SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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


                 For the quarterly period ended June 30, 2002
                                                -------------

                                       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 Identification No.)
 incorporation or organization)





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


 Number of shares of common stock outstanding on August 12, 2002: 31,864,538 .
                                                                  ----------
<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 under the
captions  "Results of Operations"  and "Liquidity and Capital  Resources"  (both
contained in  Management's  Discussion  and Analysis of Financial  Condition and
Results  of   Operations),   are   forward-looking   statements  that  represent
management's  beliefs and assumptions based on currently available  information.
Forward-looking  statements  can 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 assurances 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 in those portions
referenced  above and those  described from time to time in the Company's  other
filings with the Securities and Exchange  Commission 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,  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
war or terrorist  activities,  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>

<TABLE>
<CAPTION>

                           TITANIUM METALS CORPORATION

                                      INDEX


                                                                                                            Page
                                                                                                           Number

PART I.       FINANCIAL INFORMATION

<S>                                                                                                           <C>
         Item 1.    Consolidated Financial Statements

                    Consolidated Balance Sheets - June 30, 2002 (unaudited) and
                      December 31, 2001                                                                       2

                    Consolidated Statements of Operations - Three months and
                      six months ended June 30, 2002 and 2001 (unaudited)                                     4

                    Consolidated Statements of Comprehensive Income (Loss) -
                      Three months and six months ended June 30, 2002
                      and 2001 (unaudited)                                                                    5

                    Consolidated Statements of Cash Flows - Six months
                      ended June 30, 2002 and 2001 (unaudited)                                                6

                    Consolidated Statement of Changes in Stockholders' Equity -
                      Six months ended June 30, 2002 (unaudited)                                              8

                    Notes to Consolidated Financial Statements (unaudited)                                    9

         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


PART II.     OTHER INFORMATION


         Item 1.    Legal Proceedings                                                                        36

         Item 6.    Exhibits and Reports on Form 8-K                                                         36


</TABLE>

                                      -1-
<PAGE>
<TABLE>
<CAPTION>


                           TITANIUM METALS CORPORATION

                           CONSOLIDATED BALANCE SHEETS
                                 (In thousands)

                                                                                  June 30,             December 31,
ASSETS                                                                              2002                   2001
                                                                              ------------------    ------------------
                                                                                 (unaudited)
Current assets:
<S>                                                                           <C>                   <C>
  Cash and cash equivalents                                                   $         7,372       $        24,500
  Accounts and other receivables, less
     allowance of $3,157 and $2,739                                                    76,819                83,347
  Receivables from related parties                                                      1,687                 5,907
  Refundable income taxes                                                               1,009                   470
  Inventories                                                                         197,716               185,052
  Prepaid expenses and other                                                            2,948                 9,026
  Deferred income taxes                                                                   493                   385
                                                                              ------------------    ------------------

       Total current assets                                                           288,044               308,687

Investment in joint ventures                                                           21,776                20,585
Preferred securities of Special Metals Corporation ("SMC")                                  -                27,500
Property and equipment, net                                                           265,369               275,308
Goodwill, net                                                                          45,077                44,310
Other intangible assets, net                                                            8,925                 9,836
Deferred income taxes                                                                      18                    56
Other                                                                                  13,458                13,101
                                                                              ------------------    ------------------

       Total assets                                                           $       642,667       $       699,383
                                                                              ==================    ==================


</TABLE>

                                      -2-
<PAGE>
<TABLE>
<CAPTION>


                           TITANIUM METALS CORPORATION

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

                                                                                  June 30,              December 31,
LIABILITIES, MINORITY INTEREST AND                                                  2002                    2001
                                                                              ------------------    -------------------
STOCKHOLDERS' EQUITY                                                             (unaudited)


<S>                                                                           <C>                   <C>
Current liabilities:
  Notes payable                                                               $        10,732       $         1,522
  Current maturities of long-term debt and
     capital lease obligations                                                            703                   512
  Accounts payable                                                                     25,297                42,821
  Accrued liabilities                                                                  42,940                41,799
  Customer advance payments                                                            27,660                33,242
  Payable to related parties                                                              350                 1,612
  Income taxes                                                                            710                   746
  Deferred income taxes                                                                   156                   106
                                                                              -------------------    ------------------
       Total current liabilities                                                      108,548               122,360

Long-term debt                                                                          9,571                10,712
Capital lease obligations                                                               9,161                 8,598
Payable to related parties                                                                644                   953
Accrued OPEB cost                                                                      13,983                15,980
Accrued pension cost                                                                   25,063                23,690
Accrued environmental cost                                                              3,262                 3,262
Deferred income taxes                                                                   4,098                 5,509
Other                                                                                     153                   237
                                                                              ------------------    -------------------
       Total liabilities                                                              174,483               191,301
                                                                              ------------------    -------------------

Minority interest - Company-obligated mandatorily
  redeemable preferred securities of subsidiary trust
  holding solely subordinated debt securities ("Convertible
  Preferred Securities")                                                              201,241               201,241
Other minority interest                                                                 9,514                 8,727

Stockholders' equity:

  Preferred stock, $.01 par value; 1,000 share authorized,                                  -                     -
     none outstanding
  Common stock, $.01 par value; 99,000 shares authorized;
     31,951 and 31,946 shares issued, respectively                                        319                   319

  Additional paid-in capital                                                          350,661               350,514
  Accumulated deficit                                                                 (64,268)              (15,841)
  Accumulated other comprehensive loss                                                (27,708)              (35,274)
  Treasury stock, at cost  (90 shares)                                                 (1,208)               (1,208)
  Deferred compensation                                                                  (367)                 (396)
                                                                              ------------------    -------------------
       Total stockholders' equity                                                     257,429               298,114
                                                                              ------------------    -------------------

       Total liabilities and stockholders' equity                             $       642,667       $       699,383
                                                                              ==================    ===================
</TABLE>

Commitments and contingencies (Note 14)

          See accompanying notes to consolidated financial statements.
                                      -3-

<PAGE>
<TABLE>
<CAPTION>


                           TITANIUM METALS CORPORATION

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

                                                          Three months ended                  Six months ended
                                                               June 30,                           June 30,
                                                    -------------------------------    -------------------------------
                                                        2002              2001             2002              2001
                                                    --------------    -------------    --------------    -------------

<S>                                                 <C>               <C>              <C>               <C>
Revenues and other income:
   Net sales                                        $     94,295      $    120,035     $    198,735      $    244,043
   Equity in earnings of joint ventures                      823               248            1,328             1,114
   Other                                                   2,051            75,379            2,121            77,835
                                                    --------------    -------------    --------------    -------------
                                                          97,169           195,662          202,184           322,992
                                                    --------------    -------------    --------------    -------------
Costs and expenses:
   Cost of sales                                          92,871           123,514          192,203           240,260
   Selling, general, administrative
     and development                                      11,414            21,211           21,793            31,911
   Interest                                                  735             1,083            1,473             2,594
   Other                                                     121                 -           28,269                 -
                                                    --------------    -------------    --------------    -------------
                                                         105,141           145,808          243,738           274,765
                                                    --------------    -------------    --------------    -------------
     (Loss) income before income taxes
     and minority interest                                (7,972)           49,854          (41,554)           48,227

Income tax expense (benefit)                                 615            17,532             (839)           16,963
Minority interest - Convertible
   Preferred Securities, net of tax in 2001                3,333             2,493            6,666             4,679
Other minority interest, net of tax                          425               277            1,046               649
                                                    --------------    -------------    --------------    -------------

     Net (loss) income                              $    (12,345)     $     29,552     $    (48,427)     $     25,936
                                                    ==============    =============    ==============    =============

(Loss) earnings per share:
   Basic                                            $      (.39)      $       .94      $     (1.53)      $       .82
                                                    ==============    =============    ==============    =============
   Diluted                                          $      (.39)      $       .86      $     (1.53)      $       .82
                                                    ==============    =============    ==============    =============

Weighted average shares outstanding:
   Basic                                                  31,603            31,504           31,582            31,460
   Diluted                                                31,603            37,193           31,582            31,755

</TABLE>
          See accompanying notes to consolidated financial statements.
                                      -4-
<PAGE>
<TABLE>
<CAPTION>


                           TITANIUM METALS CORPORATION

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

                                                          Three months ended                  Six months ended
                                                               June 30,                           June 30,
                                                    -------------------------------    -------------------------------
                                                        2002              2001             2002              2001
                                                    --------------    -------------    --------------    -------------

<S>                                                 <C>               <C>              <C>               <C>
Net (loss) income                                   $    (12,345)     $    29,552      $   (48,427)      $    25,936

Other comprehensive income (loss) -
   currency translation adjustment                         8,842           (3,404)           7,566            (7,713)
                                                    --------------    -------------    --------------    -------------

Comprehensive (loss) income                         $     (3,503)     $    26,148      $   (40,861)      $    18,223
                                                    ==============    =============    ==============    =============



</TABLE>
          See accompanying notes to consolidated financial statements.
                                      -5-
<PAGE>
<TABLE>
<CAPTION>


                           TITANIUM METALS CORPORATION

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

                                                                                      Six months ended June 30,
                                                                                 -------------------------------------
                                                                                       2002                2001
                                                                                 -----------------    ----------------

<S>                                                                              <C>                  <C>
Cash flows from operating activities:
   Net (loss) income                                                             $     (48,427)       $      25,936
   Depreciation and amortization                                                        18,248               20,161
   Noncash equipment impairment charge                                                       -               10,840
   Noncash impairment of SMC securities                                                 27,500                    -
   Equity in (earnings) losses of joint ventures,
     net of distributions                                                               (1,058)                (714)
   Deferred income taxes                                                                (1,672)              14,998
   Other minority interest                                                               1,046                  649
   Other, net                                                                              827                  561
   Change in assets and liabilities:
     Receivables                                                                        10,529               (6,362)
     Inventories                                                                        (8,662)              (2,923)
     Prepaid expenses and other                                                          6,165               (4,725)
     Accounts payable and accrued liabilities                                          (17,740)               7,513
     Customer advance payments                                                          (6,884)               1,755
     Accrued restructuring charges                                                        (117)                (395)
     Income taxes                                                                       (1,421)                  90
     Accounts with related parties, net                                                  2,648                1,457
     Accrued OPEB and pension costs                                                     (1,418)                (286)
     Accrued dividends on SMC securities                                                     -                 (529)
     Accrued dividends on Convertible Preferred Securities                                   -              (10,043)
     Other, net                                                                          1,079               (2,793)
                                                                                 -----------------    ----------------
       Net cash (used) provided by operating activities                                (19,357)              55,190
                                                                                 -----------------    ----------------

Cash flows from investing activities:
   Capital expenditures                                                                 (3,337)              (4,200)
                                                                                 -----------------    ----------------
       Net cash used by investing activities                                            (3,337)              (4,200)
                                                                                 -----------------    ----------------

Cash flows from financing activities:
   Indebtedness:
     Borrowings                                                                        206,196              272,015
     Repayments                                                                       (198,640)            (308,557)
   Dividends paid on minority interest                                                  (1,115)                   -
   Issuance of common stock                                                                  -                  513
   Other, net                                                                             (322)                 (79)
                                                                                 -----------------    ----------------
       Net cash provided (used) by financing activities                                  6,119              (36,108)
                                                                                 -----------------    ----------------

       Net cash (used) provided by operating,
         investing and financing activities                                      $     (16,575)       $      14,882
                                                                                 =================    ================
</TABLE>

          See accompanying notes to consolidated financial statements.
                                      -6-
<PAGE>
<TABLE>
<CAPTION>


                           TITANIUM METALS CORPORATION

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

                                                                                      Six months ended June 30,
                                                                                 -------------------------------------
                                                                                       2002                2001
                                                                                 -----------------    ----------------

Cash and cash equivalents:
   Net (decrease) increase from:
<S>                                                                              <C>                  <C>
     Operating, investing and financing activities                               $     (16,575)       $      14,882
     Currency translation                                                                 (553)                 124
                                                                                 -----------------    ----------------
                                                                                       (17,128)              15,006
   Cash at beginning of period                                                          24,500                9,796
                                                                                 -----------------    ----------------

   Cash at end of period                                                         $       7,372        $      24,802
                                                                                 =================    ================



Supplemental disclosures:
   Cash paid for:
     Interest, net of amounts capitalized                                        $         876        $       2,127
     Convertible Preferred Securities dividends                                  $       6,666        $      17,227
     Income taxes, net                                                           $       2,253        $       1,926

</TABLE>


          See accompanying notes to consolidated financial statements.
                                      -7-
<PAGE>
<TABLE>
<CAPTION>

                           TITANIUM METALS CORPORATION

      CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited)

                         Six months ended June 30, 2002
                                 (In thousands)


                                                                          Accumulated Other
                                               Additional                 Comprehensive Loss
                                                                      ------------------------                            Total
                              Common   Common   Paid-In   Accumulated   Currency    Pension    Treasury   Deferred     Stockholders'
                              Shares   Stock    Capital    Deficit    Translation  Liabilities   Stock    Compensation    Equity
                             -------- ------- ----------- ----------- -----------  ----------- --------- ------------- -------------

<S>                            <C>    <C>     <C>         <C>         <C>          <C>         <C>       <C>            <C>
Balance at December 31, 2001   31,856 $   319 $  350,514  $ (15,841)  $  (14,395)  $ (20,879)  $ (1,208) $       (396)  $   298,114

Components of comprehensive
     income (loss):
     Net loss                       -      -         -      (48,427)           -            -        -              -       (48,427)
     Change in cumulative
       currency translation
       adjustment                   -      -         -            -        7,566            -        -              -         7,566

Issuance of common stock            5      -        20            -            -            -        -              -            20

Stock award cancellations           -      -        (6)           -            -            -        -              6             -

Amortization of deferred
   compensation                     -      -         -            -            -            -        -            156           156

Other                               -      -       133            -            -            -        -           (133)            -
                             -------- ------- ----------- ----------- -----------  ----------- --------- -------------  ------------

Balance at June 30, 2002       31,861 $   319 $  350,661  $ (64,268)  $   (6,829)  $ (20,879)  $ (1,208) $       (367)  $   257,429
                             ======== ======= =========== =========== ===========  =========== ========= =============  ============

</TABLE>

          See accompanying notes to consolidated financial statements.
                                      -8-
<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.  At  June  30,  2002,  Tremont
Corporation  ("Tremont") held  approximately 39% of TIMET's  outstanding  common
stock. At June 30, 2002, the Combined Master Retirement Trust ("CMRT"),  a trust
formed by Valhi,  Inc.  ("Valhi") to permit the collective  investment by trusts
that maintain the assets of certain  employee benefit plans adopted by Valhi and
related companies,  held approximately an additional 6% of TIMET's common stock.
At June 30, 2002,  subsidiaries of Valhi held an aggregate of approximately  80%
of Tremont's outstanding common stock, and Contran Corporation ("Contran") held,
directly  or through  subsidiaries,  approximately  93% 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.  In  addition,  Mr.
Simmons  is the sole  trustee  of the CMRT and a member of the trust  investment
committee  for the CMRT.  Mr.  Simmons may be deemed to control each of Contran,
Valhi, Tremont and TIMET.


     The accompanying  consolidated financial statements include the accounts of
TIMET and its majority-owned  subsidiaries  (collectively,  the "Company").  All
material  intercompany  transactions  and  balances  have been  eliminated.  The
consolidated  balance sheet at June 30, 2002 and the consolidated  statements of
operations,  comprehensive  income (loss),  changes in stockholders'  equity and
cash  flows  for the  interim  periods  ended  June 30,  2002 and 2001 have been
prepared  by the  Company  without  audit.  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  prior  year  amounts  have  been
reclassified to conform to the current year  presentation.  Certain  information
and footnote  disclosures  normally included in financial statements prepared in
accordance with generally accepted accounting  principles have been condensed or
omitted.  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,  2001 (the  "2001
Annual Report").


     The Company adopted Statement of Financial  Accounting  Standards  ("SFAS")
No. 145,  Rescission  of FASB  Statements  No. 4, 44, and 64,  Amendment of FASB
Statement No. 13, and Technical  Corrections,  effective April 1, 2002. SFAS No.
145,  among other things,  eliminated the prior  requirement  that all gains and
losses  from  the  early  extinguishment  of debt  were to be  classified  as an
extraordinary  item.  Upon  adoption of SFAS No. 145,  gains and losses from the
early extinguishment of debt will be classified as an extraordinary item only if
they  meet  the  "unusual  and  infrequent"  criteria  contained  in  Accounting
Principles Board ("APB") Opinion No. 30. In addition,  upon adoption of SFAS No.
145,  all  gains  and  losses  from the  early  extinguishment  of debt that had
previously  been  classified  as an  extraordinary  item are to be reassessed to
determine if they would have met the "unusual  and  infrequent"  criteria of APB
Opinion  No. 30.  Any such gain or loss that would not have met the APB  Opinion
No. 30 criteria are  retroactively  reclassified  and reported as a component of
income  before   extraordinary   items.  The  Company  has  concluded  that  its
previously-recognized  loss from the early  extinguishment of debt that occurred
during  2000  would  not  have  met  the  APB   Opinion  No.  30  criteria   for
classification    as   an   extraordinary    item   and,    accordingly,    such
previously-reported  loss will be  retroactively  reclassified and reported as a
component  of income  before  extraordinary  items in the  applicable  reporting
periods.

                                      -9-
<PAGE>

Note 2 - Business segment information

     The  Company's  worldwide  operations  are  conducted  through one business
segment - the  production  and sale of titanium  melted and mill  products.  The
following  provides   supplemental   segment  information  to  the  consolidated
statements of operations:
<TABLE>
<CAPTION>

                                                           Three months ended                  Six months ended
                                                                June 30,                           June 30,
                                                      -------------------------------    -------------------------------
                                                         2002             2001              2002             2001
                                                      -------------    --------------    --------------   --------------
                                                                ($ in thousands except selling price data)

<S>                                                  <C>              <C>               <C>              <C>
Net sales                                            $     94,295     $    120,035      $    198,735     $    244,043
Cost of sales                                              92,871          123,514           192,203          240,260
                                                      -------------    --------------    --------------   --------------

Gross margin                                                1,424           (3,479)            6,532            3,783


Selling, general, administrative
   and development expense                                 11,414           21,211            21,793           31,911
Equity in earnings of joint ventures                          823              248             1,328            1,114

Other income (expense), net                                 2,158           73,052             2,209           73,808
                                                      -------------    --------------    --------------   --------------

Operating (loss) income                                    (7,009)          48,610           (11,724)          46,794

General corporate income (expense):
   Dividends and interest income                               24            2,039                93            3,571
   Currency transactions and other, net                      (252)             288              (950)             456
   Impairment of investment in SMC                              -                -           (27,500)               -
Interest expense                                              735            1,083             1,473            2,594
                                                     -------------    --------------    --------------   --------------

(Loss) income before income taxes
   and minority interest                             $     (7,972)    $     49,854      $    (41,554)    $     48,227
                                                     =============    ==============    ==============   ==============


Titanium melted and mill products:
   Mill product net sales                            $     70,290     $     89,980      $    149,987     $    183,785
   Melted product net sales                                 9,269           14,456            19,228           29,084
   Other                                                   14,736           15,599            29,520           31,174
                                                      -------------    --------------    --------------   --------------

                                                     $     94,295     $    120,035      $    198,735     $    244,043
                                                      =============    ==============    ==============   ==============


Mill product shipments:
   Volume (metric tons)                                     2,130            3,045             4,815            6,230
   Average price ($ per kilogram)                    $      33.00      $     29.55       $     31.15      $     29.50

Melted product shipments:
   Volume (metric tons)                                       620            1,040             1,265            2,070
   Average price ($ per kilogram)                    $      14.95      $     13.90       $     15.20      $     14.05


</TABLE>

                                      -10-
<PAGE>

Note 3 - Preferred securities of SMC

     On March 27, 2002, SMC and its U.S.  subsidiaries filed voluntary petitions
for  reorganization  under Chapter 11 of the U.S.  Bankruptcy Code. As a result,
the Company undertook an assessment of its investment in SMC with the assistance
of an external  valuation  specialist  and recorded a $27.5  million  impairment
charge during the first quarter of 2002 for an other than  temporary  decline in
the  estimated  fair value of its  investment  in SMC.  This charge  reduced the
Company's carrying amount of its investment in SMC to zero.

Note 4 - Inventories
<TABLE>
<CAPTION>

                                                                                  June 30,            December 31,
                                                                                    2002                  2001
                                                                              ------------------    ------------------
                                                                                          (In thousands)

<S>                                                                           <C>                   <C>
Raw materials                                                                 $        53,790       $        43,863
Work-in-process                                                                        88,566                94,709
Finished products                                                                      65,711                54,074
Supplies                                                                               14,239                13,476
                                                                              ------------------    ------------------
                                                                                      222,306               206,122
Less adjustment of certain inventories to LIFO basis                                   24,590                21,070
                                                                              ------------------    ------------------

                                                                              $       197,716       $       185,052
                                                                              ==================    ==================
</TABLE>

Note 5 - Goodwill and intangible assets

     The Company's goodwill,  arising from business  combinations  accounted for
under the purchase method,  is stated net of accumulated  amortization  recorded
through December 31, 2001. On January 1, 2002, the Company adopted SFAS No. 142,
Goodwill and Other Intangible Assets.  Under SFAS No. 142, goodwill is no longer
amortized on a periodic basis,  but instead is subject to a two-step  impairment
test to be  performed  on at least an annual  basis.  The change in net goodwill
during the first half of 2002 is due to currency translation effects.

     In order to test for  impairment,  SFAS No.  142  requires  the  Company to
identify its reporting units and determine the carrying amount of each reporting
unit by assigning its assets and liabilities,  including  existing  goodwill and
intangible  assets,  to those reporting units as of January 1, 2002. The Company
has determined  that it operates one reporting  unit, as that term is defined by
SFAS No.  142,  consisting  of the  Company  in  total.  The  first  step of the
impairment  test  requires  the  Company  to  determine  the  fair  value of its
reporting unit and compare it to that reporting unit's carrying  amount.  To the
extent that the carrying amount of the Company's reporting unit exceeds its fair
value, an indication  exists that the reporting  unit's goodwill may be impaired
and the Company must perform the second step of the impairment test. The Company
has  completed  the  first  step  of its  transitional  impairment  test,  which
indicates that an impairment of its recorded  goodwill may exist. The Company is
currently performing the second step of its transitional  impairment test, which
requires the Company to compare the implied fair value of its  reporting  unit's
goodwill with the carrying amount of that goodwill.  If the goodwill's  carrying
amount exceeds its implied fair value,  an impairment loss will be recognized in
an amount equal to that  excess.  The Company  currently  estimates it is likely
that the entire  amount of the Company's  goodwill  balance  (approximately  $45
million  at June  30,  2002)  may be  deemed  impaired.  Any  such  transitional
impairment  will be recognized as a cumulative  effect of a change in accounting
principle  no later than  December  31,  2002,  as  provided  by the  transition
requirements of SFAS No. 142.


                                      -11-
<PAGE>


     As shown in the  following  table,  the Company  would have  reported a net
income of $30.4 million and $27.6 million or $.88 and $.87 per diluted share for
the three and six months  ended June 30,  2001,  respectively,  if the  goodwill
amortization  included  in the  Company's  reported  net  income  had  not  been
recognized.
<TABLE>
<CAPTION>

                                                           Three months ended                  Six months ended
                                                                June 30,                           June 30,
                                                     -------------------------------    -------------------------------
                                                         2002             2001              2002             2001
                                                     -------------    --------------    --------------   --------------
                                                                    (In thousands except per share data)



<S>                                                  <C>              <C>               <C>              <C>
Net (loss) income as reported                        $    (12,345)    $     29,552      $    (48,427)    $     25,936
Adjustments for:
  Goodwill amortization                                         -            1,148                 -            2,305
  Tax provision on amortization                                 -             (307)                -             (615)
                                                     -------------    --------------    --------------   --------------

     Adjusted net (loss) income                      $    (12,345)    $     30,393      $    (48,427)    $     27,626
                                                     =============    ==============    ==============   ==============

Net (loss) income per basic share as reported        $       (.39)    $        .94      $      (1.53)    $        .82
Adjustments for:
   Goodwill amortization                                         -             .04                 -              .07
   Tax provision on amortization                                 -            (.01)                -             (.02)
                                                     -------------    --------------    --------------   --------------

     Adjusted net (loss) income per basic share      $       (.39)    $        .97      $      (1.53)     $       .87
                                                     =============    ==============    ==============   ==============

Net (loss) income per diluted share as reported      $       (.39)    $        .86      $      (1.53)     $       .82
Adjustments for:
   Goodwill amortization                                         -             .03                 -              .07
   Tax provision on amortization                                 -            (.01)                -             (.02)
                                                     -------------    --------------    --------------   --------------

     Adjusted net (loss) income per diluted share    $       (.39)    $        .88      $      (1.53)     $       .87
                                                     =============    ==============    ==============   ==============
</TABLE>

     As required by SFAS No. 142, the Company has evaluated the remaining useful
lives of its  intangible  assets with definite  lives,  comprised of patents and
covenants not to compete.  Based on this evaluation,  the Company's  patents and
covenants  not to compete  will  continue to be  amortized  over their  weighted
average remaining amortization periods of 3.75 and .75 years, respectively.  The
carrying amount and accumulated  amortization of the Company's intangible assets
are as follows:
<TABLE>
<CAPTION>

                                                           June 30, 2002                     December 31, 2001
                                                 ----------------------------------    -------------------------------
                                                   Carrying          Accumulated        Carrying         Accumulated
                                                    Amount           Amortization        Amount         Amortization
                                                 -------------    -----------------    ------------     --------------
                                                                            (In thousands)
Intangible assets:
  Definite lives, subject to amortization:
<S>                                              <C>              <C>                  <C>              <C>
     Patents                                     $    13,625      $       8,456        $   13,405       $      7,606
     Covenants not to compete                          8,720              8,162             8,353              7,514
   Other intangible asset - pension asset(1)           3,198                  -             3,198                  -
                                                 -------------    -----------------    ------------     --------------

                                                 $    25,543      $      16,618        $   24,956       $     15,120
                                                 =============    =================    ============     ==============
</TABLE>

(1)  Not covered by the scope of SFAS No. 142.

                                      -12-
<PAGE>

     For  the  three  and  six  months  ended  June  30,  2002,   the  Company's
amortization  expense relating to its intangible assets was $.5 million and $1.0
million,  respectively.  The estimated aggregate annual amortization expense for
the  Company's  patents  and  covenants  not to compete for the next five fiscal
years is summarized in the table below.
<TABLE>
<CAPTION>

                                                                                            Estimated annual
                                                                                          amortization expense
                                                                                    ----------------------------------
                                                                                             (In thousands)
Year ending December 31,
<S>                                                                                               <C>
  2002                                                                                            $ 2,062
  2003                                                                                            $ 1,560
  2004                                                                                            $ 1,392
  2005                                                                                            $   947
  2006                                                                                            $   677
</TABLE>
<TABLE>
<CAPTION>

Note 6 - Property and equipment

                                                                                  June 30,            December 31,
                                                                                    2002                  2001
                                                                              ------------------    ------------------
                                                                                          (In thousands)

<S>                                                                           <C>                   <C>
Land                                                                          $         6,176       $         6,138
Buildings                                                                              37,296                36,574
Information technology systems                                                         56,948                55,112
Manufacturing and other                                                               310,620               300,315
Construction in progress                                                                7,755                11,631
                                                                              ------------------    ------------------
                                                                                      418,795               409,770
Less accumulated depreciation                                                         153,426               134,462
                                                                              ------------------    ------------------

                                                                              $       265,369       $       275,308
                                                                              ==================    ==================

</TABLE>
<TABLE>
<CAPTION>

Note 7 - Other noncurrent assets

                                                                                  June 30,            December 31,
                                                                                    2002                  2001
                                                                              ------------------    ------------------
                                                                                          (In thousands)

<S>                                                                           <C>                   <C>
Deferred financing costs                                                      $         7,164       $         8,212
Notes receivable from officers                                                            163                   163
Prepaid pension cost                                                                    4,513                 4,006
Refundable income taxes                                                                 1,009                     -
Other                                                                                     609                   720
                                                                              ------------------    ------------------

                                                                              $        13,458       $        13,101
                                                                              ==================    ==================

</TABLE>

                                      -13-
<PAGE>
<TABLE>
<CAPTION>


Note 8 - Accrued liabilities

                                                                                  June 30,            December 31,
                                                                                    2002                  2001
                                                                              ------------------    ------------------
                                                                                          (In thousands)

<S>                                                                           <C>                   <C>
OPEB cost                                                                     $         4,485       $         2,969
Pension cost                                                                            1,056                   555
Incentive compensation                                                                  3,111                 6,077
Other employee benefits                                                                13,702                14,616
Deferred income                                                                           854                   325
Environmental costs                                                                       537                   654
Restructuring costs                                                                        80                   198
Tungsten costs                                                                          2,701                 2,743
Taxes, other than income                                                                4,559                 4,867
Dividends on Convertible Preferred Securities                                           1,111                 1,111
Other                                                                                  10,744                 7,684
                                                                              ------------------    ------------------

                                                                              $        42,940       $        41,799
                                                                              ==================    ==================
</TABLE>

     Accrued  restructuring  costs of $.1  million at June 30,  2002  consist of
unpaid personnel severance and benefits for terminated employees relating to the
Company's  restructuring  plans implemented during 1999 and 2000. During the six
months ended June 30, 2002, the Company applied  payments of $.1 million against
the accrued  costs  related to the  restructuring  plans.  During the six months
ended June 30, 2001,  the Company  applied  payments of $.4 million  against the
accrued  costs  related to the  restructuring  plans and recorded  income of $.2
million   related  to  revisions  to   estimates   of   previously   established
restructuring accruals.

Note 9 - Customer advance payments


     As of June 30, 2002,  approximately  $23.5 million of the customer  advance
liability  was related to the  Company's  long-term-agreement  ("LTA")  with The
Boeing Company  ("Boeing").  In April 2001, the Company  reached a settlement of
the litigation between TIMET and Boeing related to the parties' LTA entered into
in 1997. Under the terms of the LTA, in years 2002 through 2007, Boeing advances
TIMET $28.5 million annually less $3.80 per pound of titanium product  purchased
by Boeing subcontractors during the preceding year.


     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  liability  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  liability is also reduced as take-or-pay  benefits
are earned, as described in Note 12.


                                      -14-
<PAGE>
<TABLE>
<CAPTION>


Note 10 - Notes payable, long-term debt and capital lease obligations

                                                                                  June 30,            December 31,
                                                                                    2002                  2001
                                                                              ------------------    ------------------
                                                                                          (In thousands)
Notes payable:
<S>                                                                           <C>                   <C>
  U.S. credit agreement                                                       $         9,056       $            30
  European credit agreements                                                            1,676                 1,492
                                                                              ------------------    ------------------

                                                                              $        10,732       $         1,522
                                                                              ==================    ==================
Long-term debt:
  Bank credit agreement - U.K.                                                $         9,571       $        10,712
  Other                                                                                    95                   172
                                                                              ------------------    ------------------
                                                                                        9,666                10,884
  Less current maturities                                                                  95                   172
                                                                              ------------------    ------------------

                                                                              $         9,571       $        10,712
                                                                              ==================    ==================

Capital lease obligations                                                     $         9,769       $         8,938
  Less current maturities                                                                 608                   340
                                                                              ------------------    ------------------

                                                                              $         9,161       $         8,598
                                                                              ==================    ==================
</TABLE>

     Borrowings under the Company's U.S. asset-based  revolving credit agreement
are limited to the lesser of $125 million or a formula-determined borrowing base
derived  from  the  value  of  accounts  receivable,   inventory  and  equipment
("borrowing availability"). This facility requires the Company's U.S. daily cash
receipts  to be  used  to  reduce  outstanding  borrowings,  which  may  then be
reborrowed, subject to the terms of the agreement. 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 dividends on TIMET's  Convertible  Preferred
Securities  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. Excess  availability is defined
as borrowing  availability less certain contractual  commitments such as letters
of credit. At June 30, 2002, excess availability was approximately $90 million.

     The  Company's  U.S.  credit  agreement  allows  the  lender to modify  the
borrowing base formulas at its discretion, subject to certain conditions. During
the second  quarter of 2002,  the  Company's  lender  elected to  exercise  such
discretion and modified the Company's borrowing base formulas, which reduced the
amount that the  Company  can borrow  against its  inventory  and  equipment  by
approximately  $7 million.  In the event the lender exercises such discretion in
the future,  such event could have a material  adverse  impact on the  Company's
liquidity.  Borrowings  outstanding under this U.S. facility are classified as a
current  liability.  Unused borrowing  availability under this agreement at June
30, 2002 was approximately $93 million. The credit agreement expires in February
2003.  The  Company  is  currently  negotiating  with its  lender to extend  the
maturity date of this  agreement on  substantially  similar terms;  however,  no
assurance  can be given  that an  agreement  to  extend  this  facility  will be
achieved.


                                      -15-
<PAGE>


     The Company's  subsidiary,  TIMET UK, has a credit  agreement that provides
for   borrowings   limited   to  the   lesser   of   (pound)30   million   or  a
formula-determined borrowing base derived from the value of accounts receivable,
inventory  and  equipment  ("borrowing  availability").   The  credit  agreement
includes a revolving and term loan facility and an overdraft facility (the "U.K.
facilities").  Borrowings under the U.K. facilities can be in various currencies
including U.S. dollars,  British pounds and euros, 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. The U.K.  overdraft facility is
subject to annual  review in February of each year and was extended for one year
in February  2002. The U.K.  facilities  expire in February 2005. As of June 30,
2002,  the  outstanding  balance of the U.K.  facilities was  approximately  $10
million with unused borrowing availability of approximately $32 million.

     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.  Unused  borrowing  availability as of June 30,
2002 under these facilities was approximately $14 million.

     The weighted  average  interest  rate on borrowings  outstanding  under the
U.S.,  U.K. and other European  credit  agreements for the six months ended June
30, 2002 was 5.25%, 5.56% and 4.29%, respectively.

Note 11 - Minority interest

     During the second quarter of 2002, TIMET Savoie, S.A. ("TIMET Savoie"), the
Company's 70% owned consolidated  French subsidiary,  paid a dividend,  of which
$1.1  million  was  paid to  Compagnie  Europeene  du  Zirconium-CEZUS,  the 30%
minority owner in TIMET Savoie.

Note 12 - Other income and other expense
<TABLE>
<CAPTION>

                                                          Three months ended                  Six months ended
                                                               June 30,                           June 30,
                                                    -------------------------------    -------------------------------
                                                        2002             2001              2002              2001
                                                    --------------   --------------    --------------    -------------
                                                                             (In thousands)
Other income:
<S>                                                 <C>              <C>               <C>               <C>
  Dividends and interest income                     $         24     $      2,017      $         93      $      3,530
  Boeing settlement, net of legal fees                         -           73,000                 -            73,000
  Boeing take-or-pay                                       2,156                -             2,156                 -
  Foreign exchange (loss) gain                              (226)             305              (342)              438
  Restructuring credit                                         -                -                 -               220
  Other                                                       97               57               214               647
                                                    --------------   --------------    --------------    -------------

                                                    $      2,051     $     75,379      $      2,121      $     77,835
                                                    ==============   ==============    ==============    =============

Other expense:
  Impairment of investment in SMC (Note 3)          $          -     $          -      $     27,500      $          -
  Other                                                      121                -               769                 -
                                                    --------------   --------------    --------------    -------------

                                                    $        121     $          -      $     28,269      $          -
                                                    ==============   ==============    ==============    =============

</TABLE>

                                      -16-
<PAGE>


     Pursuant to the Boeing  settlement,  the Company received a cash payment of
$82 million. The Company's 2001 results reflect  approximately $73 million (cash
settlement less legal fees) as other operating income.

     The terms of the  amended  Boeing LTA allow  Boeing to  purchase  up to 7.5
million pounds of titanium  product  annually from TIMET through 2007, but limit
TIMET's maximum  quarterly volume  obligation to 3.0 million pounds.  The LTA is
structured  as a  take-or-pay  agreement  such that,  beginning in calendar year
2002,  Boeing  forfeits $3.80 per pound of its advance payment in the event that
its orders for delivery are less than 7.5 million  pounds in any given  calendar
year. The Company recognizes income to the extent Boeing's  year-to-date  orders
for delivery plus TIMET's maximum quarterly volume obligations for the remainder
of the year total less than 7.5 million  pounds.  This income is  recognized  as
other operating  income and is not included in net sales or gross margin.  Based
on actual purchases of approximately .9 million pounds through June 30, 2002 and
the Company's  contractual  maximum volume  obligation of 6.0 million pounds for
the remainder of the year, the Company  recognized $2.2 million of income in the
second quarter of 2002 related to the take-or-pay  provisions for the .6 million
pounds of material that the Company is no longer  obligated to provide under the
LTA in 2002.  Recognition of the take-or-pay  income reduces the Boeing customer
advance liability as described in Note 9.

Note 13 - Income taxes
<TABLE>
<CAPTION>

                                                                                     Six months ended June 30,
                                                                              ----------------------------------------
                                                                                    2002                  2001
                                                                              ------------------    ------------------
                                                                                          (In thousands)

<S>                                                                           <C>                   <C>
Expected income tax (benefit) expense, at 35%                                 $       (14,544)      $        16,879
Non-U.S. tax rates                                                                        658                   277
U.S. state income taxes, net                                                              162                   662
Dividends received deduction                                                                -                  (632)
Effect of change in tax law                                                            (1,797)                    -
Adjustment of deferred tax valuation allowance                                         14,767                   (39)
Other, net                                                                                (85)                 (184)
                                                                              ------------------    ------------------

                                                                              $          (839)      $        16,963
                                                                              ==================    ==================
</TABLE>

     During the first  quarter of 2002,  the Job Creation and Worker  Assistance
Act of 2002 (the "Act") was signed into law. The Company  benefits  from certain
provisions of the Act, which liberalized  certain net operating loss ("NOL") and
alternative  minimum tax  ("AMT")  restrictions.  Prior to the law change,  NOLs
could be carried  back two years and  forward 20 years.  The Act  increases  the
carryback  period  for losses  generated  in 2001 and 2002 to five years with no
change to the  carryforward  period.  In addition,  losses generated in 2001 and
2002 can be carried back and offset  against  100% of a  taxpayer's  alternative
minimum taxable income ("AMTI"). Prior to the law change, an NOL could offset no
more than 90% of a taxpayer's AMTI. The suspension of the 90% limitation is also
applicable to NOLs carried  forward into 2001 and 2002.  Based on these changes,
the Company  recognized  $1.8 million of refundable U.S. income taxes during the
first quarter of 2002.


                                      -17-
<PAGE>


     At June 30, 2002,  the Company had, for U.S.  federal  income tax purposes,
NOL  carryforwards  of  approximately  $90 million that expire  between 2020 and
2022.  At  June  30,  2002,  the  Company  had  AMT  credit   carryforwards   of
approximately  $4 million,  which can be utilized to offset regular income taxes
payable  in  future  years.  The  AMT  credit  carryforward  has  an  indefinite
carryforward  period. At June 30, 2002, the Company had the equivalent of an $11
million NOL carryforward in the United Kingdom and a $2 million NOL carryforward
in Germany, both of which have indefinite carryforward periods.

Note 14 - Commitments and contingencies

     For  additional   information  concerning  certain  legal  proceedings  and
contingencies  related  to the  Company,  see (i) Part I, Item 2 -  Management's
Discussion and Analysis of Financial  Condition and Results of Operations,  (ii)
Part II, Item 1 - Legal  Proceedings  and (iii) the 2001  Annual  Report on Form
10K.


     Long-term  agreements.  The Company has LTAs with certain  major  aerospace
customers,  including,  but not  limited to,  Boeing,  Rolls-Royce  plc,  United
Technologies   Corporation   (Pratt  &  Whitney  and  related   companies)   and
Wyman-Gordon  Company  (a  unit  of  Precision  Castparts  Corporation).   These
agreements  initially  became  effective  in 1998 and 1999  and  expire  in 2007
through 2008, subject to certain conditions.  The LTAs generally provide for (i)
minimum market shares of the  customers'  titanium  requirements  or firm annual
volume commitments and (ii) fixed or formula-determined  prices generally for at
least the first five years.  Generally,  the LTAs require the Company's  service
and product performance to meet specified criteria and contain a number of other
terms and conditions customary in transactions of these types. In certain events
of   nonperformance   by  the  Company,   the  LTAs  may  be  terminated  early.
Additionally,   under  a  group  of  related   LTAs  (which   group   represents
approximately  15% of the Company's 2001 sales  revenue),  which  currently have
fixed prices that convert to  formula-derived  prices in 2004,  the customer may
terminate the agreement as of the end of 2003 if the effect of the initiation of
formula-derived  pricing  would cause such customer  "material  harm." If any of
such  agreements  were to be  terminated  by the  customer on this basis,  it is
possible  that  some  portion  of the  business  represented  by that LTA  would
continue on a non-LTA  basis.  However,  the  termination of one or more of such
agreements by the customer in such circumstances  could result in a material and
adverse effect on the Company's  business,  results of operations,  consolidated
financial condition or liquidity.

     Environmental  matters.  In 1999,  TIMET and certain other  companies  (the
"Steering  Committee  Companies") that currently have or formerly had operations
within a Henderson, Nevada industrial complex (the "BMI Complex") entered into a
series of agreements with BMI and certain related  companies  pursuant to which,
among  other  things,  BMI  assumed  responsibility  for the  conduct  of  soils
remediation activities on the properties described, including the responsibility
to complete all outstanding  requirements  pertaining to such  activities  under
existing   consent   agreements  with  the  Nevada  Division  of   Environmental
Protection. The Company contributed $2.8 million to the cost of this remediation
(which payment was charged against accrued liabilities). The Company also agreed
to convey to BMI,  at no  additional  cost,  certain  lands owned by the Company
adjacent to its plant site (the "TIMET Pond  Property")  upon  payment by BMI 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  onto the TIMET Pond  Property (BMI will pay 100% of the first $15.9
million cost for this project, and TIMET agreed to contribute 50% of the cost in
excess of $15.9 million,  up to a maximum  payment by TIMET of $2 million).  The
Company,   BMI  and  the  other  Steering  Committee  Companies  are  continuing
investigation  with respect to certain  additional  issues  associated  with the
properties described above, including any possible groundwater issues at the BMI
Complex and the TIMET Pond Property.

                                      -18-
<PAGE>

     The Company is  continuing  assessment  work with respect to its own active
plant  site.   During  2000,  a  preliminary  study  was  completed  of  certain
groundwater  remediation issues at the Company's Henderson  operations and other
Company  sites  within the BMI  Complex  (which  sites do not  include the above
discussed TIMET Pond  Property).  The Company accrued $3.3 million in 2000 based
on the  undiscounted  cost estimates set forth in the study.  These expenses are
expected to be paid over a period of up to thirty years.

     At June 30, 2002,  the Company had accrued an aggregate of $3.8 million for
environmental  matters,  including  those discussed  above.  The Company records
liabilities  related to  environmental  remediation  obligations  when estimated
future  expenditures  are probable and reasonably  estimable.  Such accruals are
adjusted as further  information  becomes  available  or  circumstances  change.
Estimated  future  expenditures 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  expenditures  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.  In September  2000, the Company was named in an action
filed by the U.S. Equal  Employment  Opportunity  Commission in Federal District
Court in Las Vegas,  Nevada (U.S.  Equal  Employment  Opportunity  Commission v.
Titanium Metals Corporation,  CV-S-00-1172DWH-RJJ).  The complaint,  as amended,
alleges that several female employees at the Company's  Henderson,  Nevada plant
were the subject of sexual  harassment and  retaliation.  The Company intends to
vigorously  defend  this  action,   and  no  estimate  of  a  possible  loss  is
determinable  at this  time,  but in any event the  Company  does not  presently
anticipate  that any  adverse  outcome  in this case  would be  material  to its
results of operations, consolidated financial position or liquidity.



                                      -19-
<PAGE>

     Other. In March 2001, the Company was notified by one of its customers that
a product the customer manufactured from standard grade titanium produced by the
Company  contained  what has been confirmed to be a tungsten  inclusion.  At the
present time,  the Company is aware of six standard  grade ingots that have been
demonstrated to contain tungsten inclusions. Based upon the Company's assessment
of possible losses, TIMET recorded an aggregate charge to cost of sales for this
matter of $3.3  million  during 2001 (of which $2.8  million was recorded in the
second quarter of 2001).  During 2001, the Company  charged $.3 million  against
this accrual to write down its remaining  on-hand inventory and made $.3 million
in settlement  payments,  resulting in a $2.7 million accrual as of December 31,
2001 for potential  future claims.  During 2002, the Company has made settlement
payments  aggregating  $.2  million.  Additionally,  the Company has revised its
estimate of the most likely amount of loss to be incurred, resulting in a charge
of $.2  million to cost of sales in the second  quarter of 2002.  As of June 30,
2002,  $2.7 million is accrued for pending and  potential  future  claims.  This
amount  represents the Company's best estimate of the most likely amount of loss
to be incurred.  This amount does not represent the maximum possible loss, which
is  not  possible  for  the  Company  to  estimate  at  this  time,  and  may be
periodically  revised in the future as more facts become  known.  As of June 30,
2002, the Company has received claims  aggregating  approximately $5 million and
has made settlement payments  aggregating $.5 million.  Pending claims are being
investigated  and  negotiated.  The Company  believes  that  certain  claims are
without merit or can be settled for less than the amount of the original  claim.
There is no assurance  that all potential  claims have yet been submitted to the
Company.  The  Company has filed suit  seeking  full  recovery  from its silicon
supplier for any liability the Company might incur,  although no assurances  can
be given that the Company will  ultimately be able to recover all or any portion
of such  amounts.  The Company has not recorded any  recoveries  related to this
matter as of June 30, 2002.

     As a  consequence  of  uncertainties  surrounding  both  the  titanium  and
commercial  aerospace  industries and broader economic  conditions,  the Company
believes assessments of long-lived asset recoverability,  as required under SFAS
No. 144,  Accounting for the Impairment or Disposal of Long-Lived  Assets,  that
may result in charges for asset  impairments could occur in the balance of 2002.
Generally,  when events or changes in  circumstances  indicate that the carrying
amount of  long-lived  assets,  including  property  and  equipment,  may not be
recoverable, the Company prepares an evaluation comparing the carrying amount of
the assets to the undiscounted expected future cash flows of the assets or asset
group. If this comparison indicates that the carrying amount is not recoverable,
the amount of the  impairment  would  typically be calculated  using  discounted
expected  future  cash flows or  appraised  values.  All  relevant  factors  are
considered in  determining  whether an  impairment  exists and charges for asset
impairments,  if any, are recorded when  reasonably  estimable.  Such  potential
future charges, if any, could be material.


     The  Company is  involved  in  various  other  environmental,  contractual,
product  liability and other claims,  disputes and litigation  incidental to its
business.

     The Company currently  believes the disposition of all claims and disputes,
individually or in the aggregate,  should not have a material  adverse effect on
the Company's business, results of operations,  consolidated financial condition
or liquidity.


                                      -20-
<PAGE>

Note 15 - Earnings (loss) 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 reflect the dilutive effect of common stock options, restricted
stock and the assumed  conversion of the Convertible  Preferred  Securities,  if
applicable.  The assumed conversion of the Convertible  Preferred Securities was
omitted from the diluted earnings (loss) per share calculation for the three and
six months  ended  June 30,  2002 and for the six  months  ended  June 30,  2001
because the effect was antidilutive.  Had the Convertible  Preferred  Securities
not been antidilutive,  diluted losses would have been decreased by $3.3 million
and $6.7 million for the three and six months ended June 30, 2002,  respectively
and by $4.7  million for the six months  ended June 30,  2001.  Diluted  average
shares  outstanding  would have been increased by 5.4 million shares for each of
these three  periods.  Stock  options and  restricted  shares  omitted  from the
calculation  because  they were  antidilutive  approximated  1.8 million for the
three and six months ended June 30, 2002. A reconciliation  of the numerator and
denominator  used in the calculation of basic and diluted  earnings per share is
presented below.
<TABLE>
<CAPTION>

                                                          Three months ended                  Six months ended
                                                               June 30,                           June 30,
                                                    -------------------------------    -------------------------------
                                                        2002              2001             2002              2001
                                                    --------------    -------------    --------------    -------------
                                                            (In thousands)                     (In thousands)
Numerator:
<S>                                                 <C>               <C>              <C>               <C>
   Net (loss) income                                $    (12,345)     $     29,552     $   (48,427)      $     25,936
   Minority interest - Convertible
     Preferred Securities                                      -             2,493               -                  -
                                                    --------------    -------------    --------------    -------------
   Diluted net (loss) income                        $    (12,345)     $     32,045     $   (48,427)      $     25,936
                                                    ==============    =============    ==============    =============

Denominator:
   Average common shares outstanding                      31,603            31,504          31,582             31,460
   Average dilutive stock options and
     restricted shares                                         -               299               -                295
   Convertible Preferred Securities                            -             5,390               -                  -
                                                    --------------    -------------    --------------    -------------

   Diluted shares                                         31,603            37,193          31,582             31,755
                                                    ==============    =============    ==============    =============

</TABLE>


Note 16 - Accounting principles not yet adopted

     In 2001,  the  Financial  Accounting  Standards  Board issued SFAS No. 143,
Accounting for Asset Retirement Obligations.  Under SFAS No. 143, the fair value
of a liability  for an asset  retirement  obligation  covered under the scope of
SFAS No.  143  would be  recognized  in the  period in which  the  liability  is
incurred,  with an  offsetting  increase in the  carrying  amount of the related
long-lived  asset.  Over time,  the  liability  would be accreted to its present
value, and the capitalized cost would be depreciated over the useful life of the
related asset.  Upon settlement of the liability,  an entity would either settle
the obligation for its recorded amount or incur a gain or loss upon  settlement.
The Company is still  studying this  standard to determine,  among other things,
whether it has any asset retirement obligations that are covered under the scope
of SFAS No.  143,  and the  effect,  if any,  to the  Company of  adopting  this
standard has not yet been determined. The Company will implement SFAS No. 143 no
later than January 1, 2003.

                                      -21-
<PAGE>

     The Company will adopt SFAS No. 146,  Accounting for Costs  Associated with
Exit or Disposal Activities,  no later than January 1, 2003 for exit or disposal
activities initiated on or after the date of adoption. Under SFAS No. 146, costs
associated with exit  activities,  as defined,  that are covered by the scope of
SFAS No. 146 are recognized and measured  initially at fair value,  generally in
the period in which the  liability  is  incurred.  SFAS No. 146  eliminates  the
definition and requirement for recognition of exit costs in Emerging Issues Task
Force Issue No. 94-3 where a liability  for an exit cost was  recognized  at the
date of an entity's  commitment  to an exit plan.  Costs covered by the scope of
SFAS No. 146  include  termination  benefits  provided  to  employees,  costs to
consolidate  facilities or relocate employees,  and costs to terminate contracts
(other than a capital lease).  The Company is currently  unable to determine the
effect, if any, of adopting this standard.

                                      -22-
<PAGE>

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

RESULTS OF OPERATIONS

     The following table summarizes  certain components of the Company's results
for the three and six month periods ended June 30, 2002 and 2001. The discussion
that  follows  regarding  the  Company's  results  frequently  refers to segment
information that is presented in Note 2 to the Consolidated Financial Statements
and should be read in conjunction with that information.  Average selling prices
per kilogram, as reported by the Company,  reflect the net effects of changes in
selling prices,  currency exchange rates, customer and product mix. Accordingly,
average selling prices are not necessarily  indicative of any one factor. In the
following  discussion,  the  Company has  attempted  to adjust for the effect of
currency fluctuations and changes in mix when referring to the percentage change
in selling prices from period to period.
<TABLE>
<CAPTION>

                                                         Three months ended                   Six months ended
                                                              June 30,                            June 30,
                                                   --------------------------------    -------------------------------
                                                       2002              2001              2002             2001
                                                   --------------    --------------    -------------- - --------------
                                                          ($ in thousands)                    ($ in thousands)

<S>                                                <C>               <C>               <C>              <C>
Net sales                                          $   94,295        $    120,035      $    198,735     $     244,043
Gross margin                                            1,424              (3,479)            6,532             3,783
Gross margin, excluding special items                   1,424              10,120             6,532            18,382
Operating (loss) income                                (7,009)             48,610           (11,724)           46,794
Operating (loss) income, excluding
   restructuring and special items                     (7,009)               (452)          (11,724)           (1,488)

Percent of net sales:
   Gross margin                                            2%                 -3%                 3%               2%
   Gross margin, excluding special items                   2%                  8%                 3%               8%

Percent change in:
     Mill product sales volume                            -30                                   -23
     Mill product selling prices (1)                       +4                                    +4
     Melted product sales volume                          -40                                   -39
     Melted product selling prices (1)                     +3                                    +5

--------------------------------------------------------------------------------
</TABLE>
(1) Change expressed in U.S. dollars and mix adjusted.

     Second quarter of 2002 compared to second  quarter of 2001.  Sales of $94.3
million in the second  quarter of 2002 were 21% lower than the  year-ago  period
due  principally to the net effects of a 30% decrease in mill product volume and
a 40% decrease in melted product volume, partially offset by 4% and 3% increases
in mill and melted product  selling prices,  respectively  (mill product selling
prices expressed in U.S.  dollars using actual foreign  currency  exchange rates
prevailing  during the  respective  periods) and changes in customer and product
mix.  In billing  currencies  (which  exclude  the  effects of foreign  currency
translation), mill product selling prices also increased 4%.


                                      -23-
<PAGE>

     Gross  margin (net sales less cost of sales) was 2% of sales for the second
quarter of 2002 compared to negative 3% in the year-ago  period,  reflecting the
net effect of a decrease in sales volumes, slightly higher selling prices, lower
operating rates at certain facilities  (estimated capacity  utilization declined
from  approximately  75% to 55%),  changes in  customer  and product mix and the
effect of  special  items.  Gross  margin  for the  second  quarter  of 2001 was
adversely  impacted by $10.8  million of equipment  impairment  charges and $2.8
million of estimated costs related to the tungsten matter discussed below. Gross
margin  excluding  special items was 8% of sales for the second quarter of 2001.
The 2001 period was also  adversely  impacted by goodwill  amortization  of $1.1
million. As required by SFAS No. 142, and effective January 1, 2002, the Company
no  longer  amortizes  its  goodwill  on a  periodic  basis.  See  Note 5 to the
Consolidated Financial Statements.

     In March  2001,  the Company was  notified by one of its  customers  that a
product the customer  manufactured  from standard grade titanium produced by the
Company  contained  what has been confirmed to be a tungsten  inclusion.  At the
present time,  the Company is aware of six standard  grade ingots that have been
demonstrated to contain tungsten inclusions. Based upon the Company's assessment
of possible losses, TIMET recorded an aggregate charge to cost of sales for this
matter of $3.3  million  during 2001 (of which $2.8  million was recorded in the
second quarter of 2001).  During 2001, the Company  charged $.3 million  against
this accrual to write down its remaining  on-hand inventory and made $.3 million
in settlement  payments,  resulting in a $2.7 million accrual as of December 31,
2001 for potential  future claims.  During 2002, the Company has made settlement
payments  aggregating  $.2  million.  Additionally,  the Company has revised its
estimate of the most likely amount of loss to be incurred, resulting in a charge
of $.2  million to cost of sales in the second  quarter of 2002.  As of June 30,
2002,  $2.7 million is accrued for pending and  potential  future  claims.  This
amount  represents the Company's best estimate of the most likely amount of loss
to be incurred.  This amount does not represent the maximum possible loss, which
is  not  possible  for  the  Company  to  estimate  at  this  time,  and  may be
periodically  revised in the future as more facts become  known.  As of June 30,
2002 the Company has received claims  aggregating  approximately  $5 million and
has made settlement payments  aggregating $.5 million.  Pending claims are being
investigated  and  negotiated.  The Company  believes  that  certain  claims are
without merit or can be settled for less than the amount of the original  claim.
There is no assurance  that all potential  claims have yet been submitted to the
Company.  The  Company has filed suit  seeking  full  recovery  from its silicon
supplier for any liability the Company might incur,  although no assurances  can
be given that the Company will  ultimately be able to recover all or any portion
of such  amounts.  The Company has not recorded any  recoveries  related to this
matter as of June 30, 2002.

     During  the  second  quarter  of  2001,  the  Company  determined  that  an
impairment of the carrying  amount of certain  long-lived  assets located at its
Millbury, Massachusetts facility had occurred. Accordingly, the Company recorded
a $10.8 million pretax  impairment charge to cost of sales in the second quarter
of 2001,  representing  the  difference  between the assets'  previous  carrying
amount and their estimated fair values, based on a third-party appraisal.

     Selling, general, administrative and development expenses during the second
quarter of 2002 increased by  approximately  5% from year-ago levels  (excluding
$10.3 million of incentive  compensation related to the Boeing settlement in the
2001 period),  principally  as a result of increases to the Company's  allowance
for doubtful  accounts and higher  selling and marketing  costs  relating to the
Company's automotive division.

     Equity in earnings of joint ventures  during the second quarter of 2002 was
$.6 million higher than the year-ago  period  principally  due to an increase in
earnings of VALTIMET, the Company's minority-owned welded tube joint venture.

                                      -24-
<PAGE>

     Other  income  (expense),  net during the second  quarter of 2002 was $70.9
million lower than the year-ago  period  principally  due to the  recognition of
$73.0  million  of income in the 2001  period  related  to a  settlement  of the
litigation  between TIMET and Boeing related to the parties' LTA entered into in
1997.  The terms of the  amended  Boeing LTA allow  Boeing to purchase up to 7.5
million  pounds of titanium  product  annually from TIMET through 2007 but limit
TIMET's maximum quarterly volume  obligation to 3.0 million pounds.  The Company
recognizes income to the extent Boeing's  year-to-date  orders for delivery plus
TIMET's maximum quarterly volume obligations for the remainder of the year total
less than 7.5 million  pounds.  This  income is  recognized  as other  operating
income  and is not  included  in net  sales or  gross  margin.  Based on  actual
purchases  of  approximately  .9 million  pounds  through  June 30, 2002 and the
Company's  contractual  maximum volume  obligation of 6.0 million pounds for the
remainder of the year,  the Company  recognized  $2.2 million of other income in
the second  quarter of 2002  related to the  take-or-pay  provisions  for the .6
million  pounds of material  that the Company is no longer  obligated to provide
under the LTA in 2002.

     First six months of 2002  compared  to first six  months of 2001.  Sales of
$198.7  million  for the six months  ended June 30, 2002 were 19% lower than the
year-ago  period due  principally  to the net effects of a 23%  decrease in mill
product volume and a 39% decrease in melted product volume,  partially offset by
4% and 5%  increases in mill and melted  product  selling  prices,  respectively
(mill product  selling  prices  expressed in U.S.  dollars using actual  foreign
currency exchange rates prevailing during the respective periods) and changes in
customer and product mix. In billing  currencies  (which  exclude the effects of
foreign currency translation), mill product prices also increased 4%.

     Gross  margin  was 3% of sales  for the six  months  ended  June  30,  2002
compared to 2% in the year-ago period,  principally reflecting the net effect of
a decrease in sales volume,  slightly  higher selling  prices,  lower  operating
rates at  certain  facilities  (estimated  capacity  utilization  declined  from
approximately 70% to 60%), changes in customer and product mix and the effect of
special items. Gross margin for the six months ended June 30, 2001 was adversely
impacted by $10.8  million of equipment  impairment  charges and $3.8 million of
estimated costs related to the tungsten  matter  described  above.  Gross margin
excluding  special items was 8% of sales for the six months ended June 30, 2001.
The 2001 period was also  adversely  impacted by goodwill  amortization  of $2.3
million.  As required by SFAS No. 142, effective January 1, 2002, the Company no
longer  amortizes  its  goodwill  on  a  periodic  basis.  See  Note  5  to  the
Consolidated Financial Statements.

     Selling,  general,  administrative  and  development  expenses  for the six
months ended June 30, 2002 increased by  approximately  1% from year-ago  levels
(excluding  $10.3  million  of  incentive  compensation  related  to the  Boeing
settlement in the 2001 period),  principally  as a result of higher  selling and
marketing costs relating to the Company's automotive division,  partially offset
by lower personnel-related costs.

     Equity in earnings of joint  ventures  during the six months ended June 30,
2002 was $.2  million  higher  than the year ago  period  principally  due to an
increase in earnings of VALTIMET.

     Other income  (expense),  net during the six months ended June 30, 2002 was
$71.6 million lower than the year-ago period  principally due to the recognition
of $73.0  million of income in the 2001 period  related to a  settlement  of the
previously discussed litigation between TIMET and Boeing and the $2.2 million of
other operating  income  recognized in the second quarter of 2002 related to the
Boeing take-or-pay agreement.

                                      -25-

<PAGE>

     General corporate income (expense).  General corporate income (expense) for
the three and six  months  ended  June 30,  2001  includes  interest  income and
dividend  income on $80 million of  non-voting  preferred  securities of Special
Metals  Corporation  ("SMC"),  which  accrued at an annual  rate of  6.625%.  No
interest income or dividend  income relating to these  securities was recognized
during the three and six months ended June 30, 2002. On March 27, 2002,  SMC and
its U.S. subsidiaries filed voluntary petitions for reorganization under Chapter
11 of the U.S. Bankruptcy Code. As a result, the Company undertook an assessment
of its investment in SMC with the assistance of an external valuation specialist
and recorded a $27.5 million  impairment charge during the first quarter of 2002
for  an  other  than  temporary  decline  in the  estimated  fair  value  of its
investment in SMC.  This charge  reduced the  Company's  carrying  amount of its
investment in SMC to zero. See Note 3 to the Consolidated Financial Statements.

     Interest  expense.  Interest  expense during the three and six months ended
June 30, 2002 was lower than in the comparable periods in 2001, primarily due to
lower average debt levels and lower interest rates during the 2002 period.

     Income taxes. During the first quarter of 2002, the Job Creation and Worker
Assistance  Act of 2002 (the  "Act") was signed into law.  The Company  benefits
from certain provisions of the Act, which liberalized certain net operating loss
("NOL") and alternative minimum tax restrictions.  Prior to the law change, NOLs
could be carried  back two years and  forward 20 years.  The Act  increases  the
carryback  period  for losses  generated  in 2001 and 2002 to five years with no
change to the  carryforward  period.  In addition,  losses generated in 2001 and
2002 can be carried back and offset  against  100% of a  taxpayer's  alternative
minimum taxable income ("AMTI"). Prior to the law change, an NOL could offset no
more than 90% of a taxpayer's AMTI. The suspension of the 90% limitation is also
applicable to NOLs carried  forward into 2001 and 2002.  Based on these changes,
the Company  recognized  $1.8 million of refundable U.S. income taxes during the
first quarter of 2002.

     The Company operates in several tax jurisdictions and is subject to varying
income tax rates.  As a result,  the  geographic mix of pretax income can impact
the  Company's  overall  effective  tax  rate.  The  Company's  income  tax rate
approximated  the U.S.  statutory  rate during the second  quarter 2001. For the
three and six months ended June 30, 2002,  the Company's  income tax rate varied
from the U.S.  statutory  rate  primarily due to an increase in the deferred tax
valuation  allowance  related to the Company's tax attributes  that did not meet
the "more-likely-than-not"  recognition criteria during that period. See Note 13
to the Consolidated Financial Statements.

     Minority  interest.  Dividend  expense  related  to  the  Company's  6.625%
Convertible  Preferred  Securities  approximates $3.3 million per quarter and is
reported as minority interest. For the three and six months ended June 30, 2001,
this expense was recorded net of allocable income taxes; however, as a result of
the Company's  decision to increase its deferred tax valuation  allowance,  this
expense was  reported  pre-tax for the three and six months ended June 30, 2002.
In addition,  in the second  quarter of 2001 the Company  recorded an additional
$.5 million of pretax dividend  expense  related to dividends in arrears.  Other
minority interest relates primarily to the 30% interest in TIMET Savoie, SA held
by Compagnie Europeene du Zirconium-CEZUS, S.A. ("CEZUS").

                                      -26-
<PAGE>

     Supplemental   information.   Approximately  43%  of  the  Company's  sales
originated  in  Europe  for the  six  months  ended  June  30,  2002,  of  which
approximately  60% were  denominated in currencies  other than the U.S.  dollar,
principally the British pound and 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;  thus,
the U.S.  dollar value of these  subsidiaries'  sales and costs  denominated  in
currencies  other  than their  functional  currency,  including  sales and costs
denominated in U.S. dollars,  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 as such are not subject to currency
exchange rate fluctuations.

     The  Company  does  not  use  currency  contracts  to  hedge  its  currency
exposures.  At June 30, 2002, consolidated assets and liabilities denominated in
currencies other than functional  currencies were  approximately $40 million and
$38 million,  respectively,  consisting  primarily of U.S. dollar cash, accounts
receivable, accounts payable and borrowings.

     In July 2002, the Company  successfully  negotiated a new three-year  labor
agreement with its labor unions at its Toronto, Ohio facility.

     Outlook.   The  Outlook  section  contains  a  number  of   forward-looking
statements,  all of which are based on current  expectations,  and  exclude  the
potential effect of special and other charges related to  restructurings,  asset
impairments,  valuation allowances, changes in accounting principles and similar
items,   unless  otherwise  noted.  Undue  reliance  should  not  be  placed  on
forward-looking  statements.  Actual results may differ materially. See Notes 1,
5, 12, 14 and 16 to the Consolidated Financial Statements regarding commitments,
contingencies,  legal,  environmental  and other  matters,  which may materially
affect  the  Company's  future  business,  results of  operations,  consolidated
financial position and liquidity.

     The economic  slowdown  that began during 2001 in the economies of the U.S.
and other  regions of the world  combined  with the events of September 11, 2001
have  resulted in the major  commercial  airframe  and jet engine  manufacturers
substantially  reducing their forecast of future engine and aircraft  deliveries
and their production levels in 2002. The Company expects that aggregate industry
mill product  shipments  will  decrease in 2002 by  approximately  18%, from its
revised  estimate of 55,000  metric tons in 2001 to an estimated  45,000  metric
tons,  and that demand for mill  products for the  commercial  aerospace  sector
could decline by up to 40% in 2002,  primarily  due to a combination  of reduced
aircraft  production  rates and  excess  inventory  accumulated  throughout  the
aerospace supply chain. Excess inventory  accumulation  typically leads to order
demand for titanium products falling below actual consumption.

                                      -27-
<PAGE>

     The Company  believes  that demand for  titanium is likely to recover  more
gradually than it previously  anticipated  based on recent  projections of large
commercial  aircraft  deliveries by The Airline Monitor.  The Airline  Monitor's
latest forecast for deliveries of large commercial  aircraft is for 675 in 2002,
595 in 2003,  525 in 2004,  495 in 2005,  565 in 2006 and 685 in 2007.  Although
these projections are somewhat higher in 2002 through 2004, they are down 13% to
17% from The Airline  Monitor's  previous  forecast for 2005 through  2007.  The
demand for titanium generally precedes aircraft deliveries by about one year and
can be  significantly  affected by both excess  inventory  accumulation  and its
subsequent  absorption.  Based on The Airline Monitor's current forecast and the
Company's  projected  changes in supply  chain  inventory  levels,  the  Company
anticipates  a  cyclical  trough  in  titanium  demand  may occur in 2003 with a
gradual recovery beginning thereafter. Adverse world events, including terrorist
activities  and conflicts in the Middle East,  the financial  health of airlines
and  economic  growth  in  the  U.S.  and  other  regions  of the  world,  could
significantly  and  adversely  affect  the  timing of the  commercial  aerospace
recovery.

     The Company's backlog of unfilled orders was approximately  $145 million at
June 2002, compared to $175 million at March 2002 and $300 million at June 2001.
Substantially all of the June 2002 backlog is scheduled to be shipped within the
next 12 months.  However,  the  Company's  order  backlog  may not be a reliable
indicator of future business activity. Since September 11, 2001, the Company has
continued  to receive a number of  deferrals  and  cancellations  of  previously
scheduled orders and believes such requests will continue throughout 2002.

     Although the current business environment makes it difficult to predict the
Company's  future financial  performance,  the Company expects its sales revenue
for the full year of 2002 to  decline  to about  $375  million,  reflecting  the
combined  effects of decreases  in sales  volume,  softening  of market  selling
prices and changes in customer and product mix.  Compared to 2001,  mill product
sales  volume is expected  to decline  approximately  25% to about 9,100  metric
tons.  Melted product sales volume is expected to decline  approximately  40% to
about 2,600  metric  tons.  The  reduction  of overall  sales  volume in 2002 is
principally driven by an anticipated decline of 35% in the Company's  commercial
aerospace sales volume compared to 2001, partly offset by sales volume growth in
other  markets.  The  Company  expects  market  selling  prices on new orders to
continue to soften  throughout the balance of 2002.  However,  about one-half of
the  Company's  commercial  aerospace  volume is under LTAs that  provide  price
stability on that portion of its business.  The Company's  forecast  anticipates
that Boeing will purchase about 1.5 million pounds of product under its LTA with
the Company in 2002. At that level,  the Company  expects to recognize about $23
million of income under the Boeing  agreement's  take-or-pay  provisions for the
full year 2002.  Those earnings will be reported as operating  income,  but will
not be included in net sales or gross margin.

     The Company  currently  anticipates gross margin as a percent of sales will
decrease  over the year and that  gross  margin  for the full  year 2002 will be
between  negative 1% and  negative  4%.  Selling,  general,  administrative  and
development expense should be approximately $43 million. Interest expense should
approximate $4 million.  The Company's  consolidated  effective book tax rate is
expected to be about 5%, but could vary significantly with the geographic mix of
income.  Minority  interest on the Company's  Convertible  Preferred  Securities
should approximate $13 million.  The Company presently expects an operating loss
before special items of $25 million to $35 million and a net loss before changes
in accounting  principles and other special items of between $40 million and $50
million in 2002.

                                      -28-
<PAGE>

     The Company expects cash flow from  operations in 2002 to be  approximately
negative  $30  million.  This is mainly  due to the  effect in 2002 of the $28.5
million cash advance  payment that the Company  received from Boeing in December
2001. That advance created a liability for the same amount at year end 2001. The
liability is being reduced during 2002 as product  shipments are made and as the
take-or-pay benefits are earned.  The advance for calendar year 2003 will not be
received until early in 2003.  Excluding the effect of the Boeing  advance,  the
Company expects cash flow from operations to be slightly  negative in 2002. Cash
flow from  operations is also  expected to be affected by increased  payments to
fund  employee  retirement  plan  benefits  due to decreases in the value of the
underlying  plan  assets  and  certain  early  employee   retirements.   Capital
expenditures  are expected to be  approximately  $12 million.  Depreciation  and
amortization should approximate $37 million.

     For the third quarter of 2002,  the Company  expects sales revenue to range
between $75 million and $85 million. Mill product sales volume is expected to be
about 2,000  metric tons and melted  product  sales  volume  should be about 600
metric tons. Certain third quarter production was pulled forward into the second
quarter  of  2002.  As a result  of this  and the  current  reduced  demand  for
titanium, the Company's forecast anticipates temporary shutdowns of certain U.S.
facilities  in the  second  half of this year.  These  shutdowns  are  currently
expected to be only a few weeks each in duration,  but that will  ultimately  be
dependent on the level of  production  needed to meet demand.  Gross margin as a
percent of sales in the third quarter is expected to range  between  negative 4%
and negative 8%. Selling, general, administrative and development expense in the
third  quarter  of 2002  should be about $11  million.  The  Company  expects to
recognize  an  additional  $10  million  of  operating  income  related  to  the
take-or-pay provisions of the Boeing contract during the third quarter. Interest
expense should  approximate $1 million while minority  interest on the Company's
Convertible  Preferred  Securities should  approximate $3.3 million.  With these
estimates,  the Company  expects an operating  loss before  special items in the
third  quarter  of 2002 of between $4  million  and $7  million,  and a net loss
before  changes in accounting  principles  and other special items of between $8
million and $12 million.

     The Company expects to take actions to reduce its costs and working capital
over the balance of 2002.  The Company plans to reduce the operating rate of its
sponge  production  facility to about 70% of capacity  for the last half of this
year,  and it recently  targeted an  additional  reduction  in its  Company-wide
employment  levels  of 10% to 15% by year end.  At June 30,  2002,  the  Company
employed approximately 2,250 personnel worldwide. The timing and effect of these
recent  decisions is somewhat  uncertain  and,  accordingly,  the effect of such
items has not been included in the 2002 forecasts  outlined above. These actions
could result in restructuring or other charges in 2002 that might be material.

                                      -29-
<PAGE>

     The Company  adopted SFAS No. 142  effective  as of January 1, 2002.  Under
SFAS No. 142,  goodwill is no longer  amortized on a periodic basis, but instead
is subject to a two-step  impairment  test to be performed at least on an annual
basis.  In order to test for  impairment,  SFAS No. 142  requires the Company to
identify its reporting units and determine the carrying amount of each reporting
unit by assigning its assets and liabilities,  including  existing  goodwill and
intangible  assets,  to those reporting units as of January 1, 2002. The Company
has determined  that it operates one reporting unit, as defined by SFAS No. 142.
The first step of the impairment test requires the Company to determine the fair
value of its reporting  unit and compare it to that  reporting  unit's  carrying
amount.  To the extent that the carrying amount of the Company's  reporting unit
exceeds its fair value, an indication  exists that the reporting unit's goodwill
may be impaired and the Company  must perform the second step of the  impairment
test.  The Company has completed the first step of its  transitional  impairment
test, which indicates that an impairment of its recorded goodwill may exist. The
Company is currently  performing the second step of its transitional  impairment
test,  which  requires  the  Company to compare  the  implied  fair value of its
reporting  unit's  goodwill with the carrying  amount of that  goodwill.  If the
goodwill's  carrying  amount exceeds its implied fair value,  an impairment loss
will be  recognized  in an amount  equal to that excess.  The Company  currently
believes it is likely that the entire amount of the Company's  goodwill  balance
(approximately  $45 million at June 30, 2002) may be deemed  impaired.  Any such
transitional impairment will be recognized as a cumulative effect of a change in
accounting  principle  no later than  December  31,  2002,  as  provided  by the
transition requirements of SFAS No. 142.

     As a  consequence  of  uncertainties  surrounding  both  the  titanium  and
commercial  aerospace  industries and broader economic  conditions,  the Company
believes assessments of long-lived asset recoverability,  as required under SFAS
No. 144,  Accounting for the Impairment or Disposal of Long-Lived  Assets,  that
may result in charges for asset  impairments could occur in the balance of 2002.
Generally,  when events or changes in  circumstances  indicate that the carrying
amount of  long-lived  assets,  including  property  and  equipment,  may not be
recoverable, the Company prepares an evaluation comparing the carrying amount of
the assets to the undiscounted expected future cash flows of the assets or asset
group. If this comparison indicates that the carrying amount is not recoverable,
the amount of the  impairment  would  typically be calculated  using  discounted
expected  future  cash flows or  appraised  values.  All  relevant  factors  are
considered in  determining  whether an  impairment  exists and charges for asset
impairments,  if any, are recorded when  reasonably  estimable.  Such  potential
future charges, if any, could be material.


                                      -30-
<PAGE>

     Future results of operations and other forward-looking statements contained
in this Outlook  involve a number of substantial  risks and  uncertainties  that
could  significantly  affect  expected  results.  Actual  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. Among the factors that could cause actual results to
differ  materially are the risks and  uncertainties  discussed in this Quarterly
Report and those described from time to time in the Company's other filings with
the Securities and Exchange  Commission  which include,  but are not limited to,
the  cyclicality  of the  commercial  aerospace  industry,  the  performance  of
aerospace manufacturers and the Company under their LTAs, the renewal of certain
LTAs,  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,  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 war or terrorist  activities  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.

LIQUIDITY AND CAPITAL RESOURCES

     The Company's consolidated cash flows provided by operating,  investing and
financing activities are presented below:
<TABLE>
<CAPTION>

                                                                                        Six months ended
                                                                                            June 30,
                                                                            ------------------------------------------
                                                                                   2002                   2001
                                                                            -------------------    -------------------
                                                                                         (In thousands)
<S>                                                                         <C>                    <C>
Cash provided (used) by:
   Operating activities:
     Excluding changes in assets and liabilities                            $       (3,536)        $        72,431
     Changes in assets and liabilities                                             (15,821)                (17,241)
                                                                            -------------------    -------------------
                                                                                   (19,357)                 55,190
   Investing activities                                                             (3,337)                 (4,200)
   Financing activities                                                              6,119                 (36,108)
                                                                            -------------------    -------------------

   Net cash provided (used) by operating,
     investing and financing activities                                     $      (16,575)        $        14,882
                                                                            ===================    ===================

</TABLE>


                                      -31-
<PAGE>

     Operating activities. Cash used by operating activities,  excluding changes
in assets and liabilities,  generally  followed the trend in operating  results.
Changes in assets and  liabilities  reflect  primarily  the timing of purchases,
production and sales and can vary significantly from period to period.  Accounts
receivable  decreased in the first half of 2002 primarily as a result of reduced
sales,  which was somewhat  offset by an increase in days sales  outstanding  as
certain customers extended their payment terms to the Company.  Receivables from
related  parties  decreased  in the first half of 2002  primarily as a result of
cash received from Tremont through an intercorporate services agreement and from
a  reduction  in trade  sales to  VALTIMET  during the  second  quarter of 2002.
Inventories  increased in the first half of 2002 as a result of production begun
by the Company prior to certain customer  cancellations and push-outs related to
the recent downturn in the commercial  aerospace  market,  the timing of certain
raw material purchases and the accelerated  production of certain orders as part
of its  contingency  planning  for a possible  labor  disruption  at its Toronto
plant.  This increase was partially  offset by an increase in the Company's LIFO
reserve.  Prepaid  expenses and other current assets decreased in the first half
of 2002 due to the  receipt  of raw  materials  for which the  Company  had made
advance payments during 2001 and the ongoing usage of other prepaid assets.

     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 materials purchases.  Changes in customer advance payments reflect
the  application of customer  purchases and the  recognition  of  Boeing-related
take-or-pay income during the first half of 2002. Under the terms of the LTA, in
years 2002 through 2007,  Boeing  advances  TIMET $28.5 million  annually,  less
$3.80 per pound of titanium product  purchased by Boeing  subcontractors  during
the preceding  year.  Effectively,  the Company  collects $3.80 less from Boeing
than the LTA selling  price for each pound of titanium  product sold directly to
Boeing,  which reduces the related  customer advance  liability  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  Company  estimates  that the  reduction  against  the 2003
advance from Boeing will be less than $2.0  million.  The LTA is structured as a
take-or-pay  agreement  such that,  beginning  in  calendar  year  2002,  Boeing
forfeits $3.80 per pound in the event that its orders for delivery are less than
7.5 million pounds in any given calendar year. The Boeing  customer  advance was
reduced by $5.0 million ($2.8 million from purchases directly by Boeing and $2.2
million from  recognition  of  take-or-pay  income) to $23.5 million  during the
first half of 2002.

     On March 27, 2002, SMC and its U.S.  subsidiaries filed voluntary petitions
for  reorganization  under Chapter 11 of the U.S.  Bankruptcy Code. As a result,
the Company, with the assistance of an external valuation specialist,  undertook
a further  assessment of its investment in SMC and recorded an additional  $27.5
million  impairment charge during the first quarter of 2002 to general corporate
expense for an other than temporary  decline in the fair value of its investment
in SMC, reducing the Company's carrying amount of its investment in SMC to zero.

     Investing activities.  The Company's capital expenditures were $3.3 million
for the six months  ended June 30, 2002  compared  to $4.2  million for the same
period in 2001, principally for capacity enhancements,  capital maintenance, and
safety and environmental projects.

     Financing activities. Net borrowings of $7.6 million in the 2002 period are
primarily  attributable to increases in working capital (exclusive of cash). Net
repayments  in the 2001  period were  primarily  attributable  to the  Company's
litigation settlement with Boeing. The Company also made a $1.1 million dividend
payment to CEZUS in the second quarter of 2002.

                                      -32-

<PAGE>

     Borrowing  arrangements.  At June  30,  2002,  the  Company's  net debt was
approximately $13.0 million,  consisting of $7.4 million of cash and equivalents
and $20.4 million of debt  (principally  borrowings under the Company's U.S. and
U.K. credit  agreements).  This compares to a net cash position of $12.1 million
as of December 31, 2001.

     Borrowings under the Company's U.S. asset-based  revolving credit agreement
are limited to the lesser of $125 million or a formula-determined borrowing base
derived  from  the  value  of  accounts  receivable,   inventory  and  equipment
("borrowing availability"). This facility requires the Company's U.S. daily cash
receipts  to be  used  to  reduce  outstanding  borrowings,  which  may  then be
reborrowed, subject to the terms of the agreement. 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 dividends on TIMET's  Convertible  Preferred
Securities  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. Excess  availability is defined
as borrowing  availability less certain contractual  commitments such as letters
of credit. At June 30, 2002, excess availability was approximately $90 million.

     The  Company's  U.S.  credit  agreement  allows  the  lender to modify  the
borrowing base formulas at its discretion, subject to certain conditions. During
the second  quarter of 2002,  the  Company's  lender  elected to  exercise  such
discretion and modified the Company's borrowing base formulas, which reduced the
amount that the  Company  can borrow  against its  inventory  and  equipment  by
approximately  $7 million.  In the event the lender exercises such discretion in
the future,  such event could have a material  adverse  impact on the  Company's
liquidity.  Borrowings  outstanding under this U.S. facility are classified as a
current  liability.  Unused borrowing  availability under this agreement at June
30, 2002 was approximately $93 million. The credit agreement expires in February
2003.  The  Company  is  currently  negotiating  with its  lender to extend  the
maturity date of this  agreement on  substantially  similar terms;  however,  no
assurance  can be given  that an  agreement  to  extend  this  facility  will be
achieved.

     The Company's  subsidiary,  TIMET UK, has a credit  agreement that provides
for   borrowings   limited   to  the   lesser   of   (pound)30   million   or  a
formula-determined borrowing base derived from the value of accounts receivable,
inventory  and  equipment  ("borrowing  availability").   The  credit  agreement
includes a revolving and term loan facility and an overdraft facility (the "U.K.
facilities").  Borrowings under the U.K. facilities can be in various currencies
including U.S. dollars,  British pounds and euros, 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. The U.K.  overdraft facility is
subject to annual  review in February of each year and was extended for one year
in February  2002. The U.K.  facilities  expire in February 2005. As of June 30,
2002,  the  outstanding  balance of the U.K.  facilities was  approximately  $10
million with unused borrowing availability of approximately $32 million.

     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.  Unused  borrowing  availability as of June 30,
2002 under these facilities was approximately $14 million.

                                      -33-
<PAGE>
     Although excess  availability  under TIMET's U.S. credit agreement  remains
above $40 million,  no dividends were paid by TIMET during the six-month periods
ended June 30, 2002 and 2001. Any future  dividends will be at the discretion of
the  Company's  board of  directors  and will depend upon,  among other  things,
earnings,   financial  condition,  cash  requirements,   cash  availability  and
contractual  requirements.  TIMET  presently  has no plans to resume  payment of
common stock dividends.

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

     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, and 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 capital 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.

                                      -34-
<PAGE>

Item 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     General.  The  Company is exposed  to market  risk from  changes in foreign
currency  exchange  rates,  interest  rates and  commodity  prices.  The Company
typically does not enter into interest rate swaps or other types of contracts in
order to manage its interest rate market risk and typically  does not enter into
currency forward contracts to manage its foreign exchange market risk associated
with receivables, payables and indebtedness denominated in a currency other than
the functional currency of the particular entity.

     Interest rates. Information regarding the Company's market risk relating to
interest rate  volatility  was disclosed in the Company's 2001 Annual Report and
should be read in conjunction  with this interim  financial  information.  Since
December 31,  2001,  there has been no  significant  change in the nature of the
Company's exposure to market risks.

     Foreign  currency  exchange  rates.  The  Company is exposed to market risk
arising  from  changes in  foreign  currency  exchange  rates as a result of its
international operations.  See Item 2 - "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

     Commodity  prices.  The  Company  is exposed to market  risk  arising  from
changes in  commodity  prices as a result of its  long-term  purchase and supply
agreements with certain suppliers and customers.  These agreements,  which offer
various fixed or formula-determined  pricing arrangements,  effectively obligate
the Company to bear (i) the risk of  increased  raw  material and other costs to
the  Company  which  cannot  be  passed on to the  Company's  customers  through
increased  titanium  product  prices  (in  whole or in part) or (ii) the risk of
decreasing raw material costs to the Company's suppliers which are not passed on
to the Company in the form of lower raw material prices.

                                      -35-
<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 2001 Annual
Report for descriptions of certain previously reported legal proceedings.

Item 6.    EXHIBITS AND REPORTS ON FORM 8-K

          (a)  Exhibits


               10.1*Amended and  Restated  Employment  Contract  between  TIMET
                    Savoie, SA and Christian Leonhard


               10.2 Purchase and Sale Agreement (for titanium  products) between
                    The Boeing  Company,  acting  through its  division,  Boeing
                    Commercial  Airplanes,  and Titanium Metals  Corporation (as
                    amended and restated effective April 19, 2001)

               10.3 Purchase  and Sale  Agreement  between  Rolls-Royce  plc and
                    Titanium Metals Corporation

               99.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
                    pursuant to section 906 of the Sarbanes-Oxley Act of 2002.

               99.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
                    pursuant to section 906 of the Sarbanes-Oxley Act of 2002.

                     * Management contract, compensatory plan or arrangement.

          (b)  Reports on Form 8-K filed by the Registrant for the quarter ended
               June 30, 2002 and the month of July 2002:
<TABLE>
<CAPTION>

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

<S>                <C>                                    <C>
                   April 11, 2002                         5 and 7
                   April 26, 2002                         5 and 7
                   May 15, 2002                           5 and 7
                   July 9, 2002                           5 and 7


</TABLE>


                                      -36-
<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
                                  ----------------------------------------------
                                                   (Registrant)



Date: August 13, 2002      By     /s/ Mark A. Wallace
                                  ----------------------------------------------
                                  Mark A. Wallace
                                  (Executive Vice President and
                                  Chief Financial Officer)



Date: August 13, 2002      By     /s/ JoAnne A. Nadalin
                                  ----------------------------------------------
                                  JoAnne A. Nadalin
                                  (Vice President, Corporate Controller and
                                  Principal Accounting Officer)