =============    ==============    =============    ==============
</TABLE>

     During the second  quarter of 2006, we accrued an  additional  $1.3 million
for a change in estimate of the aggregate  liability  for worker's  compensation
bonds issued on behalf of a former subsidiary, Freedom Forge Corporation.

Note 10 - Income taxes
<TABLE>
<CAPTION>
                                                                                     Six months ended June 30,
                                                                              ----------------------------------------
                                                                                    2006                  2005
                                                                              ------------------    ------------------
                                                                                          (In thousands)

<S>                             <C>                                           <C>                   <C>
Expected income tax expense, at 35%                                           $          64,990      $       24,804
Non-U.S. tax rates                                                                         (935)               (811)
Incremental tax on earnings of non-U.S. group affiliates                                    117                   -
U.S. state income taxes, net                                                              3,228                 472
Dividends received deduction                                                               (192)               (110)
Change in state income tax law                                                                -                 550
Tax on repatriation of foreign earnings                                                       -                 998
Adjustment of deferred income tax asset valuation allowance                                   -             (35,592)
Domestic manufacturing credit                                                              (986)                  -
Other, net                                                                                 (118)                149
                                                                              ------------------    ------------------

         Total income tax expense (benefit)                                   $          66,104     $        (9,540)
                                                                              ==================    ==================
</TABLE>

     At June 30, 2006, we had a capital loss  carryforward  of $73.0 million for
U.S.  federal  income tax purposes  that expires in 2008.  We have  recognized a
deferred income tax asset  valuation  allowance for the majority of this capital
loss carryforward.

                                     - 15 -
<PAGE>


     In October  2004,  the American  Jobs Creation Act of 2004 was enacted into
law. The new law provides for a special deduction from U.S. taxable income equal
to a specified  percentage of a U.S.  company's  qualified  income from domestic
manufacturing  activities  (as defined).  Our provision for income taxes for the
first six months of 2006 includes a tax benefit of $1.0 million  related to such
special  deduction  and no tax  benefit on our income tax  provision  during the
first half of 2005.

Note 11 - Commitments and contingencies

     Environmental  matters.  We are continuing  assessment work with respect to
our active plant site in Henderson, Nevada. As of June 30, 2006, we have accrued
$2.2 million  representing our estimate of the probable costs for remediation of
this site.  We expect  these  accrued  expenses to be paid over the  remediation
period  of up to  thirty  years.  We  estimate  the  upper  end of the  range of
reasonably possible costs related to this matter, including the current accrual,
to be approximately $4.4 million.

     We accrue liabilities related to environmental remediation obligations when
estimated  future costs are probable and  estimable.  We evaluate and adjust our
estimates  as  additional  information  becomes  available  or as  circumstances
change. Estimated future costs are not discounted to their present value. In the
future, if the standards or requirements under environmental laws or regulations
become more stringent, if our testing and analytical procedures at our operating
facilities identify  additional  environmental  remediation,  or if we determine
that we are responsible for the remediation of hazardous substance contamination
at other  sites,  then we may incur  additional  costs in excess of our  current
estimates.  We do not know if actual costs will exceed our current estimates, if
additional sites or matters will be identified  which require  remediation or if
the estimated  costs  associated  with  previously  identified  sites  requiring
environmental remediation will become estimable in the future.

     Legal  proceedings.  We are also involved in various  other  environmental,
contractual,  product liability,  patent (or intellectual property),  employment
and other claims and disputes  incidental to our present and former  businesses.
In certain cases, we have insurance coverage for these items, although we do not
currently   expect  any   additional   material   insurance   coverage  for  our
environmental  claims.  We currently  believe the  disposition of all claims and
disputes,  individually or in the aggregate,  should not have a material adverse
effect  on our  consolidated  financial  position,  results  of  operations  and
liquidity beyond the accruals already provided for.

     See our 2005 Annual Report for additional  information  concerning  certain
legal and environmental matters, commitments and contingencies.


                                     - 16 -
<PAGE>


Note 12 - Earnings per share

     Basic  earnings  per  share is  based on the  weighted  average  number  of
unrestricted common shares outstanding during each period.  Diluted earnings per
share attributable to common stockholders reflects the dilutive effect of common
stock options,  restricted stock and the assumed  conversion of our BUCS and the
Series A Preferred Stock, if applicable.  A reconciliation  of the numerator and
denominator  used in the calculation of basic and diluted  earnings per share is
presented below:

<TABLE>
<CAPTION>
                                                     Three months ended June 30,              Six months ended
                                                                                                  June 30,
                                                    -------------------------------    -------------------------------
                                                        2006              2005             2006              2005
                                                    --------------    -------------    --------------    -------------
                                                                              (In thousands)
Numerator:
  Net income attributable to common
<S>                                                 <C>               <C>              <C>               <C>
     stockholders (1)                               $     54,318      $     33,601     $    111,090      $     71,707
  Interest expense on BUCS, net of tax                         -                83               42               174
  Dividends on Series A
     Preferred Stock                                       1,855             3,298            3,929             6,597
                                                    --------------    -------------    --------------    -------------

  Diluted net income attributable
     to common stockholders                         $     56,173      $     36,982     $    115,061      $     78,478
                                                    ==============    =============    ==============    =============

Denominator:
  Average common shares outstanding                      152,085           127,941          149,027           127,687
  Average dilutive stock options
     and restricted stock (2)                                318               590              500               639
  BUCS                                                         -               620              135               620
  Series A Preferred Stock                                31,698            52,121           34,081            52,121
                                                    --------------    -------------    --------------    -------------

  Diluted shares                                         184,101           181,272          183,743           181,067
                                                    ==============    =============    ==============    =============
----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)  Net income attributable to common stockholders for the three and six months
     ended  June 30,  2006 and 2005  included  $0.5  million  and $0.7  million,
     respectively, of undeclared dividends on our Series A Preferred Stock.
(2)  Stock option conversion excludes  anti-dilutive  shares of 2,020 during the
     three and six months ended June 30, 2005.

Note 13 - Business segment information

     Our production  facilities are located in the U.S., U.K., France and Italy,
and our products are sold  throughout  the world.  Our Chief  Executive  Officer
functions as our chief operating decision maker ("CODM"),  and the CODM receives
consolidated  financial  information  about  us. He makes  decisions  concerning
resource  utilization  and  performance  analysis on a  consolidated  and global
basis. We have one reportable  segment,  our worldwide "Titanium melted and mill
products"  segment.  Sales,  gross  margin,   operating  income,  inventory  and
receivables   are  the  key  management   measures  used  to  evaluate   segment
performance.  The following table provides segment  information  supplemental to
our Condensed Consolidated Financial Statements:

                                     - 17 -
<PAGE>

<TABLE>
<CAPTION>
                                               Three months ended                   Six months ended
                                                     June 30,                            June 30,
                                          -------------------------------    -------------------------------
                                              2006              2005             2006              2005
                                          --------------    -------------    --------------    -------------
                                                  (Dollars in thousands, except selling price data)
Titanium melted and mill products:
<S>                                       <C>               <C>              <C>               <C>
   Melted product net sales               $     59,288      $     23,780     $    106,377      $     45,844
   Mill Product net sales                      207,188           131,763          412,088           245,686
   Other product sales                          34,465            28,203           69,372            47,451
                                          --------------    -------------    --------------    -------------

         Total net sales                  $    300,941      $    183,746     $    587,837      $    338,981
                                          ==============    =============    ==============    =============

Melted product shipments:
   Volume (metric tons)                          1,550             1,355            3,005             2,770
   Average selling price (per kilogram)   $      38.25      $      17.55     $      35.40      $      16.55

Mill product shipments:
   Volume (metric tons)                          3,750             3,340            7,425             6,440
   Average selling price (per kilogram)   $      55.25      $      39.45     $      55.50      $      38.15
</TABLE>





                                     - 18 -
<PAGE>
Item 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     The statements  contained in this Quarterly Report on Form 10-Q ("Quarterly
Report")  that  are  not  historical  facts,  including,  but  not  limited  to,
statements found in Management's  Discussion and Analysis of Financial Condition
and  Results  of  Operations  ("MD&A"),  are  forward-looking   statements  that
represent  management's  beliefs and  assumptions  based on currently  available
information.  Forward-looking  statements can generally be identified by the use
of words  such as  "believes,"  "intends,"  "may,"  "will,"  "looks,"  "should,"
"could," "anticipates," "expects" or comparable terminology or by discussions of
strategies  or trends.  Although we believe that the  expectations  reflected in
such  forward-looking  statements  are  reasonable,  we do  not  know  if  these
expectations  will prove to be correct.  Such statements by their nature involve
substantial risks and  uncertainties  that could  significantly  affect expected
results.  Actual future results could differ  materially from those described in
such forward-looking  statements, and we disclaim any intention or obligation to
update or revise  any  forward-looking  statements,  whether  as a result of new
information,  future  events or  otherwise.  Among the factors  that could cause
actual results to differ materially are the risks and uncertainties discussed in
this  Quarterly  Report,  including  risks and  uncertainties  in those portions
referenced above and those described from time to time in our other filings with
the SEC which include, but are not limited to, the cyclicality of the commercial
aerospace industry, the performance of aerospace  manufacturers and us under our
long-term  agreements,   the  renewal  of  certain  long-term  agreements,   the
difficulty in  forecasting  demand for titanium  products,  global  economic and
political  conditions,  global  productive  capacity  for  titanium,  changes in
product pricing and costs, the impact of long-term contracts with vendors on our
ability to reduce or increase  supply,  the  possibility  of labor  disruptions,
fluctuations  in currency  exchange  rates,  fluctuations in the market price of
marketable securities,  uncertainties  associated with new product or new market
development,  the  availability  of raw materials  and services,  changes in raw
material  prices and other operating costs  (including  energy costs),  possible
disruption of business or increases in the cost of doing business resulting from
terrorist  activities or global conflicts,  competitive  products and strategies
and other risks and uncertainties. Should one or more of these risks materialize
(or the  consequences  of such a development  worsen),  or should the underlying
assumptions  prove incorrect,  actual results could differ materially from those
forecasted or expected.

     Overview.  Titanium Metals Corporation is a vertically  integrated producer
of  titanium  sponge,  melted  products  and a  variety  of  mill  products  for
commercial aerospace,  military,  industrial and other applications.  We are the
only  titanium  producer with major  production  facilities in both the U.S. and
Europe, the world's principal titanium markets.

     The following  discussion and analysis  should be read in conjunction  with
our Condensed  Consolidated  Financial  Statements  and related  notes  included
elsewhere  in  this  Quarterly  Report  and  with  our  Consolidated   Financial
Statements and the information  under the heading  "Management's  Discussion and
Analysis of Financial  Condition and Results of Operations,"  which are included
in our 2005 Annual Report.

     We effected  two-for-one  splits of our common  stock on September 5, 2005,
February  16,  2006  and May 15,  2006.  All  share  and per  share  disclosures
contained  herein  have been  adjusted  for all  periods to give effect to these
stock splits.

                                     - 19 -
<PAGE>
RESULTS OF OPERATIONS

Quarter ended June 30, 2006 compared to quarter ended June 30, 2005

     Summarized  financial  information.  The following table summarizes certain
information  regarding our results of operations for the three months ended June
30, 2006 and 2005.  Our reported  average  selling  prices are a  reflection  of
actual  selling  prices  received by us after the  effects of currency  exchange
rates, customer and product mix, and other related factors realized throughout a
given period.  Consequently,  changes in average  selling  prices from period to
period will be impacted by changes in actual prices and these other factors. The
percentage change information  presented in the table represent changes from the
respective prior year.

<TABLE>
<CAPTION>
                                                                Three months ended
                                                                     June 30,
                                                         ---------------------------------
                                                             2006               2005             Change %
                                                         --------------    ---------------    ---------------
                                                          (Dollars in thousands, except
                                                               selling price data)
Net sales:
<S>                                                      <C>               <C>                     <C>
   Melted products                                       $    59,288       $     23,780           +149%
   Mill products                                             207,188            131,763            +57%
   Other products                                             34,465             28,203            +22%
                                                         --------------    ---------------

   Total net sales                                           300,941            183,746            +64%

Cost of sales                                               (194,640)          (135,866)           +43%
                                                         --------------    ---------------

Gross margin                                                 106,301             47,880           +122%

Selling, general, administrative and
   development expense                                       (17,365)           (12,978)           +34%
Other operating income and expenses, net                       4,633              2,034           +128%
                                                         --------------    ---------------

Operating income                                         $    93,569       $     36,936           +153%
                                                         ==============    ===============

Gross margin percentage                                          35%                26%             +9 pts
Operating income percentage                                      31%                20%            +11 pts

Melted product shipments:
   Volume (metric tons)                                        1,550              1,355            +14%
   Average selling price (per kilogram)                  $     38.25       $      17.55           +118%

Mill product shipments:
   Volume (metric tons)                                        3,750              3,340            +12%
   Average selling price (per kilogram)                  $     55.25       $      39.45            +40%
</TABLE>

     Net sales. We experienced  significant  growth during the second quarter of
2006,  as net sales  increased  64%, or $117.2  million,  compared to the second
quarter  of  2005.  We,  and the  industry  as a  whole,  have  benefitted  from
significantly  increased  demand for titanium from the commercial  aerospace and
military  sectors  that has  driven  melted and mill  titanium  prices to record
levels.  As a result of these market factors,  average selling prices for melted
and mill  products  have  increased  118% and 40%,  respectively,  over the same
period  in  the  prior  year.  In  addition  to the  improved  pricing  we  have
experienced,  we delivered  14% more melted  products and 12% more mill products
compared to the 2005  period.  Our higher sales volume was a result of increased
demand across all market  sectors.  Further,  other product sales  increased 22%
compared to the prior year  period due  principally  to improved  demand for our
fabrication  products.

                                     - 20 -
<PAGE>

     As a result of current and future  outlook for demand for our products,  we
are currently  producing at approximately 90% of capacity at the majority of our
facilities and therefore have initiated several  strategic  capital  improvement
projects at our existing  facilities that will add capacity to capitalize on the
anticipated increase in demand, as further discussed below.

     Cost of sales.  Our cost of raw  materials,  primarily  sponge  and  scrap,
increased  compared to the prior year due to increased  industry-wide  demand as
well as demand in  non-titanium  markets that use titanium as an alloying agent.
Additionally, we have experienced increasing rutile and energy costs compared to
the prior year,  but we have  experienced a decrease in our  non-titanium  alloy
costs in 2006 compared to 2005. To support the continued growth of our business,
we increased our  manufacturing  headcount by approximately  130 compared to the
2005  period.  Somewhat  offsetting  these  cost  increases,  we were  favorably
impacted by improved plant operating rates,  which increased to 91% of practical
capacity in the second quarter of 2006 from 80% in the second quarter of 2005.

     Gross margin.  During the second quarter 2006,  gross margin increased 122%
to $106.3  million  compared  to the same period in 2005,  and our gross  margin
percentage increased to 35% in the second quarter of 2006 from 26% in the second
quarter of 2005. The improvement  was generally  driven by the increase in sales
prices partially offset by increased cost of goods sold.

     Operating  income.  Our second quarter of 2006 operating  income  increased
153% to $93.6  million  compared to the same period in 2005,  and our  operating
income percentage  increased to 31% in the first quarter of 2006 from 20% in the
second quarter of 2005. The increase in operating  income is driven primarily by
increases in gross margin.

     Our selling,  general,  administrative  and development  expense  ("SGA&D")
during  the second  quarter  of 2006  increased  $4.4  million to $17.4  million
compared to the same period of 2005 primarily due to (i) $3.9 million of travel,
relocation and severance  expenses incurred in connection with the relocation of
our headquarters to Dallas, Texas and our operational management and information
technology group to Exton, Pennsylvania and (ii) increased employee compensation
as a result of additional personnel to support expansion of our business.

     Partially  offsetting the increase in SGA&D, our other operating income for
the second quarter of 2006  increased  $2.6 million to $4.6 million  compared to
the prior year  period due  primarily  to an  increase  in equity in earnings in
VALTIMET (our minority owned welded tube joint  venture).  Equity in earnings in
VALTIMET  increased  to $4.1 million in the second  quarter of 2006  compared to
$1.3  million in the same  period of 2005 due to stronger  demand and  increased
pricing in the industrial tubing market.

     Interest  expense.  In March 2006, we redeemed all of the outstanding  BUCS
issued by the Capital Trust for our common shares or cash, and the Capital Trust
was dissolved.  As a result we incurred no interest expense  associated with the
Capital  Trust  during  the  second  quarter of 2006  compared  to $0.7  million
incurred  in the second  quarter of 2005.  This  decrease  in  interest  expense
related to the Capital Trust was partially offset by additional interest expense
on bank debt.

     Net  other  non-operating  income  and  expense.  We  recognized  net other
non-operating  expense of $1.7 million in the second quarter of 2006 compared to
net other non-operating income of $15.4 million in the second quarter of 2005.

     During the second  quarter of 2006, we accrued an  additional  $1.3 million
for a change in estimate of the aggregate  liability  for worker's  compensation
bonds issued on behalf of a former subsidiary, Freedom Forge Corporation.

                                     - 21 -
<PAGE>

     Additionally,  during the second quarter of 2006, the U.S.  dollar weakened
relative to British  pound  sterling  and euro,  which  resulted in net currency
transaction  losses of $1.1  million.  In  contrast,  we realized  net  currency
transaction gains of $1.3 million during the second quarter of 2005, as the U.S.
dollar strengthened relative to the British pound sterling and the euro.

     During the second  quarter of 2005,  we realized a gain of $13.9 million on
the sale of certain property adjacent to our Henderson, Nevada plant site.

     Income taxes. We incurred income tax expense of $32.8 million in the second
quarter of 2006  compared to $13.3  million in the same  period  last year.  The
increase in income tax expense in 2006 is primarily  due to  increased  earnings
and the $5.7 million reversal of the valuation allowance in 2005 attributable to
our U.S. and U.K. deferred income tax assets.

     In October  2004,  the American  Jobs Creation Act of 2004 was enacted into
law. The new law provides for a special deduction from U.S. taxable income equal
to a specified  percentage of a U.S.  company's  qualified  income from domestic
manufacturing  activities  (as defined).  Our provision for income taxes for the
three months ended June 30, 2006 includes a tax benefit of $0.4 million  related
to such  special  deduction,  and we  included  no tax benefit on our income tax
provision  for the three months ended June 30, 2005.  For the three months ended
June 30,  2006,  our  income tax rate did not vary  significantly  from the U.S.
statutory rate.

     Minority  interest.  Minority  interest  relates  principally  to Compagnie
Europeenne du Zirconium-CEZUS,  S.A. ("CEZUS"),  the 30% holder of our 70%-owned
French subsidiary, TIMET Savoie, S.A. ("TIMET Savoie"). Minority interest during
the second quarter of 2006  increased over the comparable  period in 2005 due to
increased net income at TIMET Savoie.

     Dividends  on Series A  Preferred  Stock.  When,  as and if declared by our
board of  directors,  holders of our Series A  Preferred  Stock are  entitled to
receive  cumulative  cash  dividends  at the rate of 6.75% of the $50 per  share
liquidation  preference per annum per share  (equivalent to $3.375 per annum per
share).  We paid  dividends of $2.1 million to holders of the Series A Preferred
Stock  during the three  months  ended June 30,  2006,  compared to $3.3 million
during the three months ended June 30, 2005.

     Shares of our Series A Preferred Stock are convertible, at any time, at the
option of the holder thereof,  into thirteen and one-third  shares of our common
stock,  subject to adjustment in certain events. The Series A Preferred Stock is
not mandatorily  redeemable,  but is redeemable at our option after September 1,
2007.  During  the  second  quarter  of 2006,  certain  holders  of the Series A
Preferred  Stock  converted an  aggregate of 0.7 million  shares of our Series A
Preferred Stock into 9.7 million shares of our common stock.


                                     - 22 -
<PAGE>
First six months of 2006 compared to first six months of 2005

     Summarized  financial  information.  The following table summarizes certain
information  regarding our results of  operations  for the six months ended June
30, 2006 and 2005.

<TABLE>
<CAPTION>
                                                                 Six months ended
                                                                     June 30,
                                                         ---------------------------------
                                                              2006              2005             Change %
                                                         ---------------    --------------    ----------------
                                                          (Dollars in thousands, except
                                                               selling price data)
Net sales:
<S>                                                      <C>                <C>                    <C>
   Melted products                                       $    106,377       $    45,844           +132%
   Mill products                                              412,088           245,686            +68%
   Other products                                              69,372            47,451            +46%
                                                         ---------------    --------------

   Total net sales                                            587,837           338,981            +73%

Cost of sales                                                (373,216)         (262,146)           +42%
                                                         ---------------    --------------

Gross margin                                                  214,621            76,835           +179%

Selling, general, administrative and
   development expense                                        (32,619)          (25,339)           +29%
Other operating income and expenses, net                        6,691             4,821            +39%
                                                         ---------------    --------------

Operating income                                         $    188,693       $    56,317           +235%
                                                         ===============    ==============

Gross margin percentage                                           37%               23%            +14 pts
Operating income percentage                                       32%               17%            +15 pts


Melted product shipments:
   Volume (metric tons)                                         3,005             2,770             +8%
   Average selling price (per kilogram)                  $      35.40       $     16.55           +114%

Mill product shipments:
   Volume (metric tons)                                         7,425             6,440            +15%
   Average selling price (per kilogram)                  $      55.50       $     38.15            +45%
</TABLE>

     Net sales. We experienced significant growth during the first six months of
2006, as net sales increased 73%, or $248.9  million,  compared to the first six
months  of  2005.  We,  and  the  industry  as a  whole,  have  benefitted  from
significantly  increased  demand for titanium from the commercial  aerospace and
military  sectors  that has  driven  melted and mill  titanium  prices to record
levels.  As a result of these market factors,  average selling prices for melted
and mill  products  have  increased  114% and 45%,  respectively,  over the same
period  in  the  prior  year.  In  addition  to the  improved  pricing  we  have
experienced,  we have  delivered  8% more  melted  products  and 15%  more  mill
products  compared to the 2005  period.  Our higher sales volume was a result of
increased  demand  across all  market  sectors.  Further,  other  product  sales
increased  46%  compared  to the prior year period due  principally  to improved
demand for our fabrication products.

     As a result of current and future  outlook for demand for our products,  we
are currently  producing at approximately 90% of capacity at the majority of our
facilities and therefore have initiated several  strategic  capital  improvement
projects at our existing  facilities that will add capacity to capitalize on the
anticipated increase in demand, as further discussed below.

                                     - 23 -

<PAGE>

     Cost of sales.  Our cost of raw  materials,  primarily  sponge  and  scrap,
increased  compared to the prior year due to increased  industry-wide  demand as
well as demand in  non-titanium  markets that use titanium as an alloying agent.
Additionally, we have experienced increasing rutile and energy costs compared to
the prior year,  but we have  experienced a decrease in our  non-titanium  alloy
costs in 2006 compared to 2005. To support the continued growth of our business,
we increased our  manufacturing  headcount by approximately  135 compared to the
2005  period.  Somewhat  offsetting  these  cost  increases,  we were  favorably
impacted by improved plant operating rates,  which increased to 89% of practical
capacity  in the  first six  months of 2006 from 80% in the first six  months of
2005. In addition,  the 2005 period included a $1.2 million  noncash  impairment
charge related to the abandonment of certain manufacturing equipment.

     Gross margin.  During the first six months of 2006,  gross margin increased
179% to $214.6  million  compared to the same period in 2005.  Our gross  margin
percentage  increased  to 37% in the  first  six  months of 2006 from 23% in the
first six months of 2005. The improvement  was generally  driven by the increase
in sales prices partially offset by increased cost of goods sold.

     Operating  income.  Our first six months of 2006 operating income increased
235% to $188.7  million  compared to the same period in 2005,  and our operating
income  percentage  increased to 32% in the first six months of 2006 from 17% in
the first  six  months  of 2005.  The  increase  in  operating  income is driven
primarily by increases in gross margin.

     SGA&D during the first six months of 2006  increased  $7.3 million to $32.6
million compared to the same period of 2005 primarily due to (i) $5.1 million of
travel,  relocation  and  severance  expenses  incurred in  connection  with the
relocation of our headquarters to Dallas,  Texas and our operational  management
and  information  technology  group to Exton,  Pennsylvania  and (ii)  increased
employee  compensation as a result of additional  personnel to support expansion
of our business.

     Partially  offsetting the increase in SGA&D, our other operating income for
the first six months of 2006  increased  $1.9  million to $6.7  million over the
prior  year  period  due  primarily  to an  increase  in equity in  earnings  in
VALTIMET.  Equity in earnings of VALTIMET increased to $6.3 million in the first
six months of 2006  compared  to $2.1  million in the same period of 2005 due to
stronger demand and increased pricing in the industrial tubing market. Partially
offsetting this increase,  other operating  income decreased $2.3 million during
the first six months of 2006  compared to the 2005 period  primarily  related to
other income of $1.8 million  recognized in the first quarter of 2005 related to
our settlement of a customer claim regarding prior order cancellations.

     Interest expense. Interest expense on bank debt and capital leases was $0.3
million higher in the 2006 period due to higher average  outstanding debt levels
as well as higher average  interest rates, as compared to the 2005 period.  This
was offset by a decrease  in  interest  expense for the first six months of 2006
compared to 2005 related to the  redemption  of our BUCS at the end of the first
quarter of 2006.

     Net other  non-operating  income and  expense.  During the six months ended
June 30,  2006,  we  recognized  other  non-operating  expense  of $1.4  million
compared to other  non-operating  income of $16.2 million  during the six months
ended June 30, 2005.

                                     - 24 -
<PAGE>

     As discussed previously, our non-operating expense during the first half of
2006  included  expense of $1.3  million  related  to a change in our  estimated
liability  for certain  worker's  compensation  bonds,  and other  non-operating
income  during  the first  half of 2005  included  a gain on the sale of certain
property of $13.9 million.

     Additionally,  during the six months ended June 30, 2006,  the U.S.  dollar
weakened  relative to British  pound  sterling and euro,  which  resulted in net
currency  transaction  losses of $1.5  million.  In  contrast,  we realized  net
currency  transaction gains of $1.5 million during the six months ended June 30,
2005 as the U.S. dollar strengthened  relative to the British pound sterling and
the euro.

     Income taxes.  We incurred income tax expense of $66.1 million in the first
six months of 2006 compared to an income tax benefit of $9.5 million in the same
period last year.  The increase in income tax expense in the first six months of
2006 is primarily due to increased  earnings and the $35.6  million  reversal of
the  valuation  allowance in 2005  attributable  to our U.S.  and U.K.  deferred
income tax assets.

     Our  provision  for  income  taxes for the six months  ended June 30,  2006
includes a tax benefit of $1.0 million  related to the special  deduction  under
the American  Jobs  Creation Act of 2004,  and we included no tax benefit on our
income tax provision for the six months ended June 30, 2005.  For the six months
ended June 30,  2006,  our income tax rate did not vary  significantly  from the
U.S.  statutory  rate.  See  Note  10 to the  Condensed  Consolidated  Financial
Statements.

     Minority  interest.  Minority  interest during the first six months of 2006
increased  over the  comparable  period in 2005 due to  increased  net income at
TIMET Savoie.

     Dividends on Series A Preferred Stock. We paid dividends of $4.3 million to
holders of the Series A  Preferred  Stock  during the six months  ended June 30,
2006, compared to $6.6 million during the six months ended June 30, 2005.

     During  the  first six  months of 2006,  certain  holders  of the  Series A
Preferred  Stock  converted an  aggregate of 1.3 million  shares of the Series A
Preferred Stock into 16.9 million shares of our common stock.

European operations

     We have  substantial  operations  located  in the U.K.,  France  and Italy.
Approximately  35% of our sales  originated  in Europe for the six months  ended
June 30, 2006, of which  approximately 54% were denominated in the British pound
sterling or the euro. Certain purchases of raw materials,  principally  titanium
sponge and alloys, for our European  operations are denominated in U.S. dollars,
while  labor  and other  production  costs are  primarily  denominated  in local
currencies.  The functional currencies of our European subsidiaries are those of
their  respective  countries,  and the  European  subsidiaries  are  subject  to
exchange rate  fluctuations that may impact reported earnings and may affect the
comparability of period-to-period operating results.  Borrowings of our European
operations may be in U.S. dollars or in functional currencies.  Our export sales
from the U.S. are  denominated  in U.S.  dollars and are not subject to currency
exchange rate fluctuations.

     We do not use currency contracts to hedge our currency  exposures.  At June
30, 2006,  consolidated  assets and liabilities  denominated in currencies other
than functional  currencies were approximately  $87.4 million and $65.8 million,
respectively,  consisting primarily of U.S. dollar cash, accounts receivable and
accounts payable.

                                     - 25 -
<PAGE>

     VALTIMET has entered into certain  derivative  financial  instruments  that
qualify  as cash flow  hedges  under  GAAP.  Our  pro-rata  share of  VALTIMET's
unrealized net gains on such derivative  financial  instruments is included as a
component of other comprehensive income.

Outlook

     In the first six months of 2006,  we achieved  record levels for net sales,
operating  income and net income.  These levels were largely driven by increased
demand in the commercial aerospace sector that, when coupled with the relatively
short  supply of raw  materials,  resulted  in average  selling  prices for both
melted and mill products  reaching their highest  historical  levels.  We expect
that current industry-wide demand trends will continue beyond 2006.

     We also  continue to expect the  availability  of certain raw  materials to
tighten, and,  consequently,  the prices for these raw materials are increasing.
We currently expect the shortage in certain raw materials to continue throughout
the remainder of 2006,  which could limit our ability to produce enough titanium
products to fully meet customer demand.  In addition,  we have certain long-term
customer  agreements  that will somewhat limit our ability to pass on all of our
increased  raw  material  costs.  However,  we expect  that the impact of higher
average  selling  prices  for melted  and mill  products  in 2006 will more than
offset such  increased raw materials  costs,  as has been the case for the first
half of 2006.

     In July 2006, The Airline Monitor, a leading aerospace publication,  issued
its  semi-annual  forecast for  commercial  aircraft  deliveries.  This forecast
delays the  expected  delivery  timeline  for  approximately  one percent of the
planes  previously  forecasted for delivery in 2006 and 2007.  However,  with an
increase in expected  deliveries from 2008 through 2010, this forecast  confirms
the  previously   projected  trend  of  increasing  large  commercial   aircraft
deliveries in the five years ending in 2010,  and the current  estimate of 3,800
delivered  aircraft  exceeds  previous  five-year  estimates  by 80 planes.  The
current estimate of large commercial  aircraft  deliveries through 2010 includes
210 Boeing 787 wide  bodies  (which  currently  require a higher  percentage  of
titanium in their  airframes,  engines and other parts than any other commercial
aircraft).  This updated forecast supports our belief that the titanium industry
is in the early  stages of the  business  cycle and that  current  industry-wide
demand trends will likely continue beyond 2006.

     Our backlog at June 30, 2006 was $860 million,  compared to $870 million at
December 31, 2005 and $580  million at June 30,  2005.  Our backlog has somewhat
decreased  from December 31, 2005 as discussions  regarding  volumes and pricing
for 2007 orders continue with certain  customers,  and as a result,  our backlog
does not yet reflect orders that we expect to  acknowledge  during the third and
fourth quarters of 2006.


                                     - 26 -
<PAGE>


     Cost of sales is affected  by a number of factors  including  customer  and
product mix, material yields,  plant operating rates, raw material costs,  labor
costs and energy costs.  Raw material  costs,  which include  sponge,  scrap and
alloys, represent the largest portion of our manufacturing cost structure,  and,
as previously discussed, continued cost increases for certain raw materials have
occurred  during the first half of 2006 and are expected to continue  throughout
the remainder of 2006. Scrap and other certain raw material costs have continued
to rise, and increased  energy costs also continue to have a negative  impact on
gross margin. We currently expect production volumes to remain at current levels
for the  remainder  of 2006,  with  overall  capacity  utilization  expected  to
approximate 90% of practical capacity for the full year 2006 (as compared to 80%
in  2005).   However,   practical   capacity   utilization   measures  can  vary
significantly based on product mix.

     Based on the foregoing,  we anticipate our full year 2006 net sales revenue
to range from $1.1  billion  to $1.2  billion  and our full year 2006  operating
income to range from $325 million to $350 million.

LIQUIDITY AND CAPITAL RESOURCES

     Our consolidated cash flows for the six months ended June 30, 2006 and 2005
are summarized  below.  The following  discussion  should be read in conjunction
with our Condensed Consolidated Financial Statements and notes thereto.

<TABLE>
<CAPTION>
                                                                                 Six months ended June 30,
                                                                        --------------------------------------------
                                                                               2006                    2005
                                                                        --------------------    --------------------
Cash provided by (used in):
<S>                                                                     <C>                     <C>
   Operating activities                                                 $          22,897       $          9,853
   Investing activities                                                           (35,564)               (27,200)
   Financing activities                                                             7,951                 15,779
                                                                        --------------------    --------------------

   Net cash used in operating, investing and
     financing activities                                               $          (4,716)      $         (1,568)
                                                                        ====================    ====================
</TABLE>

     Operating  activities.  Cash flow from  operations  is considered a primary
source of our  liquidity.  Changes in titanium  pricing,  production  volume and
customer demand, among other things, could significantly affect our liquidity.

     The  increase in cash  provided by operating  activities  was driven by the
increase in net income which  increased by $36.7  million to $115.0  million for
the six months ended June 30, 2006,  compared to net income of $78.3 million for
the six months ended June 30, 2005.

     The  increase  in net income was offset by a decrease  in cash  provided by
working capital.  Accounts  receivable  increased during the first six months of
2006 and 2005 primarily as a result of increased  sales.  Inventories  increased
during the first six months of 2006 and 2005 as a result of increased  run rates
and related  inventory build in order to meet expected  customer demand, as well
as the effects of increased raw material costs.

                                     - 27 -

<PAGE>

     Changes in accounts payable and accrued  liabilities  reflect,  among other
things,  the timing of (i) payments to suppliers  of titanium  sponge,  titanium
scrap and other raw  material  purchases  and (ii)  changes to accrued  employee
benefits,  including  performance-based employee incentive compensation.  During
the first six months of 2006, we made cash payments of approximately $20 million
to employees  related to amounts  earned during 2005 under our  incentive  based
compensation plans compared to approximately $13 million paid in 2005 related to
amounts earned during 2004.

     The  increase  in  customer  advances  during  the first six months of 2005
primarily reflects our receipt of a $27.9 million advance from Boeing in January
2005, partially offset by the application against customer purchases.  Under our
previous  long-term  agreement  ("LTA") with Boeing, we received an annual $28.5
million (less $3.80 per pound of titanium product sold to Boeing  subcontractors
in the  preceding  year)  customer  advance  from Boeing in January of each year
related to Boeing  purchases  from us for that year.  Effective July 1, 2005, we
entered into a new LTA with Boeing,  pursuant to which,  beginning in 2006,  the
take-or-pay  provisions  under the  previous  LTA were  replaced  with an annual
makeup  payment early in the following  year in the event Boeing  purchases less
than its annual commitment in any year. Accordingly,  Boeing was not required to
make an advance payment in January 2006.

     We utilized  the  remainder  of our U.S. net  operating  loss  carryforward
during the first quarter of 2006, which loss  carryforward only partially offset
the U.S.  current tax  provision  for the six months ended June 30,  2006.  As a
result,  our provision for income taxes  includes a provision for current income
taxes of  approximately  $57.4 million  (including a provision for U.S. taxes of
approximately $39.5 million). We also recognized a current income tax benefit in
the first six months of 2006 of $9.6 million related to the tax benefit from the
exercise of stock  options.  Such income tax benefit is  recognized  as a direct
increase  in  additional  paid-in  capital,  in  accordance  with GAAP.  We made
aggregate  cash  payments for income taxes of $50.5 million in the first half of
2006 compared to $3.7 million in the first half of 2005. As a result, our income
taxes payable decreased from $13.2 million at December 31, 2005 to $10.5 million
at June 30, 2006.  See also  "Results of  Operations - Income taxes" for further
discussion of income taxes.

     Investing  activities.  Our capital expenditures were $34.9 million for the
six months ended June 30,  2006,  compared to $26.8  million for the  comparable
period in 2005.  The 2006  amount  includes  expenditures  related to our sponge
plant expansion in Henderson,  Nevada and our new electron beam cold hearth melt
furnace at our facility in Morgantown,  Pennsylvania.  The 2005 amount  includes
expenditures  related to construction  on our now completed  water  conservation
facility  located in  Henderson,  Nevada as well as the  expansion of our sponge
plant.

     Financing  activities.  Cash provided  during the six months ended June 30,
2006 related  primarily to $10.6 million of proceeds from the issuance of common
stock upon  exercise of options  and the  related  tax benefit of $9.6  million.
These cash  inflows were  partially  offset by our net debt  repayments  of $4.2
million,  dividends  paid on our Series A  Preferred  Stock of $4.3  million and
dividends paid to CEZUS of $3.0 million during the first six months of 2006.

     Cash provided  during the six months ended June 30, 2005 related  primarily
to our net  borrowings  of  $23.5  million  used in  part  to fund  the  ongoing
construction  projects and support the increase in inventory  levels required to
meet anticipated customer demand. Additionally, we received $1.1 million of cash
from the  issuance of common stock  related to the exercise of certain  employee
stock options  during the 2005 period.  These cash inflows during the first half
of 2005 were  partially  offset by our dividends  paid on our Series A Preferred
Stock of $6.6 million and dividends paid to CEZUS of $2.2 million.

                                     - 28 -
<PAGE>

     During the first quarter of 2006, 113,467 of our BUCS that were outstanding
at December 31, 2005 were  converted  into an aggregate of 0.6 million shares of
our common stock, and during the first six months of 2006, 1.3 million shares of
our Series A Preferred  Stock were  converted  into an aggregate of 16.9 million
shares of our common stock. The cash impact from these transactions was nominal.

     Borrowing  arrangements.  On February 17, 2006,  we entered into a new $175
million long-term credit agreement, replacing our previous U.S credit agreement,
which  was  terminated  on that  date.  The U.S.  credit  agreement  is  secured
primarily  by  our  U.S.  accounts  receivable,  inventory,  personal  property,
intangible  assets,  a pledge of 65% of TIMET UK's  common  stock and a negative
pledge on U.S. fixed assets, and matures in February 2011.  Borrowings under the
U.S.  credit  agreement  accrue  interest  at the  U.S.  prime  rate or  varying
LIBOR-based  rates based on a quarterly  ratio of outstanding  debt to EBITDA as
defined by the  agreement.  The U.S.  credit  agreement  also  provides  for the
issuance of up to $10 million of letters of credit.

     The U.S. credit  agreement  contains  certain  restrictive  covenants that,
among other  things,  limit or restrict our ability to incur debt,  incur liens,
make investments,  make capital  expenditures or pay dividends.  The U.S. credit
agreement also requires compliance with certain financial covenants, including a
minimum  tangible  net  worth  covenant,  a fixed  charge  coverage  ratio and a
leverage ratio, and contains other covenants  customary in lending  transactions
of this type including  cross-default  provisions with respect to our other debt
and  obligations.  Borrowings under the U.S. credit agreement are limited to the
lesser of $175 million or a  formula-determined  amount based upon U.S. accounts
receivable,  inventory and fixed assets (subject to pledging fixed assets).  The
formula-determined   amount  only  applies  if  borrowings  exceed  60%  of  the
commitment  amount or the leverage ratio exceeds a certain  level,  but based on
our   outstanding   borrowings   and  leverage  ratio  at  June  30,  2006,  the
formula-determined  borrowing  ceiling was not  applicable  at June 30, 2006. We
were in compliance with all such covenants  during the six months ended June 30,
2006.

     Under our U.K.  facility,  TIMET UK may borrow up to  (pound)22.5  million,
subject  to a  formula-determined  borrowing  base  derived  from  the  value of
accounts  receivable,  inventory and property,  plant and equipment.  Borrowings
under the U.K.  facility can be in various  currencies,  including U.S. dollars,
British pounds sterling and euros and are collateralized by substantially all of
TIMET UK's assets. Interest on outstanding borrowings generally accrues at rates
that vary from 1.125% to 1.375% above the lender's published base rate. The U.K.
facility  also  contains  financial  ratios and  covenants  customary in lending
transactions of this type, including a minimum net worth covenant.  TIMET UK was
in compliance with all covenants during the six months ended June 30, 2006.

     As of June 30, 2006, we had  outstanding  borrowings of $45.2 million under
our U.S. credit agreement and $3.3 million under our U.K. credit facility. As of
June 30, 2006, the weighted  average  interest  rates on borrowings  outstanding
under our U.S. and U.K. credit facilities were 6.1% and 5.6%, respectively.

     As of June 30, 2006,  we had $4.1 million of letters of credit  outstanding
under our U.S.  credit  facility  required by various  utilities and  government
entities for  performance and insurance  guarantees,  and we had $3.7 million of
letters of credit outstanding under our European credit facilities as collateral
under certain inventory purchase  contracts.  These letters of credit reduce our
borrowing  availability under our credit facilities.  Aggregate unused borrowing
availability  under our U.S. and U.K. credit facilities was  approximately  $164
million as of June 30, 2006. We also have overdraft and other credit  facilities
at certain of our other European  subsidiaries,  with aggregate unused borrowing
availability of $15.7 million at June 30, 2006.

                                     - 29 -
<PAGE>

Future cash requirements

     Liquidity. Our primary source of liquidity on an on-going basis is our cash
flows from operating  activities and borrowings under various credit facilities.
We  generally  use these  amounts to (i) fund capital  expenditures,  (ii) repay
indebtedness  incurred  primarily for working capital purposes and (iii) provide
for the payment of  dividends.  From  time-to-time  we will incur  indebtedness,
generally to (i) fund short-term  working capital needs, (ii) refinance existing
indebtedness,   (iii)  make  investments  in  marketable  and  other  securities
(including  the  acquisition  of  securities  issued  by  our  subsidiaries  and
affiliates) or (iv) fund major capital  expenditures or the acquisition of other
assets outside the ordinary course of business.

     We  routinely  evaluate  our  liquidity  requirements,  capital  needs  and
availability of resources in view of, among other things,  our alternative  uses
of capital, debt service  requirements,  the cost of debt and equity capital and
estimated future  operating cash flows. As a result of this process,  we have in
the past, or in light of our current outlook,  may in the future,  seek to raise
additional   capital,   modify  our  common  and  preferred  dividend  policies,
restructure ownership interests,  incur, refinance or restructure  indebtedness,
repurchase shares of common stock,  purchase or redeem Series A Preferred Stock,
sell assets,  or take a combination  of such steps or other steps to increase or
manage our liquidity and capital resources. In the normal course of business, we
investigate,  evaluate,  discuss  and  engage  in  acquisition,  joint  venture,
strategic  relationship  and other  business  combination  opportunities  in the
titanium,  specialty  metal and  other  industries.  In the event of any  future
acquisition or joint venture opportunities, we may consider using then-available
liquidity, issuing equity securities or incurring additional indebtedness.

     Based  upon  our  expectations  of  our  operating  performance,   and  the
anticipated demands on our cash resources we expect to have sufficient liquidity
to meet our short-term  obligations  (defined as the twelve-month  period ending
June 30, 2007) and our long-term  obligations  (defined as the five-year  period
ending  December 31, 2010, our time period for long-term  budgeting).  If actual
developments  differ from our  expectations,  our  liquidity  could be adversely
affected.

     At June 30, 2006, we had credit  available  under existing U.S and European
credit facilities of $179.7 million, and we had an aggregate of $13.9 million of
restricted and unrestricted cash and cash equivalents.

     Capital  expenditures.  We intend to invest a total of  approximately  $110
million  to  $120  million  for  capital   expenditures   during  2006.  Capital
expenditures are primarily for improvements and upgrades to existing facilities,
including  expansions  of sponge and melting  capacity,  and other  additions of
plant  machinery  and  equipment.   We  have  spent  $34.9  million  on  capital
expenditures through June 30, 2006.

     In May 2005, we announced our plans to expand our existing  titanium sponge
facility in Nevada. This expansion, which we currently expect to complete by the
end of 2006,  will  provide the capacity to produce an  additional  4,000 metric
tons of sponge  annually,  an  increase  of  approximately  47% over the current
sponge production capacity levels at our Nevada facility.

     In April 2006,  we  announced  our plans for the  expansion of our electron
beam cold  hearth  melt  capacity  in  Pennsylvania.  This  expansion,  which we
currently expect to complete by early 2008, will have, depending on product mix,
the capacity to produce an additional 8,500 metric tons of melted  products,  an
increase of approximately 54% over the current production capacity levels at our
Pennsylvania facility.

                                     - 30 -
<PAGE>
     We continue to evaluate  additional  opportunities to expand our production
capacity including capital projects, acquisitions or other investments which, if
consummated, any required funding would be provided by borrowings under our U.S.
or European credit facilities.

Other

     Corporations  that may be deemed to be controlled by or affiliated with Mr.
Simmons sometimes engage in (i) 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 (ii)  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. We continuously
consider,  review and evaluate such  transactions,  and understand that Contran,
Valhi and related  entities  consider,  review and evaluate  such  transactions.
Depending  upon the business,  tax and other  objectives  then  relevant,  it is
possible  that we  might  be a party  to one or more  such  transactions  in the
future.

Item 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We are exposed to market risk,  including  foreign currency exchange rates,
interest rates and security prices. There have been no material changes in these
market  risks  since we filed our 2005  Annual  Report,  and we refer you to the
report for a complete description of these risks.

Item 4.     CONTROLS AND PROCEDURES

     Evaluation of disclosure  controls and procedures.  We maintain a system of
disclosure   controls  and  procedures.   The  term  "disclosure   controls  and
procedures," as defined by Rule 13a-15(e) of the Securities Exchange Act of 1934
(the "Exchange  Act"), as amended,  means controls and other procedures that are
designed to ensure that information required to be disclosed in the reports that
we file or submit to the SEC under the  Exchange  Act, is  recorded,  processed,
summarized  and reported,  within the time periods  specified in the SEC's rules
and forms.  Disclosure  controls and  procedures  include,  without  limitation,
controls  and  procedures  designed  to ensure that  information  required to be
disclosed  by us in the  reports  that we file or  submit  to the SEC  under the
Exchange Act is accumulated and  communicated  to our management,  including our
principal  executive  officer and our principal  financial  officer,  or persons
performing  similar  functions,  as appropriate to allow timely  decisions to be
made  regarding  required  disclosure.  Steven L.  Watson,  our Chief  Executive
Officer,  and Bobby D. O'Brien, our Executive Vice President and Chief Financial
Officer,  have evaluated our  disclosure  controls and procedures as of June 30,
2006. Based upon their  evaluation,  and as a result of the material  weaknesses
identified in the 2005 Annual Report,  these  executive  officers have concluded
that our  disclosure  controls and  procedures  are not effective as of June 30,
2006. We have  performed  additional  procedures in completing  these  Condensed
Consolidated  Financial Statements as of and for the quarter ended June 30, 2006
to ensure that the  disclosures  included were fairly  presented in all material
respects in accordance with GAAP.


                                     - 31 -
<PAGE>


     Scope of management's report on internal control over financial  reporting.
We also maintain internal control over financial  reporting.  The term "internal
control over financial  reporting," as defined by rule 13a-15(f) of the Exchange
Act,  means a process  designed by, or under the  supervision  of, our principal
executive  and  principal  financial  officers,  or persons  performing  similar
functions,  and  effected  by our  board  of  directors,  management  and  other
personnel,   to  provide  reasonable  assurance  regarding  the  reliability  of
financial  reporting and the  preparation  of financial  statements for external
purposes in accordance  with GAAP,  and includes  those  policies and procedures
that:

     o    Pertain  to the  maintenance  of  records  that in  reasonable  detail
          accurately and fairly reflect the transactions and dispositions of our
          assets;

     o    Provide  reasonable   assurance  that  transactions  are  recorded  as
          necessary to permit preparation of financial  statements in accordance
          with GAAP, and that our receipts and  expenditures are being made only
          in accordance with authorizations of our management and directors; and

     o    Provide reasonable  assurance regarding prevention or timely detection
          of unauthorized acquisition,  use or disposition our assets that could
          have a material effect on our Consolidated Financial Statements.

     Changes in internal  control over  financial  reporting.  There has been no
change to our internal control over financial reporting during the quarter ended
June  30,  2006  that  has  materially  affected,  or is  reasonably  likely  to
materially  affect,  our internal  control over financial  reporting,  except as
specifically  discussed  below.  We are in the process of remediating  the three
material  weaknesses  discussed  in our 2005 Annual  Report and continue to work
toward  completion of such  remediation by or before December 31, 2006. To date,
we have completed the following remediation activities:

     o    We are in the  process of hiring  additional  accounting  and  finance
          personnel,  and  to  the  extent  necessary,   critical  functions  or
          processes  have been  augmented by or  transitioned  to the additional
          associates;

     o    We  have   implemented   additional   levels  of  manual   review  and
          authorization of journal entries at all of our significant  locations.
          We will also  further  explore  our IT  solution  options in the third
          quarter of 2006; and

     o    We have  continued  to update  certain  key  accounting  policies  and
          procedures  and  will  continue  to  prioritize  the  preparation  and
          distribution  of such  key  policies  and  procedures  throughout  the
          remainder of 2006.


                                     - 32 -

<PAGE>

PART II. - OTHER INFORMATION

Item 1.    LEGAL PROCEEDINGS

     Refer to Note 11 of the Condensed  Consolidated Financial Statements and to
our 2005 Annual Report for  descriptions  of certain  previously  reported legal
proceedings.

Item 1A.   RISK FACTORS

     There  have been no  material  changes in the first six months of 2006 with
respect to our risk factors  presented in Item 1A. in our 2005 Annual  Report on
Form 10-K.

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

     We held our 2006 Annual Meeting of Shareholders  on May 23, 2006.  Keith R.
Coogan,  Norman  N.  Green,  Glenn R.  Simmons,  Harold  C.  Simmons,  Thomas P.
Stafford,  Steven L. Watson and Paul J. Zucconi were elected as directors,  each
receiving  votes  "For"  their  election  of at least  65.8  million of the 69.7
million common shares eligible to vote at the Annual Meeting.

Item 6.    EXHIBITS

      10.1*    Titanium   Metals   Corporation   Amended   and   Restated   1996
               Non-Employee  Director Compensation Plan, as amended and restated
               effective May 23, 2006.

      31.1     Certification  pursuant to Section 302 of the  Sarbanes-Oxley Act
               of 2002.

      31.2     Certification  pursuant to Section 302 of the  Sarbanes-Oxley Act
               of 2002.

      32.1     Certification  pursuant to Section 906 of the  Sarbanes-Oxley Act
               of 2002.

               * Management contract, compensatory plan or arrangement.

              Note: We have  retained a signed  original of any  exhibit  listed
                    above that contains signatures, and we will provide any such
                    exhibit to the SEC or its staff upon  request.  Such request
                    should  be  directed  to  the  attention  of  our  Corporate
                    Secretary  at our  corporate  offices  located  at 5430  LBJ
                    Freeway, Suite 1700, Dallas, Texas 75240.

                                     - 33 -

<PAGE>



                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                    TITANIUM METALS CORPORATION
                                   ------------------------------



Date: August 4, 2006                  By  /s/ Bobby D. O'Brien
                                          ------------------------------------
                                          Bobby D. O'Brien
                                          Executive Vice President and
                                           Chief Financial Officer


Date: August 4, 2006                  By  /s/ Scott E. Sullivan
                                          ------------------------------------
                                          Scott E. Sullivan
                                          Vice President and Controller
                                          Principal Accounting Officer










                                     - 34 -