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 September 30, 2004
                                               ------------------

                                       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                              (IRS Employer
 incorporation or organization)                             Identification No.)



                1999 Broadway, Suite 4300, Denver, Colorado 80202
              ----------------------------------------------------
               (Address of principal executive offices) (Zip Code)



       Registrant's telephone number, including area code: (303) 296-5600
                                                           --------------


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 an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act).

                                 Yes      No  X
                                     ---     ---



Number of shares of common stock outstanding on November 4, 2004:  15,919,560

<PAGE>













Forward-Looking Information

     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 the  Notes to  Consolidated  Financial  Statements  and 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  the  Company  believes  that the  expectations
reflected in such forward-looking  statements are reasonable, it cannot give any
assurance that 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 the
Company   disclaims  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 the Company's  other filings with the Securities
and  Exchange  Commission  ("SEC")  which  include,  but are not limited to, the
cyclicality of the commercial  aerospace industry,  the performance of aerospace
manufacturers and the Company under their 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 the  ability of the  Company to reduce or  increase
supply  or  achieve  lower  costs,   the   possibility  of  labor   disruptions,
fluctuations  in currency  exchange  rates,  fluctuations in the market price of
marketable securities, control by certain stockholders and possible conflicts of
interest,  uncertainties associated with new product development,  the supply of
raw materials and services,  changes in raw material 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,
the Company's ability to achieve reductions in its cost structure, the potential
for adjustment of the Company's  deferred income tax asset  valuation  allowance
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.



<PAGE>


                           TITANIUM METALS CORPORATION

                                      INDEX


                                                                           Page
                                                                          Number
                                                                          ------
PART I. FINANCIAL INFORMATION

  Item 1. Consolidated Financial Statements

          Consolidated Balance Sheets - September 30, 2004  (unaudited) and
               December 31, 2003                                               2

          Consolidated  Statements  of  Operations  - Three and nine months
               ended September 30, 2004 and 2003 (unaudited)                   4

          Consolidated  Statements of  Comprehensive  Income (Loss) - Three
               and  nine  months   ended   September   30,  2004  and  2003
               (unaudited)                                                     6

          Consolidated  Statements  of  Cash  Flows  -  Nine  months  ended
               September 30, 2004 and 2003 (unaudited)                         7

          Consolidated Statement of Changes in Stockholders'  Equity - Nine
               months ended September 30, 2004 (unaudited)                     9

          Notes to Consolidated Financial Statements (unaudited)              10

  Item 2. Management's  Discussion  and Analysis of Financial  Condition and
               Results of Operations                                          23

  Item 3. Quantitative and Qualitative Disclosures about Market Risk          35

  Item 4. Controls and Procedures                                             36

PART II. OTHER INFORMATION

  Item 1. Legal Proceedings                                                   38

  Item 6. Exhibits and Reports on Form 8-K                                    38



                                      - 1 -

<PAGE>

                           TITANIUM METALS CORPORATION

                           CONSOLIDATED BALANCE SHEETS
                                 (In thousands)

<TABLE>

                                                                               September 30,           December 31,
                                                                                   2004                    2003
                                                                            --------------------     ------------------
ASSETS                                                                           (unaudited)

<S>                                                                         <C>                      <C>
Current assets:
   Cash and cash equivalents                                                $           7,973        $        35,040
   Restricted cash and cash equivalents                                                 2,248                  2,248
   Accounts and other receivables, less allowance
     of $1,469 and $2,347                                                              86,371                 67,432
   Refundable income taxes                                                                  -                  2,155
   Inventories                                                                        213,575                165,721
   Prepaid expenses and other                                                           3,522                  2,604
   Deferred income taxes                                                                  826                    778
                                                                            --------------------     ------------------

       Total current assets                                                           314,515                275,978

Marketable securities                                                                  40,770                      -
Investment in joint ventures                                                           21,223                 22,469
Investment in common securities of TIMET Capital Trust I                                6,259                  6,794
Property and equipment, net                                                           227,438                239,182
Intangible assets, net                                                                  5,165                  6,294
Deferred income taxes                                                                     697                      -
Other                                                                                  10,730                 16,692
                                                                            --------------------     ------------------

       Total assets                                                         $         626,797        $       567,409
                                                                            ====================     ==================
</TABLE>

           See accompanying Notes to Consolidated Financial Statements
                                      - 2 -


<PAGE>


                           TITANIUM METALS CORPORATION

                     CONSOLIDATED BALANCE SHEETS (continued)
                      (In thousands, except per share data)

<TABLE>

                                                                                September 30,            December 31,
LIABILITIES, MINORITY INTEREST AND                                                   2004                    2003
STOCKHOLDERS' EQUITY                                                         ---------------------    -------------------
                                                                                  (unaudited)

<S>                                                                          <C>                      <C>
Current liabilities:
   Notes payable                                                             $          33,759        $              -
   Current maturities of capital lease obligations                                         170                     524
   Accounts payable                                                                     41,695                  29,200
   Accrued liabilities                                                                  45,029                  45,163
   Customer advances                                                                    17,554                   3,356
   Income taxes payable                                                                  1,260                      11
   Other                                                                                   375                     251
                                                                             ---------------------    -------------------

       Total current liabilities                                                       139,842                  78,505

Capital lease obligations                                                                9,740                   9,766
Accrued OPEB cost                                                                       14,300                  13,661
Accrued pension cost                                                                    65,335                  62,366
Accrued environmental cost                                                               2,751                   3,930
Deferred income taxes                                                                      124                     637
Accrued interest on debt payable to TIMET Capital Trust I                                    -                  19,003
Debt payable to TIMET Capital Trust I                                                   12,010                 207,465
Other                                                                                    1,527                   2,188
                                                                             ---------------------    -------------------

       Total liabilities                                                               245,629                 397,521
                                                                             ---------------------    -------------------

Minority interest                                                                       11,128                  11,131
                                                                             ---------------------    -------------------

Stockholders' equity:
   Preferred Stock, $.01 par value, $195,455 liquidation
     preference; 10,000 shares authorized, 3,909 and 0
     shares issued                                                                     173,650                       -
   Common stock, $.01 par value; 90,000 shares
     authorized, 15,960 and 15,950 shares issued                                           160                     160
   Additional paid-in capital                                                          350,812                 350,515
   Accumulated deficit                                                                (114,975)               (140,428)
   Accumulated other comprehensive loss                                                (38,384)                (50,226)
   Treasury stock, at cost (45 shares)                                                  (1,208)                 (1,208)
   Deferred compensation                                                                   (15)                    (56)
                                                                             ---------------------    -------------------
       Total stockholders' equity                                                      370,040                 158,757
                                                                             ---------------------    -------------------

       Total liabilities, minority interest and
         stockholders' equity                                                $         626,797        $        567,409
                                                                             =====================    ===================

Commitments and contingencies (Note 14)

</TABLE>

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


                           TITANIUM METALS CORPORATION

                CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
                      (In thousands, except per share data)

<TABLE>

                                                                 Three months ended                     Nine months ended
                                                                    September 30,                         September 30,
                                                          ----------------------------------    ----------------------------------
                                                               2004               2003               2004               2003
                                                          ---------------    ---------------    ---------------    ---------------

<S>                                                       <C>                <C>                <C>                <C>
Net sales                                                 $      120,246     $      83,635      $      364,859     $      284,741
Cost of sales                                                    106,585            83,677             323,356            279,407
                                                          ---------------    ---------------    ---------------    ---------------

   Gross margin                                                   13,661               (42)             41,503              5,334

Selling, general, administrative and
 development expense                                              11,710             8,538              32,378             28,016
Equity in earnings (losses) of joint ventures                        393               (93)                161                321
Other income (expense), net                                       10,088             9,940              12,941             13,476
                                                          ---------------    ---------------    ---------------    ---------------

   Operating income (loss)                                        12,432             1,267              22,227             (8,885)

Interest expense                                                   3,099             3,958              11,497             12,216
Other non-operating income (expense), net                         15,399                (7)             16,296               (583)
                                                          ---------------    ---------------    ---------------    ---------------

 Income (loss) before income taxes,
   minority interest and cumulative effect
   of change in accounting principle                              24,732            (2,698)             27,026            (21,684)

Income tax (benefit) expense                                        (629)              326                 692                807
Minority interest, net of tax                                        120               (38)                881                246
                                                          ---------------    ---------------    ---------------    ---------------

 Income (loss) before cumulative effect of
   change in accounting principle                                 25,241            (2,986)             25,453            (22,737)

Cumulative effect of change in
 accounting principle                                                  -                 -                   -               (191)
                                                          ---------------    ---------------    ---------------    ---------------

   Net income (loss)                                              25,241            (2,986)             25,453            (22,928)

Dividends on Series A Preferred Stock                              1,099                 -               1,099                  -
                                                          ---------------    ---------------    ---------------    ---------------

   Net income (loss) attributable to
     common stockholders                                  $       24,142     $      (2,986)     $       24,354     $      (22,928)
                                                          ===============    ===============    ===============    ===============

</TABLE>


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



                           TITANIUM METALS CORPORATION

          CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (continued)
                      (In thousands, except per share data)

<TABLE>

                                                                 Three months ended                     Nine months ended
                                                                    September 30,                          September 30,
                                                          ----------------------------------    ----------------------------------
                                                               2004               2003               2004               2003
                                                          ---------------    ---------------    ---------------    ---------------

<S>                                                       <C>                <C>                <C>                <C>
Basic earnings (loss) per share attributable
  to common stockholders:
     Before cumulative effect of change in
       accounting principle                               $       1.52       $     (0.19)       $       1.53       $      (1.44)

     Cumulative effect of change in
       accounting principle                                          -                 -                   -              (0.01)
                                                          ---------------    ---------------    ---------------    ---------------

Basic earnings (loss) per share attributable
  to common stockholders                                  $       1.52       $     (0.19)       $       1.53       $      (1.45)
                                                          ===============    ===============    ===============    ===============

Diluted earnings (loss) per share attributable
  to common stockholders:
     Before cumulative effect of change in
       accounting principle                               $       1.37       $     (0.19)       $       1.53       $      (1.44)

     Cumulative effect of change in
       accounting principle                                          -                 -                   -              (0.01)
                                                          ---------------    ---------------    ---------------    ---------------

Diluted earnings (loss) per share attributable
  to common stockholders                                  $       1.37       $     (0.19)       $       1.53       $      (1.45)
                                                          ===============    ===============    ===============    ===============

Weighted average shares outstanding:
  Basic                                                         15,887            15,858              15,876             15,838
                                                          ===============    ===============    ===============    ===============
  Diluted                                                       20,039            15,858              16,687             15,838
                                                          ===============    ===============    ===============    ===============
</TABLE>

           See accompanying Notes to Consolidated Financial Statements
                                      - 5 -

<PAGE>


                           TITANIUM METALS CORPORATION

       CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)
                                 (In thousands)

<TABLE>

                                                             Three months ended                     Nine months ended
                                                                September 30,                         September 30,
                                                      ----------------------------------    ----------------------------------
                                                           2004               2003               2004               2003
                                                      ---------------    ---------------    ---------------    ---------------

<S>                                                   <C>                <C>                <C>                <C>
Net income (loss)                                     $       25,241     $     (2,986)      $     25,453       $      (22,928)
                                                      ---------------    ---------------    ---------------    ---------------

Other comprehensive income (loss):

   Currency translation adjustment                               445              741                428                5,480

   Unrealized gains on marketable
     securities                                                4,950                -             11,536                    -

   TIMET's share of VALTIMET's
     unrealized net losses on
     derivative financial instruments
     qualifying as cash flow hedges                              (67)               -               (122)                   -
                                                      ---------------    ---------------    ---------------    ---------------

     Total other comprehensive income                          5,328              741             11,842                5,480
                                                      ---------------    ---------------    ---------------    ---------------

   Comprehensive income (loss)                        $       30,569     $     (2,245)      $     37,295       $      (17,448)
                                                      ===============    ===============    ===============    ===============

</TABLE>

           See accompanying Notes to Consolidated Financial Statements
                                      - 6 -
<PAGE>


                           TITANIUM METALS CORPORATION

                CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
                                 (In thousands)

<TABLE>
                                                                                         Nine months ended
                                                                                           September 30,
                                                                              ----------------------------------------
                                                                                     2004                 2003
                                                                              -------------------   ------------------

<S>                                                                           <C>                   <C>
Cash flows from operating activities:
   Net income (loss)                                                          $       25,453        $      (22,928)
   Depreciation and amortization                                                      24,303                28,344
   Cumulative effect of change in accounting principle                                     -                   191
   Gain on exchange of BUCS                                                          (15,465)                    -
   Equity in earnings of joint ventures, net of distributions                          1,518                   926
   Equity in earnings of common securities of TIMET
     Capital Trust I, net of distributions                                               536                  (321)
   Deferred income taxes                                                              (1,270)                 (203)
   Minority interest, net of tax                                                         881                   246
   Other, net                                                                             49                   683
   Change in assets and liabilities:
     Receivables                                                                     (18,854)                1,094
     Inventories                                                                     (47,692)               22,915
     Prepaid expenses and other                                                         (898)               (1,318)
     Accounts payable and accrued liabilities                                         12,273                 2,072
     Customer advances                                                                14,194                11,095
     Income taxes                                                                      3,316                   550
     Accrued OPEB and pension costs                                                    2,820                (2,962)
     Accrued interest on debt payable to TIMET Capital Trust I                       (18,936)               10,712
     Other, net                                                                       (1,642)                 (491)
                                                                              -------------------   ------------------
       Net cash (used) provided by operating activities                              (19,414)               50,605
                                                                              -------------------   ------------------

Cash flows from investing activities:
   Capital expenditures                                                              (10,868)               (5,984)
   Purchase of marketable securities                                                 (29,135)                    -
   Other                                                                                   -                    36
                                                                              -------------------   ------------------
       Net cash used by investing activities                                         (40,003)               (5,948)
                                                                              -------------------   ------------------

Cash flows from financing activities:
   Indebtedness:
     Borrowings                                                                      101,114               108,628
     Repayments                                                                      (67,359)             (126,920)
   Dividends paid to minority interest                                                  (691)               (1,892)
   Other, net                                                                           (488)                 (937)
                                                                              -------------------   ------------------
       Net cash provided (used) by financing activities                               32,576               (21,121)
                                                                              -------------------   ------------------

       Net cash (used) provided by operating,
         investing and financing activities                                   $      (26,841)       $       23,536
                                                                              ===================   ==================

</TABLE>

           See accompanying Notes to Consolidated Financial Statements
                                      - 7 -

<PAGE>


                           TITANIUM METALS CORPORATION

          CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (continued)
                                 (In thousands)

<TABLE>
                                                                                         Nine months ended
                                                                                            September 30,
                                                                              ----------------------------------------
                                                                                     2004                  2003
                                                                              ------------------    ------------------

<S>                                                                           <C>                   <C>
Cash and cash equivalents:
   Net (decrease) increase from:
     Operating, investing and financing activities                            $      (26,841)       $       23,536
     Currency translation                                                               (226)                  164
                                                                              ------------------    ------------------
                                                                                     (27,067)               23,700
   Cash and cash equivalents at beginning of period                                   35,040                 6,214
                                                                              ------------------    ------------------

   Cash and cash equivalents at end of period                                 $        7,973        $       29,914
                                                                              ===================   ==================

Supplemental disclosures:
   Cash paid for:
     Interest                                                                 $       29,863        $          954
     Income taxes, net                                                        $            -        $          463

</TABLE>

           See accompanying Notes to Consolidated Financial Statements
                                      - 8 -
<PAGE>

                           TITANIUM METALS CORPORATION

      CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited)

                      Nine months ended September 30, 2004
                                 (In thousands)

<TABLE>

                                                                                          Accumulated
                                                       Series A   Additional                 Other
                                    Common   Common   Preferred    Paid-in   Accumulated Comprehensive Treasury  Deferred
                                    Shares   Stock      Stock      Capital      Deficit  Income (Loss)  Stock  Compensation  Total
                                   --------  -------  ----------  ----------  -----------  ----------  --------  -------  ----------

<S>                                 <C>      <C>      <C>         <C>         <C>          <C>         <C>       <C>      <C>
Balance at December 31, 2003        15,905   $  160   $       -   $ 350,515   $(140,428)   $(50,226)   $(1,208)  $ (56)   $ 158,757
 Comprehensive income                    -        -           -                  25,453      11,842          -       -       37,295
 Issuance of common stock               20        -                     366           -           -          -       -          366
 Issuance of Series A
  Preferred Stock                        -        -     173,650           -           -           -          -       -      173,650
 Stock award cancellations             (10)       -           -         (69)          -           -          -      69            -
 Amortization of deferred
   compensation, net of effects of
   stock award cancellations             -        -           -           -           -           -          -     (28)         (28)
                                   --------  -------  ----------  ----------  -----------  ----------  --------  -------  ----------

Balance at September 30, 2004       15,915   $  160   $ 173,650   $ 350,812   $(114,975)   $(38,384)    (1,208)  $ (15)   $ 370,040
                                   ========  =======  ==========  ==========  ===========  ==========  ========  =======  ==========

</TABLE>


           See accompanying Notes to Consolidated Financial Statements
                                      - 9 -


<PAGE>

                           TITANIUM METALS CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 1 - Organization and basis of presentation

     Titanium Metals Corporation  ("TIMET") is a vertically  integrated producer
of  titanium  sponge,  melted  products  and a  variety  of  mill  products  for
aerospace,  industrial and other  applications.  The  accompanying  Consolidated
Financial  Statements  include  the  accounts  of TIMET and its  majority  owned
subsidiaries (collectively, the "Company") except the TIMET Capital Trust I (the
"Capital Trust"), a wholly owned subsidiary which was deconsolidated at December
31, 2003,  and for which all prior  periods were  retroactively  restated.  Such
retroactive  restatement did not impact net income (loss),  stockholders' equity
or cash flow from  operations  for any prior period.  All material  intercompany
transactions and balances with  consolidated  subsidiaries have been eliminated,
and certain prior year amounts have been  reclassified to conform to the current
year presentation. The Consolidated Balance Sheet at September 30, 2004, and the
Consolidated  Statements of Operations,  Comprehensive Income (Loss), Changes in
Stockholders'  Equity and Cash Flows for the interim periods ended September 30,
2004 and 2003, as applicable, have been prepared by the Company without audit in
accordance with accounting principles generally accepted in the United States of
America  ("GAAP").  In the opinion of management,  all adjustments  necessary to
present fairly the consolidated  financial  position,  results of operations and
cash flows have been made. The results of operations for interim periods are not
necessarily  indicative  of the  operating  results  of a full year or of future
operations.  Certain information and footnote  disclosures  normally included in
financial  statements  prepared in accordance  with GAAP have been  condensed or
omitted.  The Company's 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. The Company's fourth fiscal quarter and fiscal year always end
on December 31. For presentation  purposes, the Company's Consolidated Financial
Statements and notes thereto have been presented as ending on March 31, June 30,
September 30 and  December  31, as  applicable.  The  accompanying  Consolidated
Financial  Statements  should  be  read in  conjunction  with  the  Consolidated
Financial  Statements  included in the Company's  Annual Report on Form 10-K for
the year ended December 31, 2003, as amended (the "2003 Annual Report").

     At  September  30,  2004,  Valhi,  Inc.  and  subsidiaries  ("Valhi")  held
approximately 40.8% of the Company's  outstanding common stock and approximately
0.4% of the Company's 6.75% Series A Convertible  Preferred Stock (the "Series A
Preferred  Stock").  At September 30, 2004, the Combined Master Retirement Trust
("CMRT"), a trust formed by Valhi to permit the collective  investment by trusts
that maintain the assets of certain  employee benefit plans adopted by Valhi and
certain related  companies,  held  approximately  11.8% of the Company's  common
stock.  TIMET's U.S. pension plans invest in a portion of the CMRT that does not
hold TIMET common stock. At September 30, 2004, Contran Corporation  ("Contran")
held, directly or through subsidiaries, approximately 90% of Valhi's outstanding
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 September 30, 2004, Mr.  Simmons'  spouse owned 40.9%
of the  outstanding  Series A  Preferred  Stock.  Mr.  Simmons  may be deemed to
control each of Contran, Valhi and TIMET.


                                     - 10 -

<PAGE>


     The Company completed a five-for-one stock split of its common stock, which
was effected in the form of a stock dividend  (whereby an additional four shares
of  post-split  stock were  distributed  for each one share of pre-split  stock)
effective after the close of trading on August 27, 2004. All share and per share
disclosures  for all periods  presented have been adjusted to give effect to the
stock split.

     During the third quarter of 2004, the Company adopted Financial  Accounting
Standards  Board Emerging  Issues Task Force ("EITF") Issue 03-1, The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investments. EITF
Issue 03-1 provides  guidance for  determining  when an investment is considered
impaired,  whether that  impairment is other than temporary and the  measurement
date of an  impairment  loss.  EITF  03-1 had no  impact  on the  Company  as of
September 30, 2004.

     The Company has elected the disclosure  alternative prescribed by Statement
of Financial  Accounting  Standards ("SFAS") No. 123, Accounting for Stock-Based
Compensation,   as  amended  by  SFAS  No.  148,   Accounting  for   Stock-Based
Compensation  -  Transition  and  Disclosure,  and has chosen to account for its
stock-based  employee  compensation  related to stock options in accordance with
Accounting  Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued
to  Employees,  and its  various  interpretations.  Under APB  Opinion  No.  25,
compensation cost is generally  recognized for fixed stock options for which the
exercise  price is less than the  market  price of the  underlying  stock on the
grant date.  All of the Company's  stock options have been granted with exercise
prices equal to or in excess of the market  price on the date of grant,  and the
Company  recognized no  compensation  expense for fixed stock options during the
three and nine months ended  September 30, 2004 and 2003.  The  following  table
illustrates  the  effect on net  income  (loss)  and  earnings  (loss) per share
attributable  to common  stockholders  if the Company had applied the fair value
recognition  provisions of SFAS No. 123 to all options  granted since January 1,
1995:

<TABLE>

                                                          Three months ended                  Nine months ended
                                                             September 30,                       September 30,
                                                    -------------------------------    -------------------------------
                                                        2004              2003              2004              2003
                                                    --------------    -------------    --------------    -------------
                                                                  (In thousands, except per share data)

<S>                                                 <C>               <C>              <C>               <C>
Net income (loss) attributable to
  common stockholders, as reported                  $    24,142       $     (2,986)    $     24,354      $    (22,928)
Less stock option related stock-based
  employee compensation expense
  determined under SFAS No. 123                              11                 47               54               213
                                                    --------------    -------------    --------------    -------------

Pro forma net income (loss) attributable
  to common stockholders                            $    24,131       $     (3,033)    $     24,300      $    (23,141)
                                                    ==============    =============    ==============    =============

Basic earnings (loss) per share
  attributable to common stockholders:
  As reported                                       $      1.52       $      (0.19)    $       1.53      $      (1.45)
                                                    ==============    =============    ==============    =============
  Pro forma                                         $      1.52       $      (0.19)    $       1.53      $      (1.46)
                                                    ==============    =============    ==============    =============

Diluted earnings (loss) per share
  attributable to common stockholders:
  As reported                                       $      1.37       $      (0.19)    $       1.53      $      (1.45)
                                                    ==============    =============    ==============    =============
  Pro forma                                         $      1.37       $      (0.19)    $       1.52      $      (1.46)
                                                    ==============    =============    ==============    =============
</TABLE>

                                     - 11 -

<PAGE>


     VALTIMET,  the Company's 43.7% owned affiliate  accounted for by the equity
method, has entered into certain derivative  financial  instruments that qualify
as cash flow hedges  under GAAP.  The  Company's  pro-rata  share of  VALTIMET's
unrealized  net gains  (losses)  on such  derivative  financial  instruments  is
included as a component of other comprehensive income.

Note 2 - Inventories

<TABLE>
                                                                             September 30,            December 31,
                                                                                  2004                    2003
                                                                          ---------------------    -------------------
                                                                                        (In thousands)

<S>                                                                       <C>                      <C>
Raw materials                                                             $          65,956        $        33,198
Work-in-process                                                                      90,757                 76,573
Finished products                                                                    66,448                 62,687
Supplies                                                                             12,398                 12,248
                                                                          ---------------------    -------------------
                                                                                    235,559                184,706
Less adjustment of certain inventories to LIFO basis                                 21,984                 18,985
                                                                          ---------------------    -------------------

                                                                          $         213,575        $       165,721
                                                                          =====================    ===================
</TABLE>

Note 3 - Marketable securities

     The following table  summarizes the Company's  marketable  securities as of
September 30, 2004, which were acquired during the nine months then ended:

<TABLE>

                                                                         Market                           Unrealized
            Marketable security                         Shares         value (1)        Cost basis         gains (1)
--------------------------------------------          ------------    -------------    --------------    --------------
                                                                                      ($ in thousands)

<S>                                                     <C>           <C>              <C>               <C>
CompX International, Inc. ("CompX")                     2,212,820     $     36,489     $     26,673      $     9,816
NL Industries, Inc. ("NL")                                222,100            4,171            2,462            1,709
Kronos Worldwide, Inc. ("Kronos")                           2,850              110               99               11
                                                                      -------------    --------------    --------------

                                                                      $     40,770     $     29,234      $    11,536
                                                                      =============    ==============    ==============

-----------------------------------------------------------------------------------------------------------------------
<FN>

(1)  The Company's  securities are  classified as noncurrent  available-for-sale
     marketable  securities  carried at market value,  with all unrealized gains
     (losses) reported as a component of other comprehensive income.
</FN>


</TABLE>


     At September 30, 2004,  the Company owned  approximately  14.6%,  and NL, a
subsidiary of Valhi, owned an additional 68.4%, of the total number of shares of
all classes of CompX common stock  outstanding.  Effective  October 1, 2004, the
Company and NL contributed 100% of their respective holdings on that date of all
classes of CompX common stock to CompX Group Inc.  ("CGI") in return for a 17.6%
and 82.4% ownership interest in CGI,  respectively,  and CGI became the owner of
the  83.0%  of  CompX  that  the  Company  and NL had  previously  owned  in the
aggregate.  The CompX shares are the sole assets of CGI. The Company's shares of
CGI are  redeemable  at the option of the Company based upon the market value of
the  underlying  CompX  stock  held by CGI.  The  fair  value  of the  Company's
investment in CGI is based on the market value of the underlying CompX shares.

     On October 19, 2004,  the Company  purchased an additional  3,500 shares of
CompX Class A common stock for an aggregate of $0.1 million.  None of the shares
purchased  subsequent  to  October  1, 2004 have been,  or are  expected  to be,
contributed to CGI.

                                     - 12 -

<PAGE>


     At September 30, 2004, the Company owned  approximately 0.5%, and Valhi and
a wholly  owned  subsidiary  of Valhi owned an  additional  83.3%,  of the total
number of shares of NL common stock outstanding.

     During the nine months ended  September 30, 2004, NL paid  dividends on its
common stock in the form of shares of Kronos  common  stock.  At  September  30,
2004, the Company owned less than 0.1% and Valhi,  a wholly owned  subsidiary of
Valhi and NL own an  additional  93.9%,  of the total number of shares of Kronos
common stock outstanding.

Note 4 - Property and equipment
<TABLE>
                                                                                September 30,          December 31,
                                                                                   2004                   2003
                                                                            --------------------    ------------------
                                                                                         (In thousands)

<S>                                                                         <C>                     <C>
Land and improvements                                                       $           6,369       $         6,358
Buildings and improvements                                                             41,872                41,700
Information technology systems                                                         61,140                59,782
Manufacturing equipment and other                                                     324,969               318,364
Construction in progress                                                                8,071                 6,754
                                                                            --------------------    ------------------
                                                                                      442,421               432,958
Less accumulated depreciation                                                         214,983               193,776
                                                                            --------------------    ------------------

                                                                            $         227,438       $       239,182
                                                                            ====================    ==================

</TABLE>


Note 5 - Other noncurrent assets

<TABLE>
                                                                                September 30,          December 31,
                                                                                   2004                   2003
                                                                            --------------------    ------------------
                                                                                         (In thousands)

<S>                                                                         <C>                     <C>
Deferred financing costs                                                    $             918       $         7,563
Prepaid pension cost                                                                    9,710                 8,981
Notes receivable from officers                                                            102                   145
Other                                                                                       -                     3
                                                                            --------------------    ------------------

                                                                            $          10,730       $        16,692
                                                                            ====================    ==================
</TABLE>

     See Note 9 with respect to deferred financing costs.


                                     - 13 -


<PAGE>


Note 6 - Accrued liabilities

<TABLE>
                                                                              September 30,           December 31,
                                                                                   2004                   2003
                                                                           ---------------------    ------------------
                                                                                         (In thousands)

<S>                                                                        <C>                      <C>
OPEB cost                                                                  $           3,065        $         3,135
Pension cost                                                                           4,749                  8,466
Payroll and vacation                                                                   4,704                  6,891
Incentive compensation                                                                10,226                    579
Other employee benefits                                                                8,519                  9,731
Deferred income                                                                        1,669                  1,664
Environmental costs                                                                    1,761                    301
Taxes, other than income                                                               4,100                  4,408
Accrued interest on debt payable to the Capital Trust                                     66                      -
Wyman-Gordon installment                                                                   -                  2,800
Other                                                                                  6,170                  7,188
                                                                           ---------------------    ------------------

                                                                           $          45,029        $        45,163
                                                                           =====================    ==================
</TABLE>

     See Note 9 with respect to accrued  interest on debt payable to the Capital
Trust. See Note 14 with respect to environmental costs.

     Effective January 1, 2004, the Company modified the vacation policy for its
U.S.  salaried  employees.  Such  employees no longer accrue their entire year's
vacation  entitlement  on January 1, but rather will  accrue the current  year's
vacation  entitlement  over the  course of the year.  As a result,  the  Company
reduced its  vacation  accrual  for these  employees  from $1.9  million to zero
during the first quarter of 2004,  resulting in a one-time  reduction in cost of
sales of $1.6  million and  selling,  general,  administrative  and  development
expense of $0.3 million.

     During the third  quarter of 2003,  the  Company and  Wyman-Gordon  Company
("Wyman-Gordon")  agreed  to  terminate  the 1998  purchase  and sale  agreement
associated with the formation of the titanium castings joint venture  previously
owned by the two parties. The Company agreed to pay Wyman-Gordon a total of $6.8
million in three quarterly  installments  in connection  with this  termination,
which included the termination of certain favorable  purchase terms. The Company
recorded a one-time  charge for the entire $6.8  million as a reduction to sales
in the third  quarter of 2003.  The Company paid the first two  installments  of
$2.0 million each to  Wyman-Gordon  during the third and fourth quarters of 2003
and paid the remaining $2.8 million during the first quarter of 2004.

                                     - 14 -

<PAGE>


Note 7 - Boeing advance

     Under the terms of the amended  long-term  agreement  ("LTA") between TIMET
and The  Boeing  Company  ("Boeing"),  in years  2002  through  2007,  Boeing is
required  to  advance  TIMET  $28.5  million  annually  less  $3.80 per pound of
titanium  product  purchased  by Boeing  subcontractors  from  TIMET  during the
preceding year. The advance relates to Boeing's  take-or-pay  obligations  under
the LTA.  Effectively,  the Company collects $3.80 less from Boeing than the LTA
selling  price for each pound of titanium  product  sold  directly to Boeing and
reduces the related  customer  advance  recorded by the  Company.  For  titanium
products  sold to  Boeing  subcontractors,  the  Company  collects  the full LTA
selling  price,  but gives  Boeing  credit by reducing  the next  year's  annual
advance by $3.80 per pound of titanium  product  sold to Boeing  subcontractors.
The Boeing customer advance is also reduced as take-or-pay  benefits are earned.
As of  September  30, 2004,  approximately  $11.8  million of customer  advances
related to the Company's LTA with Boeing.

Note 8 - Bank debt

     During the first  quarter of 2004,  the  Company  amended  its U.S.  credit
facility to, among other things, allow the Company the flexibility to remove the
equipment   component  from  the   determination  of  the  Company's   borrowing
availability  in order to avoid  the costs of an  appraisal.  The  Company  took
advantage  of this  flexibility  during the first  quarter of 2004,  effectively
reducing the Company's  borrowing  availability in the U.S. by $10 million as of
September  30,  2004.  However,  the  Company can regain  this  availability  by
completing an updated equipment appraisal. As of September 30, 2004, the Company
had outstanding  borrowings of $33.7 million under its U.S. credit agreement and
$0.1  million  under one of its European  credit  facilities.  Aggregate  unused
borrowing  availability  under the Company's U.S. and European credit facilities
was approximately $117 million as of September 30, 2004.

Note 9 - Capital Trust

     In  November   1996,   the  Capital  Trust  issued  $201.3  million  6.625%
mandatorily  redeemable  convertible preferred securities,  beneficial unsecured
convertible securities ("BUCS") and $6.2 million 6.625% common securities. TIMET
owns all of the  outstanding  common  securities of the Capital  Trust,  and the
Capital Trust is a wholly owned finance  subsidiary of TIMET.  The Capital Trust
used the proceeds from such issuance to purchase from the Company $207.5 million
principal amount of TIMET's 6.625%  convertible junior  subordinated  debentures
due  2026  (the  "Subordinated   Debentures").   Interest  on  the  Subordinated
Debentures is recorded as interest  expense.  The  Subordinated  Debentures  and
accrued  interest  receivable  were  the sole  assets  of the  Capital  Trust at
September 30, 2004.

     In October 2002, the Company  exercised its right to defer future  interest
payments on the Subordinated Debentures,  effective beginning with the Company's
December 1, 2002  scheduled  interest  payment.  Based on the deferral,  accrued
interest on the Subordinated  Debentures was reflected as a long-term  liability
in the  Consolidated  Balance Sheet at December 31, 2003. On March 24, 2004, the
Company's Board of Directors approved resumption of scheduled quarterly interest
payments on the Subordinated Debentures beginning with the June 1, 2004 payment.
The Company's Board also approved payment of all previously deferred interest on
the  Subordinated  Debentures.  On April 15, 2004, the Company paid the deferred
interest in the amount of $21.7  million,  $21.0 million of which related to the
BUCS.

                                     - 15 -

<PAGE>

     In August 2004, the Company completed an exchange offer,  pursuant to which
the Company had offered to  exchange  any and all of the  4,024,820  outstanding
BUCS issued by the Capital Trust for shares of the Company's  Series A Preferred
Stock at the  exchange  rate of one share of Series A  Preferred  Stock for each
BUCS. Based upon the 3,909,103 BUCS tendered and accepted for exchange as of the
close of the offer on August 31, 2004,  the Company issued  3,909,103  shares of
Series A Preferred Stock in exchange for such BUCS.  During the third quarter of
2004, the Company recognized a $15.5 million non-cash non-operating gain related
to the BUCS exchange,  reflecting  the difference  between the carrying value of
the related  Subordinated  Debentures ($195.5 million) and the fair value of the
Series A Preferred Stock issued ($173.7  million,  based on the closing price of
the BUCS on August 31, 2004  according to NASDAQ's  website of $45.25 per share,
less $3.2  million  attributable  to accrued  and unpaid  dividends),  less $6.3
million of unamortized  deferred  financing costs related to the exchanged BUCS.
See Note 10.

Note 10 - Series A Preferred Stock

     Upon completion of the BUCS exchange offer discussed in Note 9, the Company
issued 3,909,103 shares of Series A Preferred Stock.  Each share of the Series A
Preferred  Stock is  convertible,  at any  time,  at the  option  of the  holder
thereof,  into one and two-thirds shares of the Company's common stock,  subject
to adjustment in certain events. The Series A Preferred Stock is not mandatorily
redeemable,  but is  redeemable  at the  option  of the  Company  under  certain
circumstances.  Holders of the 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), when,
as and if declared by the Company's board of directors. Whether or not declared,
cumulative dividends on Series A Preferred Stock are deducted from net income to
arrive  at  net  income  attributable  to  common  stockholders.  Subsequent  to
September  30, 2004,  the  Company's  board of directors  declared a dividend of
$0.84375 per share,  payable on December 15, 2004 to holders of record of Series
A Preferred Stock as of the close of trading on December 1, 2004.

Note 11 - Other income (expense)

<TABLE>

                                                            Three months ended                 Nine months ended
                                                               September 30,                     September 30,
                                                      ------------------------------    ------------------------------
                                                           2004             2003             2004             2003
                                                      --------------    ------------    --------------    ------------
                                                                               (In thousands)

<S>                                                   <C>               <C>             <C>               <C>
  Other operating income (expense):
     Litigation settlement                            $          -      $        -      $          -      $       475
     Boeing take-or-pay                                     10,058          10,123            12,565           12,943
     Other, net                                                 30            (183)              376               58
                                                      --------------    ------------    --------------    ------------

                                                      $     10,088      $    9,940      $     12,941      $    13,476
                                                      ==============    ============    ==============    ============

  Other non-operating income (expense):
     Dividend and interest income                     $         68      $       74      $        304      $       255
     Equity in earnings of common
        securities of the Capital Trust                        103             109               320              321
     Foreign exchange (losses) gains                          (471)            240               100             (647)
     Gain on BUCS exchange, net (Note 9)                    15,465               -            15,465                -
     Other, net                                                234            (430)              107             (512)
                                                      --------------    ------------    --------------    ------------

                                                      $     15,399      $       (7)     $     16,296      $      (583)
                                                      ==============    ============    ==============    ============

</TABLE>

                                     - 16 -

<PAGE>


     During the first quarter of 2003, the Company received $0.5 million related
to its settlement of certain  litigation  relating to power outages  suffered at
its  Henderson,  Nevada  facility  in 1997 and 1998 as a  result  of  contractor
activity.

Note 12 - Income taxes

<TABLE>
                                                                                       Nine months ended
                                                                                           September 30,
                                                                             -----------------------------------------
                                                                                   2004                   2003
                                                                             ------------------    -------------------
                                                                                          (In thousands)

<S>                                                                          <C>                   <C>
Expected income tax expense (benefit), at 35%                                $         9,459       $          (7,589)
Non-U.S. tax rates                                                                      (217)                    400
Incremental tax on earnings of non-U.S. tax group affiliates                              94                      27
U.S. state income taxes, net                                                            (103)                   (790)
Dividends received deduction                                                             (25)                   (312)
Nontaxable income                                                                        (70)                   (123)
Revision of estimated tax liability                                                     (551)                   (241)
Adjustment of deferred income tax asset
  valuation allowance                                                                 (7,750)                  9,121
Other, net                                                                              (145)                    314
                                                                             ------------------    -------------------

                                                                             $           692       $             807
                                                                             ==================    ===================
</TABLE>

     The  Company  periodically  reviews  its  deferred  income  tax  assets  to
determine  if future  realization  is more  likely  than not.  During  the third
quarter of 2004, due to a change in estimate of the Company's ability to utilize
the benefits of its net operating  loss ("NOL")  carryforwards  in Germany,  the
Company  determined  that its deferred income tax asset in Germany now meets the
"more-likely-than-not"  recognition criteria.  Accordingly, the Company reversed
the $0.7 million  valuation  allowance  attributable to such deferred income tax
asset. In addition,  the Company's deferred income tax asset valuation allowance
related to income from  continuing  operations  decreased by $7.0 million during
the first nine months of 2004,  primarily due to the utilization of the U.S. and
U.K.  NOL  carryforwards,  the  benefit  of  which  had  previously  not met the
"more-likely-than-not" recognition criteria.

     At  September  30,  2004,  the Company  had,  for U.S.  federal  income tax
purposes,  (i) NOL  carryforwards  of $110  million  that expire in 2020 through
2023,  (ii) a capital loss  carryforward of $86 million that expires in 2008 and
(iii) AMT credit  carryforwards  of $4 million,  which can be utilized to offset
regular  income taxes payable in future years,  with an indefinite  carryforward
period.  In addition,  at September 30, 2004,  the Company had the equivalent of
(i) a $24 million NOL  carryforward  in the United  Kingdom and a $2 million NOL
carryforward in Germany, both of which have indefinite carryforward periods, and
(ii) $0.1 million of NOL carryforwards in Italy that expire in 2008 and 2009.

                                     - 17 -

<PAGE>


Note 13 - Employee benefits

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

<TABLE>

                                                          Three months ended                 Nine months ended
                                                             September 30,                      September 30,
                                                    -------------------------------    -------------------------------
                                                        2004              2003             2004              2003
                                                    --------------    -------------    --------------    -------------
                                                                              (In thousands)

<S>                                                 <C>               <C>              <C>               <C>
Service cost                                        $       789       $       667      $     2,466       $     2,094
Interest cost                                             3,135             2,769            9,429             8,228
Expected return on plan assets                           (3,257)           (2,594)          (9,791)           (7,074)
Amortization of unrecognized
  prior service cost                                        122               144              366               432
Amortization of net losses                                1,088               780            3,272             2,901
                                                    --------------    -------------    --------------    -------------

  Net periodic pension expense                      $     1,877       $     1,766      $     5,742       $     6,581
                                                    ==============    =============    ==============    =============
</TABLE>

     Through  September  30,  2004,  the Company  has made $7.9  million of cash
contributions  to its defined benefit pension plans in 2004 ($1.8 million to the
U.S. plan and $6.1 million to the U.K. plan), and the Company  currently expects
to make  additional  cash  contributions  of  approximately  $1.9 million to its
defined benefit  pension plans during 2004 (all to the U.K.  plan).  The current
aggregate  estimate  for  full-year  2004 cash  contributions  represents a $1.7
million  decrease from estimates as of December 31, 2003,  primarily  based upon
the effects on the U.S. plan of the Company's application of the Pension Funding
Equity Act of 2004, which was enacted on April 9, 2004.

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

<TABLE>

                                                          Three months ended                 Nine months ended
                                                             September 30,                      September 30,
                                                    -------------------------------    -------------------------------
                                                         2004              2003             2004              2003
                                                    --------------    -------------    --------------    -------------
                                                                              (In thousands)

<S>                                                 <C>               <C>              <C>               <C>
Service cost                                        $       152       $        14      $       405       $       366
Interest cost                                               529               521            1,335             1,291
Amortization of unrecognized
  prior service cost                                       (116)             (160)            (348)             (348)
Amortization of net losses                                  386               319              840               717
                                                    --------------    -------------    --------------    -------------

Net periodic OPEB expense                           $       951       $       694      $     2,232       $     2,026
                                                    ==============    =============    ==============    =============

</TABLE>

                                     - 18 -

<PAGE>


     The Medicare  Prescription Drug,  Improvement and Modernization Act of 2003
(the  "Medicare  Act  of  2003"),   enacted  in  December  2003,   introduced  a
prescription drug benefit under Medicare  (Medicare Part D) as well as a federal
subsidy to sponsors of retiree  health care benefit plans that provide a benefit
that is at least actuarially equivalent to Medicare Part D. Detailed regulations
necessary to implement the Medicare Act of 2003 were not issued upon  enactment,
including  those that would  specify the manner in which  actuarial  equivalency
would be determined,  the evidence required to demonstrate actuarial equivalence
and  the  documentation  requirements  necessary  to  receive  the  subsidy.  In
accordance  with FASB Staff Position  ("FSP") No. 106-1,  the Company elected to
defer accounting for the effects of the Medicare Act of 2003 until authoritative
guidance on how to account for such effects was issued.

     In May 2004, the FASB issued FSP No. 106-2,  which superceded FSP No. 106-1
and is  applicable to the Company  beginning in the quarter ended  September 30,
2004. FSP No. 106-2  provides  guidance on (i) accounting for the effects of the
Medicare Act of 2003 once the Company is able to determine actuarial equivalency
and (ii) various required disclosures.  Actuarial equivalence will be determined
under  regulations  issued by the Centers for  Medicare  and  Medicaid  Services
("CMMS").  Based on  proposed  CMMS  guidance  issued to date and the  Company's
understanding  of the Medicare Act of 2003,  the Company is currently  unable to
determine whether the benefits provided by its plans are actuarially equivalent.
Accordingly, the Company's accumulated postretirement benefit obligation and net
periodic  OPEB cost,  as reflected in the  accompanying  consolidated  financial
statements,  do not  reflect  any effect of the  federal  subsidy.  The  Company
expects  to  be  able  to  determine   actuarial   equivalency  when  additional
clarification  and final  regulations are issued, at which time the Company will
account for the effect of the federal subsidy,  if any,  prospectively from that
date, as permitted by and in accordance with FSP No. 106-2.

Note 14 - Commitments and contingencies

     Environmental  matters.  TIMET and Basic  Management,  Inc. ("BMI") entered
into an agreement in 1999 providing that upon BMI's payment to TIMET of the cost
to design,  purchase and install the technology and equipment necessary to allow
the Company to stop discharging  liquid and solid effluents and co-products into
settling  ponds  located on certain  lands owned by the Company  adjacent to its
Henderson,  Nevada  plant site (the "TIMET Pond  Property"),  the Company  would
convey  the TIMET  Pond  Property  to BMI,  at no  additional  cost.  Under this
agreement,  BMI will pay 100% of the first  $15.9  million  of the cost for this
project,  and TIMET will pay 50% of the cost in excess of $15.9 million, up to a
maximum payment by TIMET of $2 million.

     The Company  and BMI have agreed in  principle  to a new  agreement,  which
would  supercede the 1999  agreement,  pursuant to which TIMET would transfer to
BMI the TIMET  Pond  Property  and BMI would  pay  TIMET  cash and would  assume
substantially  all  of  the  environmental   obligations  associated  with  such
property.  TIMET currently  expects to finalize this agreement during the fourth
quarter 2004. TIMET expects to use any funds received to pay  substantially  all
of the  expected  cost to  complete  a new  wastewater  neutralization  facility
currently under construction.

                                     - 19 -

<PAGE>


     In the event the  agreement  is not  completed,  TIMET may be  required  to
restore some portion of the TIMET Pond Property to the condition it was in prior
to TIMET's use of the property,  before returning title of the affected property
to BMI.  The Company  currently  believes  any  liability it may have under this
obligation to be remote. The Company is continuing investigation with respect to
other  environmental  issues associated with the TIMET Pond Property,  including
possible groundwater issues, in the event the agreement is not finalized for any
reason.

     The  Company is also  continuing  assessment  work with  respect to its own
active  plant site in  Henderson,  Nevada.  In 2000  through  2002,  the Company
commissioned  studies of certain  remediation issues at the Company's plant site
and other Company-owned sites within the BMI Complex.  The Company currently has
$4.3 million  accrued based on the  undiscounted  cost estimates of the probable
costs for remediation of these sites,  which includes an increase in the accrual
of $0.8  million  in the  third  quarter  of 2004  related  to  specific  future
remediation costs which the Company now considers probable.  The Company expects
these accrued expenses to be paid over a period of up to thirty years.

     As of  September  30,  2004,  the  Company  had  accrued  an  aggregate  of
approximately $4.5 million for environmental matters,  including those discussed
above.  The upper end of the range of  reasonably  possible  costs to  remediate
these matters is  approximately  $9.1 million.  The Company records  liabilities
related to environmental remediation obligations when estimated future costs are
probable  and  reasonably  estimable.  Such  accruals  are  adjusted  as further
information  becomes available or circumstances  change.  Estimated future costs
are not  discounted to their present  value.  It is not possible to estimate the
range of costs for certain sites. The imposition of more stringent  standards or
requirements  under  environmental  laws or  regulations,  the results of future
testing and analysis undertaken by the Company at its operating facilities, or a
determination  that the Company is  potentially  responsible  for the release of
hazardous  substances at other sites, could result in costs in excess of amounts
currently  estimated to be required for such matters.  No assurance can be given
that  actual  costs  will not exceed  accrued  amounts or that costs will not be
incurred  with  respect to sites as to which no problem  is  currently  known or
where no estimate can presently be made. Further, there can be no assurance that
additional environmental matters will not arise in the future.

     Legal  proceedings.  The  Company  records  liabilities  related  to  legal
proceedings  when estimated  costs are probable and reasonably  estimable.  Such
accruals are adjusted as further  information becomes available or circumstances
change.  Estimated future costs are not discounted to their present value. It is
not  possible to estimate the range of costs for certain  matters.  No assurance
can be given that  actual  costs will not exceed  accrued  amounts or that costs
will not be incurred with respect to matters as to which no problem is currently
known or where no  estimate  can  presently  be made.  Further,  there can be no
assurance that additional legal proceedings will not arise in the future.

     Other. TIMET is the primary obligor on workers'  compensation bonds (having
a maximum  aggregate  exposure of $3.0  million)  issued on behalf of a divested
subsidiary that is currently under Chapter 11 bankruptcy protection. The issuers
of the bonds have been  required  to make  payments  on the bonds for claims and
have requested  reimbursement from TIMET. Since the third quarter of 2002, TIMET
has  reimbursed  the issuers  approximately  $1.3 million for claims under these
bonds,  and $0.7 million remains accrued for future payments as of September 30,
2004,  based on the  Company's  current best  estimates  of its probable  future
obligation.  TIMET may revise its estimated  liability  under these bonds in the
future as additional facts become known or claims develop.

                                     - 20 -

<PAGE>


     The Company is involved in various employment, environmental,  contractual,
product  liability and other claims,  disputes and litigation  incidental to its
business  including those discussed above.  While management  currently believes
that the outcome of these matters,  individually and in the aggregate,  will not
have a material adverse effect on the Company's financial position, liquidity or
overall  trends in  results  of  operations,  all such  matters  are  subject to
inherent  uncertainties.  Were an  unfavorable  outcome  to occur  in any  given
period,  it is  possible  that it could  have a material  adverse  impact on the
results of operations or cash flows in that particular period.

     See the 2003  Annual  Report and the March 31,  2004  Quarterly  Report for
additional  information  concerning  certain  legal and  environmental  matters,
commitments and contingencies.

Note 15 - Earnings per share

     Basic earnings (loss) per share is based on the weighted  average number of
unrestricted  common shares  outstanding  during each period.  Diluted  earnings
(loss) per share  attributable  to common  stockholders  reflects  the  dilutive
effect of common stock options,  restricted stock and the assumed  conversion of
the 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 (loss) per share is presented below.

<TABLE>

                                                          Three months ended                  Nine months ended
                                                             September 30,                      September 30,
                                                    -------------------------------    -------------------------------
                                                         2004              2003             2004              2003
                                                    --------------    -------------    --------------    -------------
                                                                              (In thousands)
<S>                                                 <C>               <C>              <C>               <C>
Numerator:
  Net income attributable to common
    stockholders                                    $     24,142      $    (2,986)     $     24,354      $   (22,928)
  Dividends on Series A Preferred
    Stock                                                  1,099                -             1,099                -
  Interest expense on BUCS                                 2,254                -                 -                -
                                                    --------------    -------------    --------------    -------------

  Diluted net income (loss) attributable
    to common stockholders                          $     27,495      $    (2,986)     $     25,453      $   (22,928)
                                                    ==============    =============    ==============    =============

Denominator:
  Average common shares outstanding                       15,887           15,858            15,876           15,838
  Average dilutive stock options and
    restricted stock                                          87                -                56                -
  Series A Preferred Stock                                 2,291                -               755                -
  BUCS                                                     1,774                -                 -                -
                                                    --------------    -------------    --------------    -------------

Diluted shares                                            20,039           15,858            16,687           15,838
                                                    ==============    =============    ==============    =============

</TABLE>

                                     - 21 -

<PAGE>


     For the nine months ended  September  30, 2004,  and for the three and nine
months ended  September 30, 2003, the  conversion of the BUCS was  antidilutive.
Stock options to purchase  approximately  288,000  shares of common stock during
the three months  ended  September  30, 2004 and 363,000  shares of common stock
during  the  nine  months  ended  September  30,  2004  were  excluded  from the
calculation  because the  exercise  price for such  options was greater than the
average  market  price of the common  shares  and such  options  were  therefore
antidilutive  during the respective period.  Stock options and restricted shares
excluded from the calculation  because they were antidilutive were approximately
645,000 for the three and nine months ended September 30, 2003.

Note 16 - Business segment information

     The  Company's  production  facilities  are  located in the United  States,
United  Kingdom,  France and Italy,  and its  products are sold  throughout  the
world.  The Company's Chief  Executive  Officer is the Company's chief operating
decision  maker  ("CODM") as that term is defined in SFAS No.  131,  Disclosures
about  Segments of an  Enterprise  and Related  Information.  The CODM  receives
financial  information  about  TIMET  from which he makes  decisions  concerning
resource  utilization  and performance  analysis only on a global,  consolidated
basis. Based upon this level of  decision-making,  the Company currently has one
segment, its worldwide "Titanium melted and mill products" segment. Sales, gross
margin,   operating  income  (loss),  inventory  and  receivables  are  the  key
management  measures used to evaluate segment  performance.  The following table
provides  segment  information   supplemental  to  the  Company's   Consolidated
Financial Statements:

<TABLE>
                                                         Three months ended                  Nine months ended
                                                            September 30,                      September 30,
                                                  ---------------------------------    ------------------------------
                                                       2004              2003              2004             2003
                                                  ---------------    --------------    -------------    -------------
                                                            ($ in thousands, except product shipment data)


<S>                                               <C>                <C>               <C>              <C>
Titanium melted and mill products:
   Melted product net sales                       $       16,461     $     12,261      $     51,942     $     41,300
   Mill product net sales                                 87,183           65,185           268,111          208,646
   Other product sales                                    16,602           12,989            44,806           41,595
   Other (1)                                                   -           (6,800)                -           (6,800)
                                                  ---------------    --------------    -------------    -------------

                                                  $      120,246     $     83,635      $    364,859     $    284,741
                                                  ===============    ==============    =============    =============


Melted product shipments:
   Volume (metric tons)                                    1,180            1,220             3,935            3,500
   Average selling price ($ per kilogram)         $        13.95     $      10.05      $      13.20     $      11.80

Mill product shipments:
   Volume (metric tons)                                    2,695            2,015             8,525            6,510
   Average selling price ($ per kilogram)         $        32.35     $      32.35      $      31.45     $      32.05
---------------------------------------------------------------------------------------------------------------------
<FN>

(1)  Represents  the effect of a $6.8  million  reduction  to sales  during 2003
     related  to  the   termination  of  a  purchase  and  sale  agreement  with
     Wyman-Gordon. See further discussion in Note 6.
</FN>

</TABLE>

                                     - 22 -

<PAGE>


Item 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

RESULTS OF OPERATIONS

     Summarized  financial  information.  The following table summarizes certain
information regarding the Company's results of operations for the three and nine
months ended September 30, 2004 and 2003. Average selling prices, as reported by
the Company,  are a reflection of not just actual selling prices received by the
Company,  but also include other related factors such as currency exchange rates
and customer  and product mix during a given  period.  Consequently,  changes in
average  selling  prices  from  period to period  will be  impacted  by  changes
occurring not just in actual  prices,  but by these other  factors as well.  The
percentage  change  information  presented  below  represents  changes  from the
respective  prior  year.  See  "Results  of  Operations  - Outlook"  for further
discussion of the Company's business expectations for the remainder of 2004.

<TABLE>

                                                      Three months ended                  Nine months ended
                                                        September 30,                       September 30,
                                               ---------------------------------    -------------------------------
                                                   2004               2003              2004             2003
                                               --------------    ---------------    -------------    --------------
                                                                        ($ in thousands)

<S>                                            <C>               <C>                <C>              <C>
Net sales                                      $    120,246      $      83,635      $     364,859    $   284,741
Gross margin                                   $     13,661      $         (42)     $      41,503    $     5,334
Operating income (loss)                        $     12,432      $       1,267      $      22,227    $    (8,885)

Gross margin percent of net sales                       11%                 0%                11%             2%

Percentage change in:
   Sales volume:
     Melted product sales volume                         -3                +95                +12            +85
     Mill product sales volume                          +34                  -                +31             -5

   Average selling prices - includes
     changes in product mix:
       Melted products                                  +39                -27                +12            -20
       Mill products                                      -                 +4                 -2             +3

   Selling prices - excludes changes
     in product mix:
       Melted products                                  +15                -20                 +6            -15
       Mill products in U.S. dollars                     +6                 -2                 +4             -2
       Mill products in
         billing currencies (1)                          +2                 -5                 -1             -7

-------------------------------------------------------------------------------------------------------------------
<FN>

(1)  Excludes the effect of changes in foreign currencies.
</FN>


</TABLE>

                                     - 23 -

<PAGE>


     Third  quarter of 2004  compared to third  quarter of 2003.  The  Company's
melted  product sales  increased 34% from $12.3 million during the third quarter
of 2003 to $16.5 million  during the third quarter of 2004,  primarily due to an
39% increase in melted  product  average  selling prices and changes in customer
and product  mix,  partially  offset by a 3% decrease  in melted  product  sales
volume. Melted products consist of ingot and slab and are generally sold only in
U.S.  dollars.  The  increase  in melted  product  average  selling  prices  was
partially due to the impact in the third  quarter of 2003 of a significant  sale
of slab, for which selling prices are lower than ingot. Excluding the effects of
changes in customer and product mix,  melted  product  selling prices during the
third quarter of 2004 increased 15% compared to the third quarter of 2003.

     The Company's  mill product sales  increased 34% from $65.2 million  during
the third  quarter of 2003 to $87.2  million  during the third  quarter of 2004.
This increase was principally due to a 34% increase in mill product sales volume
primarily  due to  increased  sales to the  aerospace  (commercial  and military
sectors) and industrial markets. Average selling prices during the third quarter
of 2004 were  unfavorably  impacted  by customer  and product mix and  favorably
impacted by changes in foreign  currencies,  resulting in  relatively  unchanged
third  quarter  2004 average  selling  prices  compared to the year-ago  period.
Selling  prices in billing  currencies  and  excluding  changes in customer  and
product  mix  increased  2% during the third  quarter of 2004 as compared to the
year-ago period.

     Gross margin (net sales less cost of sales) was 11% of net sales during the
third  quarter  of  2004,  compared  to  0%  during  the  year-ago  period.  The
improvement in gross margin was primarily a result of improved  plant  operating
rates  (from 55% in the third  quarter  of 2003 to 72% in the third  quarter  of
2004) and the  Company's  continued  cost  management  efforts.  These  positive
effects were offset by charges to cost of sales for (i) a $4.1  million  accrual
related to certain employee incentive  compensation payments expected to be made
for  2004,  (ii)  a  $0.8  million   increase  in  the  Company's   accrual  for
environmental  costs and (iii) a net increase in the  Company's  LIFO  inventory
reserve.  Due to higher raw material costs (including scrap and alloys),  higher
energy costs and increasing book inventories,  the Company currently expects its
LIFO inventory  reserve to increase at the end of 2004 as compared to the end of
2003. As a result,  the Company  increased  cost of sales by $1.1 million in the
third  quarter of 2004.  This  compared  to a  decrease  in the  Company's  LIFO
inventory  reserve  during the third quarter of 2003,  which  decreased  cost of
sales by $3.9  million  in the third  quarter  2003.  Gross  margin for the 2003
period was negatively  affected by a $6.8 million one-time charge related to the
termination  of a purchase  and sales  agreement  between  the Company and Wyman
Gordon, recorded as a reduction in sales.

     Selling,  general,  administrative  and development  expenses increased 37%
from $8.5 million  during the third quarter of 2003 to $11.7 million  during the
third  quarter of 2004,  principally  as a result of (i) a $1.0 million  accrual
related to certain employee incentive  compensation payments expected to be made
for 2004, (ii) $0.6 million of additional auditing and consulting costs relative
to the Company's  compliance  with the  Sarbanes-Oxley  Act's  internal  control
requirements  and (iii) $0.3 million of increased costs related to the Company's
intercompany services agreement with Contran.

     Equity in (losses) earnings of joint ventures increased from a loss of $0.1
million  during the third quarter of 2003 to earnings of $0.4 million during the
third quarter of 2004,  principally due to an increase in the operating  results
of VALTIMET, the Company's minority-owned welded tube joint venture.

     Net other  income  (expense)  is  primarily  related to Boeing  take-or-pay
income, which was $10.1 million during the third quarter of both 2004 and 2003.

                                     - 24 -

<PAGE>


     First  nine  months of 2004  compared  to first  nine  months of 2003.  The
Company's melted product sales increased 26% from $41.3 million during the first
nine  months of 2003 to $51.9  million  during  the first  nine  months of 2004,
primarily  due to a 12%  increase  in  melted  product  sales  volume  and a 12%
increase in melted product average  selling prices.  Melted product sales volume
increased  principally  as a result of increased  market demand and share gains.
Excluding the effects of changes in product mix,  melted product  selling prices
during the first nine months of 2004  increased  6%  compared to the  comparable
period during 2003.

     The Company's  mill product sales  increased 29% from $208.6 million during
the first nine months of 2003 to $268.1  million during the first nine months of
2004.  This increase was principally due to a 31% increase in mill product sales
volume  primarily  due to  increased  sales  to the  aerospace  (commercial  and
military sectors) and industrial  markets,  partially offset by a 2% decrease in
mill product  average  selling  prices.  As compared to the first nine months of
2003,  mill product  average selling prices during the first nine months of 2004
were  positively  affected by the weakening of the U.S.  dollar  compared to the
British  pound  sterling  and the euro and  negatively  affected  by  changes in
product mix.

     Gross  margin was 11% of net sales  during  the first nine  months of 2004,
compared to 2% during the year-ago  period.  The improvement in gross margin was
primarily a result of improved plant  operating rates (from 55% during the first
nine  months  of 2003 to 72%  during  the  first  nine  months  of 2004) and the
Company's continued cost management efforts.  Gross margin during the first nine
months of 2004 was also positively  affected by a $1.6 million reduction in cost
of sales related to the Company's  elimination of its vacation  accrual for U.S.
salaried employees. On January 1, 2004, the Company modified its vacation policy
for its U.S. salaried  employees,  whereby such employees no longer accrue their
entire  year's  vacation  entitlement  on January 1, but rather  will accrue the
current year's vacation  entitlement over the course of the year.  Additionally,
gross  margin was  positively  affected by the  elimination  of $1.0  million of
previously recorded rebate accruals that are no longer required.  These positive
effects were offset by charges to cost of sales for (i) a $7.6  million  accrual
related to certain employee incentive  compensation payments expected to be made
for  2004,  (ii)  a  $0.8  million   increase  in  the  Company's   accrual  for
environmental  costs and (iii) a net increase in the  Company's  LIFO  inventory
reserve.  Due to higher raw material costs (including scrap and alloys),  higher
energy costs and increasing book inventories,  the Company currently expects its
LIFO inventory  reserve to increase at the end of 2004 as compared to the end of
2003. As a result,  the Company  increased  cost of sales by $3.0 million in the
first nine months of 2004.  This  compared to a decrease in the  Company's  LIFO
inventory  reserve during the first nine months of 2003, which decreased cost of
sales by $4.5  million in the first nine  months of 2003.  Gross  margin for the
2003 period was negatively affected by a $6.8 million one-time charge related to
the termination of a purchase and sales agreement  between the Company and Wyman
Gordon, recorded as a reduction in sales.

     Selling,  general,  administrative  and development  expenses increased 16%
from $28.0 million  during the first nine months of 2003 to $32.4 million during
the first nine  months of 2004,  principally  as a result of (i) a $2.1  million
accrual related to certain employee incentive  compensation payments expected to
be made for 2004, (ii) $1.0 million of additional  auditing and consulting costs
relative to the Company's  compliance  with the  Sarbanes-Oxley  Act's  internal
control  requirements  and (iii) $0.8 million of increased  costs related to the
Company's intercompany services agreement with Contran.

                                     - 25 -

<PAGE>


     Net other  income  (expense)  is  primarily  related to Boeing  take-or-pay
income,  which decreased from $12.9 million during the first nine months of 2003
to $12.6 million  during the first nine months of 2004 due to an increase in the
amount of product  shipped to Boeing  during the 2004 period.  In addition,  net
other income (expense)  decreased related to the one-time  settlement of certain
litigation during the first nine months of 2003.

     Non-operating income (expense).

<TABLE>
                                                       Three months ended                  Nine months ended
                                                         September 30,                       September 30,
                                                ---------------------------------    -------------------------------
                                                    2004               2003              2004             2003
                                                --------------    ---------------    -------------    --------------
                                                                          (In thousands)

<S>                                             <C>               <C>                <C>              <C>
Interest expense on debt payable
   to the Capital Trust                         $      2,357      $       3,630      $      9,604     $     10,712
Other interest expense                                   742                328             1,893            1,504
                                                --------------    ---------------    -------------    --------------

                                                $      3,099      $       3,958      $     11,497     $     12,216
                                                ==============    ===============    =============    ==============

Dividend and interest income                    $         68      $          74      $        304     $        255
Equity in earnings of common
   securities of the Capital Trust                       103                109               320              321
Foreign exchange (losses) gains                         (471)               240               100             (647)
Gain on BUCS exchange, net                            15,465                  -            15,465                -
Other, net                                               234               (430)              107             (512)
                                                --------------    ---------------    -------------    --------------

                                                $     15,399      $          (7)     $     16,296     $       (583)
                                                ==============    ===============    =============    ==============

</TABLE>


     Prior to September 1, 2004,  quarterly  interest  expense on the  Company's
debt payable to the Capital Trust  approximated  $3.4 million,  exclusive of any
accrued  interest on deferred  interest  payments.  On  September  1, 2004,  the
Company  exchanged  97.1% of its  outstanding  BUCS for its  Series A  Preferred
Stock,  resulting in a $15.5 million non-cash non-operating gain (see "Liquidity
and  Capital  Resources  -  Other"  and  Note  9 to the  Consolidated  Financial
Statements).  Interest  expense  related to the  remaining  debt  payable to the
Capital Trust is approximately $0.1 million per quarter.

     In October 2002, the Company  exercised its right to defer future  interest
payments on this debt  effective  with the Company's  December 1, 2002 scheduled
interest payment.  Interest continued to accrue at the 6.625% coupon rate on the
principal  and  unpaid  interest.  On March 24,  2004,  the  Company's  Board of
Directors  approved  resumption of scheduled  quarterly interest payments on the
Subordinated  Debentures  beginning  with  the  payment  on  June 1,  2004.  The
Company's Board also approved payment of all previously deferred interest on the
Subordinated  Debentures.  On April 15,  2004,  the  Company  paid the  deferred
interest in the amount of $21.7  million,  $21.0 million of which related to the
BUCS.

                                     - 26 -

<PAGE>


     Income  taxes.  The Company  operates in several tax  jurisdictions  and is
subject to varying income tax rates.  As a result,  the geographic mix of pretax
income or loss can impact the  Company's  overall  effective  tax rate.  For the
three and nine months ended  September 30, 2004 and 2003,  the Company's  income
tax rate varied from the U.S.  statutory  rate  primarily  due to changes in the
deferred income tax valuation  allowance related to the Company's tax attributes
with respect to the  "more-likely-than-not"  recognition  criteria  during those
periods.  See Note 12 to the Consolidated  Financial  Statements.  The Company's
current income tax expense  during the nine months ended  September 30, 2004 and
for the three and nine months ended September 30, 2003 relates  primarily to its
operations in France.

     The  Company  periodically  reviews  its  deferred  income  tax  assets  to
determine  if future  realization  is more  likely  than not.  During  the third
quarter of 2004, due to a change in estimate of the Company's ability to utilize
the benefits of its net operating  loss ("NOL")  carryforwards  in Germany,  the
Company  determined  that its deferred income tax asset in Germany now meets the
"more-likely-than-not"  recognition criteria.  Accordingly, the Company reversed
the $0.7 million  valuation  allowance  attributable to such deferred income tax
asset.

     In addition,  the Company's  deferred income tax asset valuation  allowance
related to income from  continuing  operations  decreased by $7.0 million during
the first nine months of 2004,  primarily due to the utilization of the U.S. and
U.K.  NOL  carryforwards,  the  benefit  of  which  had  previously  not met the
"more-likely-than-not"  recognition  criteria.  As of September  30,  2004,  the
Company  had   cumulative   valuation   allowances  in  the  U.S.  and  U.K.  of
approximately $85 million  offsetting its deferred income tax assets,  primarily
related to net operating loss carryforwards, capital loss carryforwards, minimum
pension  liability and other  temporary  differences.  The Company has concluded
that   the   benefit   from   these   items   does   not   currently   meet  the
"more-likely-than-not" recognition criteria, in part because the Company has not
demonstrated a recent pattern of taxable income for a time period  sufficient to
overcome the negative evidence  generated by prior operating losses. The Company
will continue to monitor and evaluate these deferred  income tax asset valuation
allowances in light of all available  evidence,  and it is possible that at some
point in the future  the  Company  will  conclude  that the  weight of  positive
evidence is  sufficient  to support  reversal of the  applicable  portion of its
valuation allowances.

     In October  2004,  the American  Jobs Creation Act of 2004 was enacted into
law.  The new law  contains  several  provisions  that could impact the Company.
These provisions  provide for, among other things, a special deduction from U.S.
taxable  income  equal to a  stipulated  percentage  of  qualified  income  from
domestic manufacturing  activities (as defined) beginning in 2005, and a special
85% dividends  received deduction for certain dividends received from controlled
foreign  corporations,  subject to  certain  limitations.  The  Company is still
studying the new law,  including  the  technical  provisions  related to the two
complex  provisions  noted above that are also subject to numerous  limitations.
The effect on the Company of the new law, if any,  has not yet been  determined,
in part  because  the  Company has not yet  determined  whether  its  operations
qualify for the special  deduction or whether it would  benefit from the special
dividends received deduction.

                                     - 27 -

<PAGE>


     Dividends on Series A Preferred  Stock.  Shares of the  Company's  Series A
Preferred  Stock are  convertible,  at any  time,  at the  option of the  holder
thereof,  into one and two-thirds shares of the Company's common stock,  subject
to adjustment in certain events. The Series A Preferred Stock is not mandatorily
redeemable,  but is  redeemable  at the  option  of the  Company  under  certain
circumstances.  When,  as and if declared by the  Company's  board of directors,
holders of the 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).  Subsequent  to
September  30, 2004,  the  Company's  board of directors  declared a dividend of
$0.84375 per share,  payable on December 15, 2004 to holders of record of Series
A Preferred Stock as of the close of trading on December 1, 2004.

     European  operations.  The Company has  substantial  operations  located in
Europe,  principally the United Kingdom, France and Italy.  Approximately 43% of
the Company's sales originated in Europe for the nine months ended September 30,
2004, of which  approximately 60% were denominated in the British pound sterling
or the euro. Certain purchases of raw materials, principally titanium sponge and
alloys, for the Company's  European  operations are denominated in U.S. dollars,
while  labor  and other  production  costs are  primarily  denominated  in local
currencies. The functional currencies of the Company's 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 the
Company's  European   operations  may  be  in  U.S.  dollars  or  in  functional
currencies.  The Company's  export sales from the U.S. are  denominated  in U.S.
dollars and are not subject to currency exchange rate fluctuations.

     The  Company  does  not  use  currency  contracts  to  hedge  its  currency
exposures.  Net  currency  transaction  gains/losses  included in the  Company's
results of operations  were a loss of $0.5 million during the three months ended
September  30, 2004 and a gain of $0.2  million  during the three  months  ended
September 30, 2003. Net currency  transaction  gains/losses  were a gain of $0.1
million  during the nine  months  ended  September  30,  2004 and a loss of $0.6
million during the nine months ended  September 30, 2003. At September 30, 2004,
consolidated  assets  and  liabilities  denominated  in  currencies  other  than
functional  currencies  were  approximately  $37.8  million  and $39.7  million,
respectively,  consisting primarily of U.S. dollar cash, accounts receivable and
accounts payable.

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

     Outlook.  The  "Outlook"  section  contains  a  number  of  forward-looking
statements,  all  of  which  are  based,  unless  otherwise  noted,  on  current
expectations  and  exclude the effect of  potential  future  charges  related to
restructurings,  asset impairments,  valuation allowances, changes in accounting
principles  and  similar  items.  Undue  reliance  should not be placed on these
statements,  as  more  fully  discussed  in  the  "Forward-Looking  Information"
statement of this Quarterly Report.  Actual results may differ  materially.  See
also  Notes to the  Consolidated  Financial  Statements  regarding  commitments,
contingencies, legal matters, environmental matters and other matters, including
new accounting  principles,  which could materially  affect the Company's future
business, results of operations, financial position and liquidity.

                                     - 28 -

<PAGE>


     The  Company  expects  its full year 2004 sales  revenue to range from $495
million to $505  million  (narrowing  from  previous  guidance  of between  $490
million and $510 million),  with full year 2004 capacity utilization expected to
approximate  70% to 75%.  Capacity  utilization  was 72%  during  the first nine
months of 2004. The Company has modified its method of  calculating  its backlog
to include purchase orders under consignment relationships. The Company believes
inclusion of these orders  provides a more accurate  reflection of the Company's
overall backlog.  Using the modified  methodology for all periods, the Company's
backlog at the end of  September  2004 was $400  million,  an $80 million  (25%)
increase  over  the  $320  million  backlog  at the end of June  2004 and a $220
million  (122%)  increase over the $180 million  backlog at the end of September
2003.

     The Company  continues  to expect full year 2004 gross margin to range from
9% to 11% of net sales.  The Company's  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
represent the largest portion of the Company's manufacturing cost structure. The
Company   expects  to  manufacture   about  one-third  of  its  titanium  sponge
requirements  during 2004. The unit cost in 2004 of titanium sponge manufactured
at TIMET's Henderson,  Nevada facility is expected to decrease relative to 2003,
due primarily to higher sponge plant  operating  rates as the plant reached full
capacity in the second quarter of 2004.  The Company  expects the aggregate cost
of  purchased  sponge and alloys to increase  through the  remainder of 2004 and
into 2005.  Additionally,  the industry is currently  experiencing higher prices
for  scrap,  and the  Company  expects  those  costs  to  continue  to  increase
throughout  2004 and into 2005.  When the demand  for  titanium  melted and mill
products begins to increase,  the Company's  requirements  for scrap precede the
increase in scrap  generation  by  downstream  customers  and the supply  chain,
placing upward pressure on the market price of scrap.  The Company is continuing
its efforts to increase prices on its products in order to offset the effects of
increased raw material and energy costs.

     Selling,  general,  administrative and development expenses for 2004 should
approximate  $44  million,  an increase of $8 million from 2003.  This  increase
relates  primarily to (i) potential  employee  profit sharing payouts based upon
the Company's  various  incentive  compensation  arrangements,  (ii)  additional
auditing and consulting costs expected to be incurred  relative to the Company's
compliance with the Sarbanes-Oxley Act's internal control requirements and (iii)
increases in costs related to the Company's intercompany services agreement with
Contran.

     The Company  currently  anticipates that it will receive orders from Boeing
for about 1.6 million  pounds of product  during 2004. At this  projected  order
level,  the  Company  expects to  recognize  about $22 million of income in 2004
under the Boeing LTA's take-or-pay provisions.

     The Company expects its 2004 operating  income to range between $33 million
and $38 million  (narrowed from previous guidance of between $28 million and $38
million).  Excluding the Boeing take-or-pay income,  operating income in 2004 is
expected  to range from $11  million to $16  million.  Interest  expense  should
approximate   $13  million  in  2004,   including   interest  on  the  Company's
Subordinated Debentures held by the Capital Trust.

                                     - 29 -

<PAGE>


     Dividends  on Series A Preferred  Stock  should  approximate  $4 million in
2004, resulting in 2004 full year net income attributable to common stockholders
of between $34 million and $39 million. Excluding the Boeing take-or-pay income,
the Company would expect 2004 net income  attributable to common stockholders to
range from $12 million to $17 million.  The  Company's  current  estimate of net
income  attributable to common stockholders has increased from previous guidance
of  between  $8  million  and $18  million,  primarily  as a result of the $15.5
million non-operating BUCS exchange gain recognized in the third quarter of 2004
and the expected  reversal of the deferred income tax asset valuation  allowance
related to utilization of a portion of the Company's capital loss  carryforwards
in the fourth quarter of 2004. The Company currently anticipates selling certain
real property at its Henderson,  Nevada  facility in the fourth quarter of 2004,
and although the Company does not  anticipate  recognizing  any gain on the sale
for book  purposes  until the Company  ceases  continuing  involvement  with the
property in 2005, a gain for federal income tax purposes would occur at the time
of the sale. As a result, the "more-likely-than-not"  recognition criteria would
be met  relative  to the portion of the  Company's  capital  loss  carryforwards
utilized to offset any tax gain on the sale,  which would require  reversal of a
portion of the  deferred  income  tax asset  valuation  allowance  in the fourth
quarter of 2004.

     The Company expects its cash flows from operating activities to be negative
during 2004,  primarily  reflecting the Company's  accumulation  of inventory to
meet expected customer demand over the next several months,  higher raw material
prices  and  the  2004  resumption  of  quarterly   interest   payments  on  the
Subordinated  Debentures  and payment of the $19  million of  deferred  interest
payments on the  Subordinated  Debentures  that were  accrued as of December 31,
2003. Capital  expenditures during 2004 are expected to approximate $24 million,
a decrease  from the Company's  previous  guidance of $29 million due in part to
the timing of construction of a wastewater neutralization plant at the Henderson
facility  (scheduled  to be  completed in the first half of 2005 - see also Note
14).  Depreciation and amortization  should approximate $33 million in 2004. The
Company  currently  expects  its  full-year  cash  contributions  to its defined
benefit pension plans to approximate $10 million and expects its pension expense
to approximate $8 million in 2004.

     Non-GAAP  financial  measures.  In an  effort  to  provide  investors  with
information  in addition to the Company's  results as  determined  by GAAP,  the
Company has  provided  the  following  non-GAAP  financial  disclosures  that it
believes may provide useful information to investors:

     o    The  Company  discloses  percentage  changes  in its  melted  and mill
          product  selling prices in U.S.  dollars,  which have been adjusted to
          exclude the effects of changes in product  mix.  The Company  believes
          such disclosure  provides useful  information to investors by allowing
          them to analyze such changes  without the impact of changes in product
          mix, thereby facilitating period-to-period comparisons of the relative
          changes in average  selling  prices.  Depending on the  composition of
          changes in  product  mix,  the  percentage  change in  selling  prices
          excluding  the effect of changes in product mix can be higher or lower
          than such  percentage  change  would be using the actual  product  mix
          prevailing during the respective periods;

                                     - 30 -

<PAGE>


     o    In  addition  to  disclosing  percentage  changes in its mill  product
          selling  prices  adjusted to exclude the effects of changes in product
          mix, the Company also  discloses  such  percentage  changes in billing
          currencies, which have been further adjusted to exclude the effects of
          changes in foreign currency  exchange rates. The Company believes such
          disclosure  provides useful  information to investors by allowing them
          to  analyze  such  changes  without  the  impact of changes in foreign
          currency  exchange  rates,   thereby   facilitating   period-to-period
          comparisons of the relative  changes in average  selling prices in the
          various actual billing  currencies.  Generally,  when the U.S.  dollar
          strengthens (weakens) against other currencies,  the percentage change
          in selling  prices in billing  currencies  will be higher (lower) than
          such   percentage   changes  would  be  using  actual  exchange  rates
          prevailing during the respective periods; and

     o    The  Company  discloses  forecasted  operating  income  and net income
          excluding  the impact of the Boeing  take-or-pay  income.  The Company
          believes this provides  investors  with useful  information  to better
          analyze the Company's  business and possible  future  earnings  during
          periods  after  December 31,  2007,  at which time the Company will no
          longer receive the positive effects of the take-or-pay income.

LIQUIDITY AND CAPITAL RESOURCES

     The Company's  consolidated  cash flows for the nine months ended September
30, 2004 and 2003 are presented below. The following  discussion  should be read
in conjunction with the Company's  Consolidated  Financial  Statements and Notes
thereto.

<TABLE>

                                                                              Nine months ended September 30,
                                                                        --------------------------------------------
                                                                                2004                    2003
                                                                        --------------------    --------------------
                                                                                      (In thousands)
<S>                                                                     <C>                     <C>
Cash (used) provided by:
   Operating activities                                                 $         (19,414)      $         50,605
   Investing activities                                                           (40,003)                (5,948)
   Financing activities                                                            32,576                (21,121)
                                                                        --------------------    --------------------

   Net cash (used) provided by operating,
     investing and financing activities                                 $         (26,841)      $         23,536
                                                                        ====================    ====================

</TABLE>

     Operating  activities.  The titanium  industry  historically  has derived a
substantial portion of its business from the aerospace  industry.  The aerospace
industry is cyclical,  and changes in economic  conditions  within the aerospace
industry  significantly  impact the Company's earnings and operating cash flows.
Cash flow from  operations  is  considered  a  primary  source of the  Company's
liquidity.  Changes in titanium pricing,  production volume and customer demand,
among other things, could significantly affect the Company's liquidity.

                                     - 31 -

<PAGE>


     Certain items  included in the  determination  of net income (loss) have an
impact on cash flows from operating activities,  but the impact of such items on
cash may differ from their impact on net income.  For example,  pension  expense
and OPEB expense will generally  differ from the outflows of cash for payment of
such benefits. In addition, relative changes in assets and liabilities generally
result from the timing of production, sales and purchases. Such relative changes
can  significantly  impact the  comparability  of cash flow from operations from
period to period,  as the income  statement  impact of such items may occur in a
different period than that in which the underlying cash transaction  occurs. For
example,  raw materials may be purchased in one period, but the cash payment for
such raw materials may occur in a subsequent period. Similarly, inventory may be
sold in one period,  but the cash  collection of the  receivable  may occur in a
subsequent period.

     Net income  attributable to common  stockholders  was $24.4 million for the
nine months ended  September 30, 2004,  compared to a net loss  attributable  to
common  stockholders  of $22.9  million for the nine months ended  September 30,
2003.

     Accounts  receivable  increased  during  the  first  nine  months  of  2004
primarily as a result of increased  sales.  Accounts  receivable  was relatively
unchanged during the first nine months of 2003. Inventories increased during the
first  nine  months of 2004 as a result  of  increased  run  rates  and  related
inventory build in order to meet expected  customer demand during the balance of
2004 and into 2005,  as well as the effects of  increased  raw  material  costs.
Inventories decreased during the first nine months of 2003 as a result of higher
melted  product  sales  volumes  during the first half of 2003 and the Company's
focus on inventory reduction.

     Changes in accounts payable and accrued  liabilities  reflect,  among other
things,  the timing of payments to suppliers of titanium sponge,  titanium scrap
and other raw material purchases. Accrued liabilities increased during the first
nine  months  of  2004  primarily  due  to (i) a $9.6  million  increase  in the
Company's  accrual for  incentive  compensation  for potential  employee  profit
sharing  payments  and (ii) an  increase  to the  Company's  accrual  for  costs
expected  to  be  incurred  for  environmental   remediation  at  the  Company's
Henderson, Nevada facility. These increases were partially offset by (i) payment
of the $2.8  million  final  installment  related  to  termination  of the prior
Wyman-Gordon agreement,  (ii) a $1.9 million reduction of the Company's vacation
accrual related to the Company's modification of its vacation policy for its U.S
salaried  employees and (iii) a $3.5 million  reclassification  of the Company's
defined benefit pension  liability from current to noncurrent,  as the Company's
short-term cash contribution requirements have decreased significantly.

     The increase in customer  advances during the first nine months of 2004 and
2003  primarily  reflects the  Company's  receipt of the $27.9 million and $27.7
million advances from Boeing in January 2004 and 2003,  respectively,  partially
offset  by  the  recognition  of  Boeing-related   take-or-pay  income  and  the
application of customer purchases through September 30, 2004 and 2003. Under the
terms of the amended  Boeing LTA, in years 2002 through  2007,  Boeing  advances
TIMET $28.5 million annually, less $3.80 per pound of titanium product purchased
from TIMET by Boeing subcontractors during the preceding year.

                                     - 32 -

<PAGE>


     In October 2002, the Company  exercised its right to defer future  interest
payments on its  Subordinated  Debentures  held by the Capital Trust,  effective
beginning  with the  Company's  December  1, 2002  scheduled  interest  payment,
although  interest  continued to accrue at the coupon rate on the  principal and
unpaid interest. On April 15, 2004, the Company paid all previously deferred and
accrued  interest in the amount of $21.7 million ($21.0 million of which related
to the BUCS) and on June 1, 2004,  the Company  resumed its  quarterly  interest
payments on the  Subordinated  Debentures.  Changes in accrued  interest on debt
payable to the Capital Trust reflect this  activity.  See further  discussion in
Note 9 to the Consolidated Financial Statements.

     Investing activities. The Company's capital expenditures were $10.9 million
for the nine months ended  September 30, 2004,  compared to $6.0 million for the
comparable  period  in  2003,  principally  for  replacement  of  machinery  and
equipment and capacity  maintenance.  During the first nine months of 2004,  the
Company  purchased  2,212,820  shares  of CompX  Class A common  stock for $26.7
million and 221,100  shares of NL common stock for $2.5 million.  On October 19,
2004, the Company  purchased an additional  3,500 shares of CompX Class A common
stock for an aggregate of $0.1 million.  See further discussion in Note 3 to the
Consolidated Financial Statements.

     Financing  activities.  The  Company  had $33.8  million of net  borrowings
during the nine  months  ended  September  30,  2004,  primarily  to support the
Company's  accumulation  of inventory in order to meet expected  customer demand
during the balance of 2004 and into 2005 and to fund its  investing  activities.
Cash used during the nine months ended  September  30, 2003 was due primarily to
the Company's $18.5 million of net repayments on its outstanding borrowings upon
the Company's  receipt of the $27.7 million  Boeing  advance in January 2003. In
addition,  the Company's 70%-owned subsidiary,  TIMET Savoie, S.A. made dividend
payments of $0.7 million and $1.9 million  during the second quarter of 2004 and
2003, respectively, to its 30% minority partner.

     Borrowing  arrangements.  Under the terms of the Company's U.S. asset-based
revolving  credit  agreement,  which matures in February  2006,  borrowings  are
limited to the lesser of $105  million or a  formula-determined  borrowing  base
derived  from  the  value  of  accounts  receivable,   inventory  and  equipment
("borrowing  availability").  During  the first  quarter  of 2004,  the  Company
amended its U.S. credit  facility to, among other things,  allow the Company the
flexibility  to remove the equipment  component  from the  determination  of the
Company's  borrowing  availability  in order to avoid the costs of an appraisal.
The Company took advantage of this flexibility during the first quarter of 2004,
effectively reducing the Company's current borrowing availability in the U.S. by
$12 million.  However, the Company can regain this availability by completing an
updated equipment appraisal.  Interest generally accrues at rates that vary from
LIBOR plus 2% to LIBOR plus 2.5%. Borrowings are collateralized by substantially
all of the Company's U.S. assets. The credit agreement  prohibits the payment of
distributions  in respect of the Capital  Trust's BUCS and dividends on Series A
Preferred Stock if "excess  availability," as defined, is less than $25 million,
limits  additional  indebtedness,  prohibits  the  payment of  dividends  on the
Company's common stock if excess availability is less than $40 million, requires
compliance  with  certain  financial  covenants  and  contains  other  covenants
customary in lending transactions of this type. The Company was in compliance in
all material  respects  with all  covenants  for the three and nine months ended
September 30, 2004 and for all periods  during the year ended December 31, 2003.
At September  30, 2004,  the Company had  borrowings of $33.7 million and excess
availability (defined as borrowing  availability less outstanding borrowings and
certain  contractual  commitments  such as letters of credit) was $59.9 million,
under the U.S. credit agreement.

                                     - 33 -

<PAGE>


     The Company's  subsidiary,  TIMET UK, has a credit  agreement that provides
for   borrowings   limited   to  the   lesser  of   (pound)22.5   million  or  a
formula-determined borrowing base derived from the value of accounts receivable,
inventory and  property,  plant and equipment  ("borrowing  availability").  The
credit  agreement  includes a revolving  and term loan facility and an overdraft
facility (the "U.K.  Facilities") and matures in December 2005. Borrowings under
the U.K.  Facilities  can be in  various  currencies,  including  U.S.  dollars,
British pounds sterling and euros. Borrowings accrue interest at rates that vary
from LIBOR plus 1% to LIBOR plus 1.25% and are  collateralized  by substantially
all of TIMET UK's assets. The U.K. Facilities require the maintenance of certain
financial   ratios  and  amounts  and  other  covenants   customary  in  lending
transactions of this type.  TIMET UK was in compliance in all material  respects
with all  covenants  for the three and nine months ended  September 30, 2004 and
for all periods  during the year ended December 31, 2003. At September 30, 2004,
the  Company  had no  borrowings  and unused  borrowing  availability  was $40.7
million, under the U.K. Facilities.

     The Company also has  overdraft  and other credit  facilities at certain of
its other European  subsidiaries.  These  facilities  accrue interest at various
rates and are  payable on  demand.  At  September  30,  2004,  the  Company  had
outstanding  borrowings of $0.1 million,  and unused borrowing  availability was
$16.2 million, under these facilities.

     Legal and environmental  matters. See Note 14 to the Consolidated Financial
Statements for discussion of legal and  environmental  matters,  commitments and
contingencies.

     Other.  The Company  periodically  evaluates  its  liquidity  requirements,
capital needs and availability of resources in view of, among other things,  its
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, the Company has in the past, or in light of its current outlook, may in
the future,  seek to raise additional  capital,  modify its common and preferred
dividend  policies,   restructure  ownership  interests,   incur,  refinance  or
restructure indebtedness,  repurchase shares of common stock, purchase or redeem
BUCS or Series A Preferred  Stock,  sell assets,  or take a combination  of such
steps or other steps to increase or manage its liquidity and capital  resources.
In the normal course of business, the Company investigates, evaluates, discusses
and engages 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,  the Company may consider using then-available liquidity, issuing
equity securities or incurring additional indebtedness.

     Corporations  that may be deemed to be  controlled  by or  affiliated  with
Harold C. 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. The
Company  continuously  considers,  reviews and evaluates such transactions,  and
understands  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 the Company might be a party to
one or more such transactions in the future.

                                     - 34 -

<PAGE>


     In March 2004 the  Company's  Board of  Directors  approved a  five-for-one
split of the  Company's  common  stock,  which was  effected  after the close of
trading on August 27,  2004 in the form of a stock  dividend.  All share and per
share data has been  adjusted  for the effect of the stock  split in all periods
presented.

     In August 2004, the Company completed an exchange offer,  pursuant to which
the Company had offered to  exchange  any and all of the  4,024,820  outstanding
BUCS issued by the Capital Trust for shares of the Company's  Series A Preferred
Stock at the  exchange  rate of one share of Series A  Preferred  Stock for each
BUCS. Based upon the 3,909,103 BUCS tendered and accepted for exchange as of the
close of the offer on August 31, 2004,  the Company issued  3,909,103  shares of
Series A Preferred  Stock in  exchange  such BUCS.  During the third  quarter of
2004, the Company recognized a $15.5 million non-cash  non-operating gain on the
BUCS  exchange,  reflecting  the  difference  between the carrying  value of the
related  Subordinated  Debentures  ($195.5  million)  and the fair  value of the
Series A Preferred Stock issued ($173.7  million,  based on the closing price of
the BUCS on August 31, 2004  according to NASDAQ's  website of $45.25 per share,
less $3.2  million  attributable  to accrued  and unpaid  dividends),  less $6.3
million of unamortized deferred financing costs related to the exchanged BUCS.

     Each share of the Series A Preferred Stock is convertible,  at any time, at
the  option  of the  holder  thereof,  into  one and  two-thirds  shares  of the
Company's  common stock,  subject to adjustment in certain events.  The Series A
Preferred Stock is not mandatorily  redeemable,  but is redeemable at the option
of the Company  under  certain  circumstances.  When,  as and if declared by the
Company's  board of  directors,  holders  of the  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).  Subsequent  to September  30, 2004,  the  Company's  board of
directors  declared a dividend of $0.84375  per share,  payable on December  15,
2004 to holders of record of Series A Preferred Stock as pf the close of trading
on December 1, 2004. See Note 10 to the consolidated financial statements.

     During  the third  quarter of 2004,  the  President  of the  United  States
approved a petition filed by the Company to eliminate a special tariff exemption
for titanium wrought products  imported into the United States from Russia under
the  Generalized  System of  Preferences  ("GSP").  Under the GSP  program,  the
President  has the  authority  to  suspend  normal  trade  tariffs on imports of
designated products from certain developing countries.  Normal customs duties on
titanium wrought products from Russia had been suspended since 1998. This action
means that duties on imports of titanium wrought product from Russia,  where one
of the Company's main  competitors is located,  will return to the normal tariff
of 15% during the fourth quarter of 2004.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     For a complete  discussion of the Company's market risks, refer to the Item
7A,  "Quantitative  and Qualitative  Disclosures About Market Risk," in the 2003
Annual  Report.  During the nine months ended  September  30, 2004,  the Company
purchased certain  publicly-traded  equity securities that are exposed to market
risk due to  changes in prices of the  securities  as  reported  on the New York
Stock  Exchange.  The  aggregate  market  value of these  equity  securities  at
September  30,  2004 was $40.8  million,  as  compared  to a cost basis of $29.2
million. The potential change in the aggregate market value of these securities,
assuming a 10% change in prices,  would be $4.1 million at  September  30, 2004.
See also Note 3 to the Consolidated Financial Statements.

                                     - 35 -

<PAGE>


Item 4. CONTROLS AND PROCEDURES

     The Company maintains a system of disclosure  controls and procedures.  The
term "disclosure controls and procedures," as defined by regulations of the SEC,
means  controls and other  procedures of the Company that are designed to ensure
that information  required to be disclosed in the reports that the Company files
or submits to the SEC under the Securities Exchange Act of 1934, as amended (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 the Company in the reports
that it files or submits to the SEC under the  Exchange Act is  accumulated  and
communicated  to the Company's  management,  including  its principal  executive
officer and its  principal  financial  officer,  or persons  performing  similar
functions,   as  appropriate  to  allow  timely  decisions   regarding  required
disclosure.  Both J. Landis Martin, the Company's Chief Executive  Officer,  and
Bruce P. Inglis,  the Company's Vice President - Finance,  Corporate  Controller
and Treasurer,  have evaluated the Company's  disclosure controls and procedures
as of September 30, 2004. Based upon their evaluation,  these executive officers
have  concluded  that the  Company's  disclosure  controls  and  procedures  are
effective as of the date of such evaluation.

     The Company also  maintains a system of internal  controls  over  financial
reporting.  The term "internal control over financial  reporting," as defined by
regulations  of the SEC, means a process  designed by, or under the  supervision
of, the  Company's  principal  executive and principal  financial  officers,  or
persons  performing  similar  functions,  and effected by the Company's 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 the
          assets of the Company;

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

     o    Provide reasonable  assurance regarding prevention or timely detection
          of  unauthorized  acquisition,  use or  disposition  of the  Company's
          assets that could have a material effect on the Company's consolidated
          financial statements.

     There has been no change to the Company's  system of internal  control over
financial  reporting  during  the  quarter  ended  September  30,  2004 that has
materially affected, or is reasonably likely to materially affect, the Company's
system of internal controls over financial reporting.

                                     - 36 -

<PAGE>


     Section  404 of the  Sarbanes-Oxley  Act of  2002  requires  the  Company's
management  to annually  report on internal  control  over  financial  reporting
starting  with the  Company's  Annual  Report  on Form  10-K for the year  ended
December 31, 2004 ("2004 Annual Report").  The Company's independent  registered
public  accounting  firm is also  required to attest  annually to the  Company's
internal control over financial  reporting.  In order to achieve compliance with
Section  404,  the Company has been  documenting,  testing  and  evaluating  its
internal  control over financial  reporting  using a combination of internal and
external  resources.  The process of  documenting,  testing and  evaluating  the
Company's  internal  control  over  financial  reporting  under  the  applicable
guidelines is complex and time consuming.  The Company currently believes it has
dedicated  the  appropriate  resources  and that it will be able to comply fully
with the  requirements  of Section 404 for its 2004 Annual  Report,  and be in a
position  to  conclude  whether  or not  the  Company's  internal  control  over
financial reporting is effective as of December 31, 2004.  However,  because the
applicable  requirements are complex and unforseen events could arise beyond the
Company's  control,  the  Company  is unable to provide  assurance  that it will
ultimately be able to comply fully with the  requirements of Section 404 for its
2004 Annual Report.

                                     - 37 -

<PAGE>


PART II. - OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

     Reference  is made to Note  14 of the  Consolidated  Financial  Statements,
which information is incorporated herein by reference, and to the Company's 2003
Annual Report for descriptions of certain previously reported legal proceedings.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits:

          3.1  Form of Certificate of Designations,  Rights and Preferences of 6
               3/4 %  Series  A  Convertible  Preferred  Stock  incorporated  by
               reference  to Exhibit  4.1 to  Pre-effective  Amendment  No. 1 to
               Registration  Statement on Form S-4 of Registrant  filed with the
               SEC on June 23, 2004 as Securities  Exchange  Commission file No.
               333-114218

          3.2  Bylaws of Titanium Metals  Corporation,  as Amended and Restated,
               dated August 31, 2004,  incorporated by reference to Exhibit 99.2
               to Registrant's  Current Report on Form 8-K filed with the SEC on
               September 2, 2004

          10.1 Amendment  No.  4 to Loan and  Security  Agreement  by and  among
               Congress Financial Corporation (Southwest) as Lender and Titanium
               Metals  Corporation  and Titanium  Hearth  Technologies,  Inc. as
               borrowers,  dated  June 2, 2004,  incorporated  by  reference  to
               Exhibit 10.1 to the Pre-effective  Amendment No.1 to Registration
               Statement  on Form S-4 Filed by  Registrant  with the SEC on June
               23, 2004 as Securities Exchange Commission File No. 333-114218

          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


          Note:The Company has retained a signed  original of any exhibit listed
               above that contains signatures,  and the Company will provide any
               such exhibit to the SEC or its staff upon  request.  Such request
               should be directed to the  attention of the  Company's  Corporate
               Secretary  at the  Company's  corporate  offices  located at 1999
               Broadway, Suite 4300, Denver, Colorado 80202.

                                     - 38 -

<PAGE>



          (b)  Reports on Form 8-K filed by the registrant for the quarter ended
               September 30, 2004 and through November 5, 2004:



               Date of Report                   Items Reported
           ----------------------           -----------------------

             July 2, 2004                              9
             August 5, 2004                         9 and 12
             August 11, 2004                           9
             August 11, 2004                           9
             August 27, 2004                     7.01 and 9.01
             September 2, 2004                   5.02 and 9.01
             September 10, 2004                  7.01 and 9.01
             September 13, 2004                  7.01 and 9.01
             October 4, 2004                     7.01 and 9.01
             October 8, 2004                     8.01 and 9.01
             October 21, 2004                    8.01 and 9.01
             November 5, 2004                2.02, 7.01 and 9.01


                                     - 39 -

<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: November 5, 2004                By  /s/ J. Landis Martin
                                          --------------------------------------
                                          J. Landis Martin
                                          Chairman of the Board, President and
                                            Chief Executive Officer


Date: November 5, 2004                By  /s/ Bruce P. Inglis
                                          --------------------------------------
                                          Bruce P. Inglis
                                          Vice President - Finance, Corporate
                                            Controller and Treasurer


                                     - 40 -