SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

                For the quarterly period ended September 30, 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
incorporation or organization)                               Identification No.)





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




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


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months,  and (2) has been subject to such filing  requirements
for the past 90 days.


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


Number of shares of common stock outstanding on November 4, 2002: 31,851,938
                                                                  ----------

<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>



                           TITANIUM METALS CORPORATION

                                      INDEX


                                                                           Page
                                                                          Number

PART I.       FINANCIAL INFORMATION

 Item 1.  Consolidated Financial Statements

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

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

          Consolidated Statements of Comprehensive Income (Loss) -
            Three months and nine months ended September 30, 2002
            and 2001 (unaudited)                                              6

          Consolidated Statements of Cash Flows - Nine months
            ended September 30, 2002 and 2001 (unaudited)                     7

          Consolidated Statement of Changes in Stockholders' Equity -
            Nine months ended September 30, 2002 (unaudited)                  9

          Notes to Consolidated Financial Statements (unaudited)             10

 Item 2.  Management's Discussion and Analysis of Financial
            Condition and Results of Operations                              27

 Item 3.  Quantitative and Qualitative Disclosures about Market Risk         41

 Item 4.  Controls and Procedures                                            42

PART II.     OTHER INFORMATION

 Item 1.  Legal Proceedings                                                  43

 Item 6.  Exhibits and Reports on Form 8-K                                   43

                                     - 1 -

<PAGE>
<TABLE>
<CAPTION>


                           TITANIUM METALS CORPORATION

                           CONSOLIDATED BALANCE SHEETS
                                 (In thousands)

                                                                              September 30,            December 31,
ASSETS                                                                             2002                    2001
                                                                           ---------------------    ------------------
                                                                               (unaudited)
<S>                                                                                 <C>                      <C>
Current assets:
  Cash and cash equivalents                                                $         4,562          $        24,500
  Accounts and other receivables, less
     allowance of $3,147 and $2,739                                                 75,044                   83,347
  Receivables from related parties                                                   3,162                    5,907
  Refundable income taxes                                                              980                      470
  Inventories                                                                      190,445                  185,052
  Prepaid expenses and other                                                         4,084                    9,026
  Deferred income taxes                                                                556                      385
                                                                           ---------------------    ------------------

       Total current assets                                                        278,833                  308,687

Investment in joint ventures                                                        22,029                   20,585
Preferred securities of Special Metals Corporation ("SMC")                               -                   27,500
Property and equipment, net                                                        258,600                  275,308
Goodwill, net                                                                            -                   44,310
Other intangible assets, net                                                         8,412                    9,836
Deferred income taxes                                                                   42                       56
Other                                                                               14,487                   13,101
                                                                           ---------------------    ------------------

       Total assets                                                        $       582,403          $       699,383
                                                                           =====================    ==================
</TABLE>

                                     - 2 -

<PAGE>


<TABLE>
<CAPTION>

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

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

<S>                                                                                  <C>                     <C>
Current liabilities:
  Notes payable                                                            $        17,395          $         1,522
  Current maturities of long-term debt and
     capital lease obligations                                                         630                      512
  Accounts payable                                                                  28,693                   42,821
  Accrued liabilities                                                               45,565                   41,799
  Customer advances                                                                 17,916                   33,242
  Payable to related parties                                                           360                    1,612
  Income taxes                                                                         705                      746
  Deferred income taxes                                                                 65                      106
                                                                           ---------------------    -------------------
       Total current liabilities                                                   111,329                  122,360

Long-term debt                                                                       1,302                   10,712
Capital lease obligations                                                            9,238                    8,598
Payable to related parties                                                             644                      953
Accrued OPEB cost                                                                   13,549                   15,980
Accrued pension cost                                                                22,387                   23,690
Accrued environmental cost                                                           3,262                    3,262
Deferred income taxes                                                                3,213                    5,509
Accrued dividends on Convertible Preferred Securities                                1,111                        -
Other                                                                                    -                      237
                                                                           ---------------------    -------------------
       Total liabilities                                                           166,035                  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                                                              9,561                    8,727

Stockholders' equity:
  Preferred stock, $.01 par value; 1,000 shares authorized,
     none outstanding                                                                    -                        -
  Common stock, $.01 par value; 99,000 shares
     authorized; 31,948 and 31,946 shares issued                                       319                      319
  Additional paid-in capital                                                       350,659                  350,514
  Accumulated deficit                                                             (117,726)                 (15,841)
  Accumulated other comprehensive loss                                             (26,162)                 (35,274)
  Treasury stock, at cost  (90 shares)                                              (1,208)                  (1,208)
  Deferred compensation                                                               (316)                    (396)
                                                                           ---------------------    -------------------
       Total stockholders' equity                                                  205,566                  298,114
                                                                           ---------------------    -------------------

       Total liabilities and stockholders' equity                          $       582,403          $       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                Nine months ended
                                                            September 30,                      September 30,
                                                    -------------------------------    -------------------------------
                                                        2002              2001              2002              2001
                                                    -------------    --------------    --------------     ------------

<S>                                                         <C>             <C>               <C>               <C>
Revenues and other income:
   Net sales                                        $     82,794     $    126,437      $     281,529      $    370,479
   Equity in earnings of joint ventures                      342              749              1,670             1,863
   Other                                                  11,084            1,352             13,208            79,187
                                                    -------------    --------------    --------------     ------------
                                                          94,220          128,538            296,407           451,529
                                                    -------------    --------------    --------------     ------------

Costs and expenses:
   Cost of sales                                          87,734          105,601            279,937           345,861
   Selling, general, administrative
     and development                                      10,714           11,562             32,508            43,473
   Interest                                                  915              722              2,388             3,316
   Other                                                     984               90             29,256                90
                                                    -------------    --------------    --------------     ------------
                                                         100,347          117,975            344,089           392,740
                                                    -------------    --------------    --------------     ------------

(Loss) income before income taxes,
  minority interest and cumulative effect
  of change in accounting principle                       (6,127)          10,563            (47,682)           58,789

Income tax (benefit) expense                                (473)           3,731             (1,312)           20,693
Minority interest - Convertible
   Preferred Securities, net of tax in 2001                3,333            2,166              9,999             6,845
Other minority interest, net of tax                          161              326              1,206               975
                                                    -------------    --------------    --------------     ------------

(Loss) income before cumulative effect
  of change in accounting principle                       (9,148)           4,340            (57,575)           30,276

Cumulative effect of change in
   accounting principle                                        -                -            (44,310)                -
                                                    -------------    --------------    --------------     ------------

     Net (loss) income                              $     (9,148)    $      4,340       $   (101,885)     $     30,276
                                                    =============    ==============    ==============     ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      - 4 -



<PAGE>

<TABLE>
<CAPTION>

                           TITANIUM METALS CORPORATION

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

                                                          Three months ended                  Nine months ended
                                                             September 30,                      September 30,
                                                    -------------------------------    -------------------------------
                                                         2002             2001              2002             2001
                                                    --------------   --------------    -------------     -------------

<S>                                                 <C>               <C>              <C>               <C>
Basic (loss) earnings per share:

   Before cumulative effect of change
   in accounting principle                          $      (.29)      $       .14      $     (1.83)      $       .96

   Cumulative effect of change in
   accounting principle                                    -                 -               (1.40)             -
                                                    --------------    -------------    --------------    -------------

Basic net (loss) income per share                   $      (.29)      $       .14      $     (3.23)      $       .96
                                                    ==============    =============    ==============    =============

Diluted (loss) earnings per share:

   Before cumulative effect of change
   in accounting principle                          $      (.29)      $       .14      $     (1.83)      $       .95

   Cumulative effect of change in
   accounting principle                                    -                 -               (1.40)             -
                                                    --------------    -------------    --------------    -------------

Diluted net (loss) income per share                 $      (.29)      $       .14      $     (3.23)      $       .95
                                                    ==============    =============    ==============    =============

Weighted average shares outstanding:
   Basic                                                 31,611            31,539           31,586            31,486
   Diluted                                               31,611            31,764           31,586            31,760
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      - 5 -
<PAGE>
<TABLE>
<CAPTION>


                           TITANIUM METALS CORPORATION

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

                                                          Three months ended                 Nine months ended
                                                            September 30,                      September 30,
                                                    -------------------------------    -------------------------------
                                                         2002              2001             2002              2001
                                                    --------------    -------------    --------------    -------------

<S>                                                 <C>               <C>              <C>                 <C>
Net (loss) income                                   $     (9,148)     $     4,340      $  (101,885)        $  30,276

Other comprehensive income (loss) -
   currency translation adjustment                         1,546            6,996            9,112              (717)
                                                    --------------    -------------    --------------    -------------

Comprehensive (loss) income                         $     (7,602)     $    11,336        $ (92,773)        $  29,559
                                                    ==============    =============    ==============    =============
</TABLE>


          See accompanying notes to consolidated financial statements.

                                      - 6 -

<PAGE>

<TABLE>
<CAPTION>

                           TITANIUM METALS CORPORATION

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

                                                                                   Nine months ended September 30,
                                                                                 -------------------------------------
                                                                                       2002                2001
                                                                                 -----------------    ----------------

<S>                                                                                 <C>                  <C>
Cash flows from operating activities:
   Net (loss) income                                                                $ (101,885)          $   30,276
   Depreciation and amortization                                                        27,623               30,145
   Cumulative effect of change in accounting principle                                  44,310                    -
   Noncash equipment impairment charge                                                       -               10,840
   Noncash impairment of SMC securities                                                 27,500                    -
   Equity in earnings of joint ventures,
     net of distributions                                                                 (641)              (1,463)
   Deferred income taxes                                                                (2,813)              17,283
   Other minority interest                                                               1,206                  975
   Other, net                                                                            1,682                  677
   Change in assets and liabilities:
     Receivables                                                                        12,970              (13,265)
     Inventories                                                                          (704)             (18,230)
     Prepaid expenses and other                                                          5,038               (5,383)
     Accounts payable and accrued liabilities                                          (14,315)              14,009
     Customer advances                                                                 (16,639)                (931)
     Accrued restructuring charges                                                        (117)                (470)
     Income taxes                                                                       (1,427)                 811
     Accounts with related parties, net                                                  1,184                 (273)
     Accrued OPEB and pension costs                                                     (2,150)              (2,548)
     Accrued dividends on SMC securities                                                     -                 (714)
     Accrued dividends on Convertible Preferred Securities                                   -              (10,043)
     Other, net                                                                            528               (4,103)
                                                                                 -----------------    ----------------
       Net cash (used) provided by operating activities                                (18,650)              47,593
                                                                                 -----------------    ----------------

Cash flows from investing activities:
   Capital expenditures                                                                 (4,765)              (7,922)
   Other, net                                                                                -                   30
                                                                                 -----------------    ----------------
       Net cash used by investing activities                                            (4,765)              (7,892)
                                                                                 -----------------    ----------------

Cash flows from financing activities:
   Indebtedness:
     Borrowings                                                                        307,613              389,029
     Repayments                                                                       (301,877)            (423,210)
   Dividends paid on minority interest                                                  (1,115)                   -
   Issuance of common stock                                                                  -                  513
   Other, net                                                                             (471)                (125)
                                                                                 -----------------    ----------------
       Net cash provided (used) by financing activities                                  4,150              (33,793)
                                                                                 -----------------    ----------------

       Net cash (used) provided by operating,
         investing and financing activities                                      $     (19,265)       $       5,908
                                                                                 =================    ================
</TABLE>

          See accompanying notes to consolidated financial statements.
                                      - 7 -

<PAGE>


<TABLE>
<CAPTION>



                           TITANIUM METALS CORPORATION

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

                                                                                   Nine months ended September 30,
                                                                                 -------------------------------------
                                                                                       2002                2001
                                                                                 -----------------    ----------------

<S>                                                                              <C>                  <C>
Cash and cash equivalents:
   Net (decrease) increase from:
     Operating, investing and financing activities                               $     (19,265)       $       5,908
     Currency translation                                                                 (673)                (340)
                                                                                 -----------------    ----------------
                                                                                       (19,938)               5,568
   Cash at beginning of period                                                          24,500                9,796
                                                                                 -----------------    ----------------

   Cash at end of period                                                         $       4,562        $      15,364
                                                                                 =================    ================
Supplemental disclosures:
   Cash paid for:
     Interest, net of amounts capitalized                                        $       1,462        $       2,613
     Convertible Preferred Securities dividends                                  $       9,999        $      20,560
     Income taxes, net                                                           $       2,928        $       2,598


Noncash investing and financing activities:
   Capital lease obligations of $779 and $481 were incurred
   during the nine months ended September 30, 2002 and
   2001, respectively, when the Company entered into certain
   leases for new equipment
</TABLE>
          See accompanying notes to consolidated financial statements.
                                      - 8 -

<PAGE>

<TABLE>
<CAPTION>


                           TITANIUM METALS CORPORATION

      CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited)

                      Nine months ended September 30, 2002
                                 (In thousands)


                                                                           Accumulated Other
                                                                           Comprehensive Loss
                                                Additional              -----------------------                           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>       <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                       -        -          -     (101,885)          -           -        -            -      (101,885)
     Change in cumulative
       currency translation
       adjustment                   -        -          -            -       9,112           -        -            -         9,112

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

Stock award cancellations          (3)       -         (8)           -           -           -        -            8             -

Amortization of deferred
   compensation                     -        -          -            -           -           -        -          205           205

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

Balance at September 30, 2002  31,858  $   319  $ 350,659  $  (117,726) $   (5,283) $ (20,879)  $ (1,208) $     (316)  $   205,566
                              ======== ======== ========== ============ =========== =========== ========= ============ =============
</TABLE>

          See accompanying notes to consolidated financial statements.
                                      - 9 -


<PAGE>

                           TITANIUM METALS CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 1 - Organization and basis of presentation

     Titanium Metals Corporation  ("TIMET") is a vertically  integrated producer
of  titanium  sponge,  melted  products  and a  variety  of  mill  products  for
aerospace,  industrial and other  applications.  At September 30, 2002,  Tremont
Corporation  ("Tremont") held  approximately 39% of TIMET's  outstanding  common
stock. At September 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 9% of TIMET's
common stock. At September 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 September 30, 2002 and the consolidated statements
of operations,  comprehensive income (loss), changes in stockholders' equity and
cash flows for the interim  periods ended  September 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").

                                     - 10 -


<PAGE>



     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 are 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 is  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
period.

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>
                                                           Three months ended                 Nine months ended
                                                              September 30,                      September 30,
                                                     -------------------------------    -------------------------------
                                                          2002             2001              2002             2001
                                                     -------------    --------------    --------------   --------------
                                                                               (In thousands)


<S>                                                  <C>              <C>               <C>              <C>
Net sales                                            $     82,794     $    126,437      $    281,529     $    370,479
Cost of sales                                              87,734          105,601           279,937          345,861
                                                     -------------    --------------    --------------   --------------

Gross margin                                               (4,940)          20,836             1,592           24,618

Selling, general, administrative
   and development expense                                 10,714           11,562            32,508           43,473
Equity in earnings of joint ventures                          342              749             1,670            1,863
Other income (expense), net                                10,946              (59)           13,155           73,749
                                                     -------------    --------------    --------------   --------------

Operating (loss) income                                    (4,366)           9,964           (16,091)          56,757

General corporate income (expense):
   Dividends and interest income                               16            1,687               105            5,140
   Impairment of investment in SMC                              -                -           (27,500)               -
   Currency transactions and other, net                      (862)            (366)           (1,808)             208
Interest expense                                              915              722             2,388            3,316
                                                     -------------    --------------    --------------   --------------

(Loss) income before income taxes,
   minority interest and cumulative effect
   of change in accounting principle                 $     (6,127)    $     10,563      $    (47,682)    $     58,789
                                                     =============    ==============    ==============   ==============
</TABLE>
                                     - 11 -
<PAGE>

<TABLE>

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

<S>                                                  <C>              <C>               <C>              <C>
Titanium melted and mill products:
   Mill product net sales                            $     62,656     $     91,053      $    212,940     $    274,577
   Melted product net sales                                 8,656           19,906            27,951           49,005
   Other                                                   11,482           15,478            40,638           46,897
                                                     -------------    --------------    --------------   --------------


                                                     $     82,794     $    126,437      $    281,529     $    370,479
                                                     =============    ==============    ==============   ==============

Mill product shipments:
   Volume (metric tons)                                     2,005            3,015             6,825            9,245
   Average price ($ per kilogram)                    $      31.25     $      30.20      $      31.20     $      29.70

Melted product shipments:
   Volume (metric tons)                                       625            1,345             1,895            3,415
   Average price ($ per kilogram)                    $      13.85     $      14.80      $      14.75     $      14.35

</TABLE>


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>

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

<S>                                                                        <C>                      <C>
Raw materials                                                              $        57,768          $        43,863
Work-in-process                                                                     83,991                   94,709
Finished products                                                                   62,578                   54,074
Supplies                                                                            14,198                   13,476
                                                                           ---------------------    ------------------
                                                                                   218,535                  206,122
Less adjustment of certain inventories to LIFO basis                                28,090                   21,070
                                                                           ---------------------    ------------------

                                                                           $       190,445          $       185,052
                                                                           =====================    ==================

</TABLE>

                                     - 12 -
<PAGE>


Note 5 - Goodwill and intangible assets

     The Company's goodwill, arising from several previous business combinations
accounted  for  under  the  purchase  method,  was  stated  net  of  accumulated
amortization  recorded as of 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.

     In order to test for  transitional  impairment,  SFAS No. 142  required 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  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  required the Company to  determine  the fair value of its
reporting unit and compare it to that reporting  unit's  carrying  amount.  This
evaluation was completed with the assistance of an external valuation specialist
and considered a combination of fair value  indicators  including  quoted market
prices,   prices  of  comparable  businesses  and  discounted  cash  flows.  The
evaluation,  which was completed  during the second  quarter of 2002,  indicated
that the Company's  recorded goodwill might be impaired and required the Company
to complete the second step of the impairment test.

     The second step of the  impairment  test,  which was  completed  during the
third quarter of 2002, required the Company to compare the implied fair value of
its reporting  unit's goodwill with the carrying  amount of that goodwill.  With
the  assistance of the external  valuation  specialist  utilized in the step one
testing, the Company determined the implied fair value of its goodwill was zero.
Accordingly, the Company recorded a non-cash goodwill impairment charge of $44.3
million,  representing the entire balance of the Company's  recorded goodwill at
January 1, 2002.  There was no income tax benefit  associated  with this charge.
While the goodwill  associated with the Company's U.S.  operations is deductible
for income tax purposes,  the Company does not currently recognize an income tax
benefit  associated with its U.S.  losses.  In addition the goodwill  associated
with  the  Company's  European  operations  is not  deductible  for  income  tax
purposes.  Pursuant to the transition  requirements of SFAS No. 142, this charge
has been  reported in the Company's  Consolidated  Statements of Operations as a
cumulative effect of a change in accounting principle as of January 1, 2002. The
effect of the change in accounting principle on the first quarter of 2002 was to
increase the  Company's  first quarter net loss by $44.3  million,  or $1.40 per
share,  to $80.4  million,  or $2.55 per share.  The change had no effect on the
second or third quarters of 2002.

                                     - 13 -
<PAGE>


     The following table reflects the Company's comparative income (loss) before
the  cumulative  effect of the change in  accounting  principle and the goodwill
amortization under SFAS No. 142:
<TABLE>

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

<S>                                                  <C>              <C>               <C>              <C>
Net (loss) income before cumulative
   effect of change in accounting
   principle, as reported                            $     (9,148)    $      4,340      $    (57,575)    $     30,276
Adjustments for:
  Goodwill amortization                                         -            1,148                 -            3,453
  Tax provision on amortization                                 -             (307)                -             (922)
                                                     -------------    --------------    --------------   --------------

Adjusted net (loss) income before
   cumulative effect of change in
   accounting principle                                    (9,148)           5,181           (57,575)          32,807

Cumulative effect of change in
   accounting principle                                         -                -           (44,310)               -
                                                     -------------    --------------    --------------   --------------

Adjusted net (loss) income                           $     (9,148)    $      5,181      $   (101,885)    $     32,807
                                                     =============    ==============    ==============   ==============

Net (loss) income per basic share
   before cumulative effect of change
   in accounting principle, as reported              $      (.29)     $       .14       $     (1.83)     $       .96
Adjustments for:
   Goodwill amortization                                     -                .04                  -             .11
   Tax provision on amortization                             -               (.01)                 -            (.03)
                                                     -------------    --------------    --------------   --------------

Adjusted net (loss) income per basic
   share before cumulative effect of
   change in accounting principle                           (.29)             .17             (1.83)             1.04

Cumulative effect of change in
   accounting principle                                      -                -               (1.40)             -
                                                     -------------    --------------    --------------   --------------

Adjusted net (loss) income per basic share           $      (.29)     $       .17       $     (3.23)     $      1.04
                                                     =============    ==============    ==============   ==============

Net (loss) income per diluted share
   before cumulative effect of change
   in accounting principle, as reported              $      (.29)     $       .14       $     (1.83)     $       .95
Adjustments for:
   Goodwill amortization                                        -             .04                  -             .11
   Tax provision on amortization                                -            (.01)                 -            (.03)
                                                     -------------    --------------    --------------   --------------

Adjusted net (loss) income per diluted
   share before cumulative effect of
   change in accounting principle                           (.29)             .17             (1.83)            1.03

Cumulative effect of change in
   accounting principle                                     -                    -            (1.40)            -
                                                     -------------    --------------    --------------   --------------


Adjusted net (loss) income per diluted share         $      (.29)     $       .17       $     (3.23)     $      1.03
                                                     =============    ==============    ==============   ==============
</TABLE>
                                     - 14 -
<PAGE>


     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 3.5 and .5 years, respectively,  as of
September 30, 2002.  The carrying  amount and  accumulated  amortization  of the
Company's intangible assets are as follows:
<TABLE>

                                                        September 30, 2002                   December 31, 2001
                                                 ----------------------------------    -------------------------------
                                                   Carrying          Accumulated        Carrying         Accumulated
                                                    Amount           Amortization        Amount         Amortization
                                                 -------------    -----------------    ------------     --------------
                                                                            (In thousands)
<S>                                                    <C>                <C>               <C>                <C>
Intangible assets:
  Definite lives, subject to amortization:
     Patents                                     $    13,740      $       8,895        $   13,405       $      7,606
     Covenants not to compete                          8,692              8,323             8,353              7,514
   Other intangible asset - pension asset(1)           3,198                  -             3,198                  -
                                                 -------------    -----------------    ------------     --------------

                                                 $    25,630      $      17,218        $   24,956       $     15,120
                                                 =============    =================    ============     ==============

----------------------------------------------------------------------------------------------------------------------
(1) Not covered by the scope of SFAS No. 142.
</TABLE>

     For the three and nine months  ended  September  30,  2002,  the  Company's
amortization  expense relating to its intangible assets was $.5 million and $1.6
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>

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

Note 6 - Property and equipment

<TABLE>
                                                                              September 30,           December 31,
                                                                                   2002                   2001
                                                                           ---------------------    ------------------
                                                                                         (In thousands)

<S>                                                                        <C>                      <C>
Land                                                                       $         6,196          $         6,138
Buildings                                                                           37,659                   36,574
Information technology systems                                                      57,477                   55,112
Manufacturing and other                                                            314,500                  300,315
Construction in progress                                                             5,284                   11,631
                                                                           ---------------------    ------------------
                                                                                   421,116                  409,770
Less accumulated depreciation                                                      162,516                  134,462
                                                                           ---------------------    ------------------

                                                                           $       258,600          $       275,308
                                                                           =====================    ==================
</TABLE>
                                     - 15 -
<PAGE>


Note 7 - Other noncurrent assets
<TABLE>

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

<S>                                                                        <C>                      <C>
Deferred financing costs                                                   $         7,090          $         8,212
Notes receivable from officers                                                         163                      163
Prepaid pension cost                                                                 5,778                    4,006
Refundable income taxes                                                              1,009                        -
Other                                                                                  447                      720
                                                                           ---------------------    ------------------

                                                                           $        14,487          $        13,101
                                                                           =====================    ==================

</TABLE>

Note 8 - Accrued liabilities

<TABLE>
                                                                              September 30,           December 31,
                                                                                   2002                   2001
                                                                           ---------------------    ------------------
                                                                                         (In thousands)

<S>                                                                        <C>                      <C>
OPEB cost                                                                  $         4,476          $         2,969
Pension cost                                                                         3,866                      555
Incentive compensation                                                               1,315                    6,077
Severance benefits                                                                   2,092                        -
Other employee benefits                                                             14,201                   14,616
Deferred income                                                                      1,396                      325
Environmental costs                                                                    487                      654
Restructuring costs                                                                     80                      198
Tungsten costs                                                                       2,701                    2,743
Taxes, other than income                                                             6,138                    4,867
Dividends on Convertible Preferred Securities (Note 11)                                  -                    1,111
Other                                                                                8,813                    7,684
                                                                           ---------------------    ------------------

                                                                           $        45,565          $        41,799
                                                                           =====================    ==================
</TABLE>

     In the third quarter of 2002,  the Company  implemented a program to reduce
global  employment levels by approximately 300 employees or approximately 13% of
the workforce. Severance costs aggregating $2.2 million were recorded for actual
and probable  terminations  based upon benefit  agreements  and/or  arrangements
applicable to the affected  salaried and hourly  positions.  Depending  upon the
terminated  employees'  years of service and payroll  classification,  severance
benefits could include  continuation  of pay as well as  continuation of certain
health and life insurance  benefits.  As of September 30, 2002,  $2.1 million of
these benefits were accrued and expected to be paid over the next year.

     Accrued  restructuring  costs at  September  30,  2002  consist  of  unpaid
severance and other benefits for terminated  employees relating to the Company's
restructuring  plans  implemented  during 1999 and 2000.  During the nine months
ended  September 30, 2002, the Company  applied  payments of $.1 million against
the accrued costs related to such  restructuring  plans.  During the nine months
ended  September 30, 2001, the Company  applied  payments of $.5 million against
the accrued costs related to such restructuring plans and recorded income of $.2
million   related  to  revisions  to   estimates   of   previously   established
restructuring accruals.
                                     - 16 -
<PAGE>

Note 9 - Customer advances

     In April 2001, the Company  reached a settlement of the litigation  between
TIMET and The  Boeing  Company  ("Boeing")  related  to the  parties'  long-term
agreement  ("LTA") entered into in 1997. Under the terms of the LTA, as amended,
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. As of September 30, 2002, approximately $12.2 million of the
customer advance was related to the Company's LTA with Boeing.

     Effectively,  the  Company  collects  $3.80 less from  Boeing  than the LTA
selling  price for each pound of titanium  product  sold  directly to Boeing and
reduces the related  customer  advance  recorded by the  Company.  For  titanium
products  sold to  Boeing  subcontractors,  the  Company  collects  the full LTA
selling  price,  but gives  Boeing  credit by reducing  the next  year's  annual
advance by $3.80 per pound of titanium  product  sold to Boeing  subcontractors.
The Boeing customer advance is also reduced as take-or-pay  benefits are earned,
as described in Note 12.

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

                                                                              September 30,           December 31,
                                                                                  2002                    2001
                                                                          ----------------------    ------------------
                                                                                        (In thousands)
<S>                                                                       <C>                       <C>
Notes payable:
  U.S. credit agreement                                                   $        16,660           $            30
  European credit agreements                                                          735                     1,492
                                                                          ----------------------    ------------------

                                                                          $        17,395           $         1,522
                                                                          ======================    ==================
Long-term debt:
  Bank credit agreement - U.K.                                            $         1,302           $        10,712
  Other                                                                                 -                       172
                                                                          ----------------------    ------------------
                                                                                    1,302                    10,884
  Less current maturities                                                               -                       172
                                                                          ----------------------    ------------------

                                                                          $         1,302           $        10,712
                                                                          ======================    ==================

Capital lease obligations                                                 $         9,868           $         8,938
  Less current maturities                                                             630                       340
                                                                          ----------------------    ------------------

                                                                          $         9,238           $         8,598
                                                                          ======================    ==================
</TABLE>
                                     - 17 -


<PAGE>


     On October 23,  2002,  the Company  amended its existing  U.S.  asset-based
revolving credit agreement,  extending the maturity date to February 2006. Under
the terms of the amendment,  borrowings are limited to the lesser of $90 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
essentially   unused   borrowing   availability  and  is  defined  as  borrowing
availability  less outstanding  borrowings and certain  contractual  commitments
such as letters of credit.  Subsequent to the aforementioned  amendment,  excess
availability was approximately $69 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 could have borrowed  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.

     The  Company's  subsidiary,  TIMET UK Limited  ("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.  Although  no
assurances  can be given,  the  Company  expects  the  overdraft  facility to be
renewed for a one-year  period in February 2003. In the event that the overdraft
facility is not renewed, the Company believes it could refinance any outstanding
overdraft  borrowings  under either the  revolving or term loan  features of the
U.K.  facilities.  The U.K.  facilities expire in February 2005. As of September
30, 2002, the outstanding  balance of the U.K. facilities was approximately $1.3
million with unused borrowing availability of approximately $37 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 September
30, 2002 under these facilities was approximately $13 million.

     The weighted  average  interest  rate on borrowings  outstanding  under the
U.S.,  U.K.  and other  European  credit  agreements  for the three months ended
September 30, 2002 was 4.0%, 5.6% and 3.3%, respectively.

                                     - 18 -

<PAGE>


Note 11 - Minority interest

     In October 2002, the Company  exercised its right to defer future  dividend
payments  on its  Convertible  Preferred  Securities  for a  period  of up to 20
consecutive  quarters.  Dividends  will continue to accrue at the coupon rate on
the principal and unpaid  dividends.  This deferral is effective  beginning with
the Company's  December 1, 2002  scheduled  dividend  payment.  The Company will
consider resuming payment of dividends on the Convertible  Preferred  Securities
once the outlook for the Company's  business  improves  substantially.  Based on
this deferral,  accrued dividends on these Convertible Preferred Securities have
been  classified  as  long-term  as of  September  30,  2002.  Since the Company
exercised its right to defer dividend payments,  it is unable under the terms of
these  securities  to, among other  things,  pay  dividends on or reacquire  its
capital stock during the deferral period.  However,  the Company is permitted to
reacquire the Convertible Preferred Securities during the deferral period.

     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>

                                                          Three months ended                 Nine months ended
                                                             September 30,                      September 30,
                                                    -------------------------------    -------------------------------
                                                         2002             2001              2002              2001
                                                    --------------   --------------    --------------    -------------
                                                                              (In thousands)

<S>                                                 <C>              <C>               <C>               <C>
Other income:
  Dividends and interest income                     $         16     $      1,717      $        105      $      5,268
  Boeing settlement, net of legal fees                         -                -                 -            73,000
  Boeing take-or-pay                                      10,540                -            12,696                 -
  Foreign exchange gain (loss)                                50             (365)             (292)               73
  Restructuring credit                                         -                -                 -               220
  Other                                                      478                -               699               626
                                                    --------------   --------------    --------------    -------------

                                                    $     11,084     $      1,352      $     13,208      $     79,187
                                                    ==============   ==============    ==============    =============

Other expense:
  Impairment of investment in SMC (Note 3)          $          -     $          -      $     27,500      $          -
  Surety bond guarantee (Note 14)                            918                -               918                 -
  Other                                                       66               90               838                90
                                                    --------------   --------------    --------------    -------------

                                                    $        984     $         90      $     29,256      $         90
                                                    ==============   ==============    ==============    =============
</TABLE>

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

                                     - 19 -

<PAGE>


     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 sales  revenue,  sales volume or
gross margin.  Based on actual  purchases of  approximately  1.2 million  pounds
through  September 30, 2002 (.9 million  pounds  through the second quarter 2002
and .3 million  pounds in the third quarter 2002) and the Company's  contractual
maximum  volume  obligation of 3.0 million pounds for the remainder of the year,
the  Company  recognized  $10.5  million of income in the third  quarter of 2002
($12.7  million for the nine months ended  September  30,  2002)  related to the
take-or-pay  provisions  for 3.3  million  pounds  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 as described in Note 9.

Note 13 - Income taxes

<TABLE>
                                                                                         Nine months ended
                                                                                           September 30,
                                                                              ----------------------------------------
                                                                                    2002                  2001
                                                                              ------------------    ------------------
                                                                                          (In thousands)

<S>                                                                                       <C>                   <C>
Expected income tax (benefit) expense, at 35%                                 $       (16,689)      $        20,577
Non-U.S. tax rates                                                                        823                   407
U.S. state income taxes, net                                                              186                 1,092
Extraterritorial income exclusion                                                        (280)                 (346)
Dividends received deduction                                                                -                  (974)
Change in valuation allowance:
  Effect of change in tax law                                                          (1,797)                    -
  Adjustment of deferred tax valuation allowance                                       16,367                  (103)
Other, net                                                                                 78                    40
                                                                              ------------------    ------------------

                                                                              $        (1,312)      $        20,693
                                                                              ==================    ==================
</TABLE>

     During the first  quarter of 2002,  the Job Creation and Worker  Assistance
Act of 2002 (the "JCWA Act") was signed  into law.  The  Company  benefits  from
certain provisions of the JCWA 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 JCWA 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.

                                     - 20 -


<PAGE>


     At  September  30,  2002,  the Company  had,  for U.S.  federal  income tax
purposes,  NOL  carryforwards of approximately  $100 million that expire between
2020 and 2022. At September 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 September 30, 2002, the Company had the equivalent of a
$15  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  and
(ii) 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.

     During 2001,  the Company  recorded a charge of $3.0 million  relating to a
titanium  sponge  supplier's   agreement  to  renegotiate   certain  components,
including minimum purchase  commitments for 1999 through 2001, of an LTA entered
into in 1997. As of September  30, 2002 and December 31, 2001,  $1.9 and $2.0 of
this amount remained  accrued and unpaid,  respectively.  In September 2002, the
Company  entered into a new LTA with this  supplier,  effective  from January 1,
2002 through  December 31, 2007.  This new LTA replaced and  superceded the 1997
LTA.  The  new  LTA  requires   minimum  annual  purchases  by  the  Company  of
approximately $10 million.

                                     - 21 -

<PAGE>


     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 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.

     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 September 30, 2002, the Company had accrued an aggregate of $3.7 million
for environmental matters,  including those discussed above. The Company records
liabilities  related to  environmental  remediation  obligations  when estimated
losses,  including estimated legal fees, are probable and reasonably  estimable.
Such  accruals  are  adjusted  as  further   information  becomes  available  or
circumstances  change.  Estimated  losses 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 is vigorously
defending this action and has filed a motion for summary  judgment.  Such motion
has not yet been acted on by the court.

                                     - 22 -

<PAGE>


     At September 30, 2002,  the Company had accrued an aggregate of $.6 million
for expected  costs related to various legal  proceedings,  including the above.
The Company  records  liabilities  related to legal  proceedings  when estimated
losses,  including estimated legal fees, are probable and reasonably  estimable.
Such  accruals  are  adjusted  as  further   information  becomes  available  or
circumstances change. Estimated future costs are not discounted to their present
value. It is not possible to estimate the range of costs for certain matters. No
assurance can be given that actual costs will not exceed accrued amounts or that
costs  will not be  incurred  with  respect to matters as to which no problem is
currently known or where no estimate can presently be made.  Further,  there can
be no assurance that additional legal proceedings will not arise in the future.

     Other.  TIMET is the primary  obligor on two  workers'  compensation  bonds
issued on behalf of a former  subsidiary,  Freedom Forge  Corporation  ("Freedom
Forge"),  which  TIMET  sold in 1989.  The bonds  were  provided  as part of the
conditions  imposed  on  Freedom  Forge  in order to  self-insure  its  workers'
compensation  obligations.  Each of the bonds has a maximum  obligation  of $1.5
million.  Freedom Forge filed for Chapter 11  bankruptcy  protection on July 13,
2001, and discontinued payment on the underlying workers' compensation claims in
November 2001. During the third quarter of 2002, TIMET received notices that the
issuers of the bonds have been  required to make payments on one of the bonds in
respect to certain of these claims and have requested  reimbursement  from TIMET
for claims paid through  September 17, 2002 in the amount of  approximately  $.3
million,  which TIMET has recorded in accounts payable at September 30, 2002. In
addition,  TIMET may be liable for up to an additional $1.2 million on this bond
if  further  claims  are  filed.  Based upon  current  loss  projections,  TIMET
anticipates  payouts of at least an  additional  $.6 million under this bond and
has recorded such amount in accrued liabilities at September 30, 2002. All costs
under this bond have been recorded as other non-operating expenses. At this time
the Company understands that no claims have been paid under the second bond, and
no such payments are  currently  anticipated.  Accordingly,  no accrual has been
recorded for potential  claims that could be filed under the second bond.  TIMET
may revise its estimated liability under these bonds in the future.

                                     - 23 -

<PAGE>


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

                                     - 24 -
<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
nine months ended September 30, 2002 and for the nine months ended September 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 $10.0 million for the three and nine months ended September 30,
2002,  respectively  and by $2.1 million and $6.8 million for the three and nine
months ended September 30, 2001.  Diluted average shares  outstanding would have
been increased by 5.4 million  shares for each of these  periods.  Stock options
and  restricted   shares  omitted  from  the   calculation   because  they  were
antidilutive  approximated  1.5  million  for the  three and nine  months  ended
September 30, 2002. A  reconciliation  of the numerator and denominator  used in
the calculation of basic and diluted earnings per share is presented below.
<TABLE>

                                                          Three months ended                 Nine months ended
                                                            September 30,                      September 30,
                                                    -------------------------------    -------------------------------
                                                        2002              2001             2002              2001
                                                    --------------    -------------    --------------    -------------
                                                            (In thousands)                     (In thousands)
<S>                                                 <C>               <C>              <C>               <C>
Numerator:
   Net (loss) income                                $     (9,148)     $      4,340     $   (101,885)     $     30,276
                                                    ==============    =============    ==============    =============

Denominator:
   Average common shares outstanding                      31,611            31,539           31,586            31,486
   Average dilutive stock options and
     restricted shares                                         -               225                -               274
                                                    --------------    -------------    --------------    -------------

   Diluted shares                                         31,611            31,764           31,586            31,760
                                                    ==============    =============    ==============    =============
</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.

                                     - 25 -

<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  currently  believes the adoption of
this  standard  will  have  no  material  effect  on the  Company's  results  of
operations, consolidated financial position or liquidity.

                                     - 26 -

<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  nine-month  periods ended  September  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  and
information  contained in the Outlook  section and  elsewhere.  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
effects of changes in mix when  referring  to the  percentage  change in selling
prices from period to period.
<TABLE>

                                                         Three months ended                  Nine months ended
                                                            September 30,                      September 30,
                                                   --------------------------------    -------------------------------
                                                       2002              2001              2002             2001
                                                   --------------    --------------    --------------   --------------
                                                          ($ in thousands)                    ($ in thousands)

<S>                                                <C>                 <C>                <C>              <C>
Net sales                                          $   82,794          $  126,437         $ 281,529        $  370,479
Gross margin                                           (4,940)             20,836             1,592            24,618
Operating (loss) income                                (4,366)              9,964           (16,091)           56,757

Percent of net sales:
   Gross margin                                           -6%                16%                 1%               7%

Percent change in:
     Mill product sales volume                            -33                                   -26
     Mill product selling prices (1)                       -1                                    +4
     Melted product sales volume                          -54                                   -45
     Melted product selling prices (1)                     -5                                    +2

----------------------------------------------------------------------------------------------------------------------
(1) Change expressed in billing currencies and mix adjusted.
</TABLE>

     Third  quarter of 2002  compared to third  quarter of 2001.  Sales of $82.8
million in the third quarter of 2002 were 35% lower than the year-ago period due
principally to the net effects of a 33% decrease in mill product  volume,  a 54%
decrease in melted  product  volume and changes in customer and product mix. The
Company's estimated shipment volume to the commercial  aerospace sector declined
approximately 40% during the third quarter of 2002 compared to the third quarter
of 2001.  Mill product  selling prices  increased 2% (expressed in U.S.  dollars
using actual foreign currency exchange rates prevailing during the period) while
melted product selling prices decreased 5%. In billing currencies (which exclude
the  effects of foreign  currency  translation),  mill  product  selling  prices
decreased 1% from the year ago period.

                                     - 27 -

<PAGE>


     Gross  margin  (net sales less cost of sales) was  negative 6% of sales for
the third quarter of 2002 compared to 16% in the year-ago  period.  Gross margin
was  significantly  affected  by the  decline in sales  volume and the impact of
lower  plant  operating  rates.  As the  Company  reduces  production  volume in
response to reduced order demand,  certain manufacturing overhead costs decrease
at a  slower  rate  and to a  lesser  extent  than  production  volume  changes,
generally resulting in higher costs relative to production levels. Average plant
operating rates declined from  approximately  85% of capacity in the 2001 period
compared  to  45% in the  2002  period.  Due  to  present  business  conditions,
including  a number  of  customer  order  cancellations,  the  Company  recorded
provisions  for excess  inventories  of  approximately  $3.0 million in the 2002
period  compared to  approximately  $.3 million in the 2001  period.  Severance
costs of approximately  $2.2 million related to the Company's third quarter 2002
program to reduce global employment levels by 300 people or approximately 13% of
the  workforce  were  substantially  offset  by  a  revision  of  the  Company's
previously  estimated  incentive  compensation  for 2002.  The 2001  period  was
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.

     Selling, general,  administrative and development expenses during the third
quarter of 2002 decreased by approximately 7% from year-ago levels,  principally
as a result of lower personnel related costs.

     Equity in earnings of joint  ventures  during the third quarter of 2002 was
$.4 million  lower than the  year-ago  period  principally  due to a decrease in
earnings of VALTIMET, the Company's minority-owned welded tube joint venture.

     Other  income  (expense),  net during  the third  quarter of 2002 was $11.0
million  higher than the year-ago  period  principally  due to $10.5  million of
other income recognized related to the take-or-pay  provisions of the Boeing LTA
entered  into in 1997 and as  subsequently  amended.  The  terms of the  amended
Boeing LTA allow Boeing to purchase up to 7.5 million pounds of titanium product
annually  from TIMET in years  2002  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 sales  revenue,  sales  volume  or gross  margin.  Based on  actual
purchases of  approximately  1.2 million pounds  through  September 30, 2002 (.9
million  pounds  through the second  quarter  2002 and .3 million  pounds in the
third quarter 2002) and the Company's  contractual  maximum volume obligation of
3.0 million pounds for the remainder of the year, the Company  recognized  $10.5
million of other income in the third quarter of 2002 related to the  take-or-pay
provisions  for the 3.3 million pounds of material that the Company is no longer
obligated to provide under the LTA in 2002.

     First nine months of 2002  compared to first nine months of 2001.  Sales of
$281.5 million for the nine months ended  September 30, 2002 were 24% lower than
the year-ago period due principally to the net effects of a 26% decrease in mill
product volume,  a 45% decrease in melted product volume and changes in customer
and product mix.  The  Company's  estimated  shipment  volume to the  commercial
aerospace  sector  declined  approximately  35%  during  the nine  months  ended
September  30, 2002 compared to the nine months ended  September 30, 2001.  Mill
product  selling  prices  increased 5% (expressed  in U.S.  dollars using actual
foreign  currency  exchange  rates  prevailing  during the period)  while melted
product selling prices  increased 2%. In billing  currencies  (which exclude the
effects of foreign currency translation),  mill product selling prices increased
4% from the year ago  period;  however,  both  mill and  melted  product  market
selling prices on new orders have been trending downward during 2002.

                                     - 28 -
<PAGE>


     Gross margin was 1% of sales for the nine months ended  September  30, 2002
compared to 7% in the year-ago period.  Gross margin was significantly  affected
by the decline in sales  volume and the impact of lower plant  operating  rates.
Average plant operating rates declined from approximately 75% of capacity in the
2001 period compared to  approximately  55% in the 2002 period.  Due to business
conditions during 2002, including a number of customer order cancellations,  the
Company recorded provisions for excess inventories of approximately $3.3 million
in the 2002 period  compared to  approximately  $1.6 million in the 2001 period.
Severance  costs of  approximately  $3.0  million  related  to global  workforce
reductions undertaken throughout 2002 were recorded during the nine months ended
September  30, 2002.  Gross margin for the nine months ended  September 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  below. The
2001  period  was also  adversely  impacted  by  goodwill  amortization  of $3.5
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.

     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. 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
September  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
September 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 September 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 for the nine
months ended  September  30, 2002  decreased by  approximately  2% 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 lower  personnel
related costs, partially offset by higher selling and marketing costs.

                                     - 29 -
<PAGE>

     Equity in earnings of joint ventures during the nine months ended September
30, 2002 was $.2  million  lower than the year ago period  principally  due to a
decrease in earnings of VALTIMET.

     Other income (expense), net during the nine months ended September 30, 2002
was  $60.6  million  lower  than  the  year-ago  period  principally  due to the
recognition  of $73.0 million of income in the 2001 period related to settlement
of the  litigation  between TIMET and Boeing related to the parties' LTA entered
into in 1997.  During the nine months  ended  September  30,  2002,  the Company
recognized  $12.7 million of other income related to the take-or-pay  provisions
of the Boeing LTA, as amended.

     General corporate income (expense).  General corporate income (expense) for
the three and nine months ended September 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 nine months ended  September  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.

     TIMET is the primary obligor on two workers'  compensation  bonds issued on
behalf of a former  subsidiary,  Freedom Forge  Corporation  ("Freedom  Forge"),
which  TIMET sold in 1989.  The bonds were  provided  as part of the  conditions
imposed on  Freedom  Forge in order to  self-insure  its  workers'  compensation
obligations. Each of the bonds has a maximum obligation of $1.5 million. Freedom
Forge  filed  for  Chapter  11  bankruptcy  protection  on July  13,  2001,  and
discontinued payment on the underlying workers'  compensation claims in November
2001.  During the third quarter of 2002, TIMET received notices that the issuers
of the bonds have been  required to make payments on one of the bonds in respect
to  certain  of these  claims and have  requested  reimbursement  from TIMET for
claims  paid  through  September  17,  2002 in the amount of  approximately  $.3
million,  which TIMET has recorded in accounts payable at September 30, 2002. In
addition,  TIMET may be liable for up to an additional $1.2 million on this bond
if  further  claims  are  filed.  Based upon  current  loss  projections,  TIMET
anticipates  payouts of at least an  additional  $.6 million under this bond and
has recorded such amount in accrued liabilities at September 30, 2002. All costs
under this bond have been recorded as general corporate  expenses.  At this time
the Company understands that no claims have been paid under the second bond, and
no such payments are  currently  anticipated.  Accordingly,  no accrual has been
recorded for potential  claims that could be filed under the second bond.  TIMET
may revise its estimated liability under these bonds in the future.

     Interest expense.  Interest expense during the three months ended September
30,  2002 was higher than in the  comparable  period in 2001,  primarily  due to
higher average debt levels  partially  offset by lower interest rates during the
2002 period.  Interest  expense during the nine months ended  September 30, 2002
was lower than in the comparable period in 2001,  primarily due to lower average
debt levels and lower interest rates during the 2002 period.


                                     - 30 -
<PAGE>


     Income taxes. During the first quarter of 2002, the Job Creation and Worker
Assistance  Act of 2002 (the  "JCWA  Act") was  signed  into  law.  The  Company
benefits from certain provisions of the JCWA 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 JCWA
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 three and nine  months  ended
September 30, 2001. For the three and nine months ended  September 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 nine months ended September 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 nine months ended
September  30, 2002.  In addition,  during the nine months ended  September  30,
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,  S.A.  held  by  Compagnie  Europeene  du
Zirconium-CEZUS, S.A. ("CEZUS").

     Cumulative  effect of change in accounting  principle.  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. In order to test for transitional  impairment,  SFAS No. 142 required 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  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  required the Company to  determine  the fair value of its
reporting unit and compare it to that reporting  unit's  carrying  amount.  This
evaluation was completed with the assistance of an external valuation specialist
and considered a combination of fair value  indicators  including  quoted market
prices,   prices  of  comparable  businesses  and  discounted  cash  flows.  The
evaluation,  which was completed  during the second  quarter of 2002,  indicated
that the Company's  recorded goodwill might be impaired and required the Company
to complete the second step of the impairment test.

                                     - 31 -

<PAGE>


     The second step of the  impairment  test,  which was  completed  during the
third quarter of 2002, required the Company to compare the implied fair value of
its reporting  unit's goodwill with the carrying  amount of that goodwill.  With
the  assistance of the external  valuation  specialist  utilized in the step one
testing, the Company determined the implied fair value of its goodwill was zero.
Accordingly, the Company recorded a non-cash goodwill impairment charge of $44.3
million,  representing the entire balance of the Company's  recorded goodwill at
January 1, 2002.  There was no income tax benefit  associated  with this charge.
While the goodwill  associated with the Company's U.S.  operations is deductible
for income tax purposes,  the Company does not currently recognize an income tax
benefit  associated with its U.S.  losses.  In addition the goodwill  associated
with  the  Company's  European  operations  is not  deductible  for  income  tax
purposes.  Pursuant to the transition  requirements of SFAS No. 142, this charge
has been  reported in the Company's  Consolidated  Statements of Operations as a
cumulative effect of a change in accounting principle as of January 1, 2002. The
effect of the change in accounting principle on the first quarter of 2002 was to
increase the  Company's  first quarter net loss by $44.3  million,  or $1.40 per
share,  to $80.4  million,  or $2.55 per share.  The change had no effect on the
second or third quarters of 2002.

     Supplemental   information.   Approximately  43%  of  the  Company's  sales
originated  in Europe for the nine months ended  September  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  September  30,  2002,   consolidated   assets  and  liabilities
denominated in currencies  other than functional  currencies were  approximately
$28.5  million and $32.2  million,  respectively,  consisting  primarily of U.S.
dollar cash, accounts receivable, accounts payable and borrowings.

     In July 2002, the Company  successfully  negotiated  new  three-year  labor
agreements 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,
12, 14 and 16 to the Consolidated  Financial Statements  regarding  commitments,
contingencies,  legal,  environmental and other matters,  which could materially
affect  the  Company's  future  business,  results of  operations,  consolidated
financial position and liquidity.

                                     - 32 -

<PAGE>


     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.

     The Airline Monitor, a leading aerospace publication,  traditionally issues
forecasts for commercial  aircraft deliveries each January and July. The Airline
Monitor's  most recently  issued  forecast,  July 2002,  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. 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 July 2002 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. However, adverse
world events,  including terrorist  activities and conflicts in the Middle East,
Iraq or  elsewhere,  could have a  significant  adverse  impact on the financial
health of commercial  airlines and economic growth in the U.S. and other regions
of the world.  Any such  events,  which are not  contemplated  in the  Company's
outlook,  could prolong and exacerbate the current commercial aerospace downturn
and have broader economic consequences.

     The Company's backlog of unfilled orders was approximately  $165 million at
September  2002,  compared  to $145  million  at June 2002 and $315  million  at
September 2001.  Substantially all of the September 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  received 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 2002 to range from $360  million to $370  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 about 25% to about 9,000 metric tons. Melted
product sales volume is expected to decline 40% to about 2,600 metric tons.  The
reduction  of  overall  sales  volume  in  2002  is  principally  driven  by the
anticipated  decline of 40% in  commercial  aerospace  sales volume  compared to
2001, partly offset by sales volume growth to other markets. The Company expects
market selling prices on new orders to continue to soften  throughout the fourth
quarter of 2002. The Company's  forecast  anticipates  that Boeing will purchase
about 1.4 million  pounds of product under the LTA 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 are
included in  operating  income,  but are not  included in sales  revenue,  sales
volume or gross margin.

                                     - 33 -

<PAGE>


     The Company  currently  anticipates  gross margin as a percent of sales 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 of $25 million to $30 million and a
net loss before the cumulative effect of changes in accounting principle and the
previously  reported  impairment  charge  related  to SMC of $45  million to $50
million in 2002.

     The Company expects cash flow from  operations in 2002 to be  approximately
negative  $25  million.  This is  influenced  by the effect in 2002 of the $28.5
million cash advance that the Company received from Boeing in December 2001 that
related to contract year 2002. That receipt  created a customer  advance for the
same amount at year-end 2001. The customer  advance 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.  Cash
flow from  operations  in the  near-term  is also  expected  to be  affected  by
increased payments to fund employee retirement benefits resulting from decreases
in the value of underlying  plan assets and early  retirements,  the deferral of
dividend  payments  on  the  Company's   Convertible  Preferred  Securities  and
reductions of inventory levels. Capital expenditures for 2002 are expected to be
approximately $9 million.  Depreciation and amortization  should approximate $37
million.

     For the fourth 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 2,200  metric tons and melted  product  sales  volume  should be about 700
metric  tons.  Gross  margin  as a percent  of sales in the  fourth  quarter  is
expected  to range  between  negative 6% and  negative  12%.  Selling,  general,
administrative and development expense in the fourth quarter should be about $10
million. The Company expects to recognize an additional $10 million of operating
income  related to the  take-or-pay  provisions of the amended Boeing LTA during
the fourth  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 in the fourth quarter of 2002 of between $5 million and $10 million,  and a
net loss of between $10 million and $15 million.

     The  Company's  outlook  for 2003 is for a  continuing  difficult  business
environment  reflecting the severe downturn in the commercial aerospace industry
and sluggish  economy.  The commercial  aerospace  sector is the major source of
demand for the Company's products.  Although workforce reduction actions in 2002
are  expected to result in annual  savings  between $12 million and $15 million,
early  expectations  are that the Company's sales revenue and financial  results
during 2003 may be similar to 2002.  However,  the Company is  conscious  of the
meaningful  risks  posed  by the  continuing  war on  terrorism,  and  potential
conflicts in the Middle East, Iraq and elsewhere.  These and other adverse world
events could prolong and exacerbate the current  commercial  aerospace  downturn
and have broader economic consequences.

                                     - 34 -
<PAGE>


     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 fourth quarter 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.

     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.

     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  currently  believes the adoption of
this  standard  will  have  no  material  effect  on the  Company's  results  of
operations, consolidated financial position or liquidity.

                                     - 35 -

<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  ("SEC")  which  include,  but are not
limited  to,  the  cyclicality  of  the  commercial   aerospace  industry,   the
performance  of aerospace  manufacturers  and the Company under their 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.

                                     - 36 -

<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

     The Company's consolidated cash flows provided by operating,  investing and
financing  activities are presented  below. The following  discussion  should be
read in conjunction with the Consolidated  Financial  Statements and information
contained in the Outlook section and elsewhere.
<TABLE>

                                                                                        Nine months ended
                                                                                          September 30,
                                                                            ------------------------------------------
                                                                                   2002                   2001
                                                                            -------------------    -------------------
                                                                                         (In thousands)
<S>                                                                         <C>                    <C>
Cash provided (used) by:
   Operating activities:
     Excluding changes in assets and liabilities                            $       (3,018)        $        88,733
     Changes in assets and liabilities                                             (15,632)                (41,140)
                                                                            -------------------    -------------------
                                                                                   (18,650)                 47,593
   Investing activities                                                             (4,765)                 (7,892)
   Financing activities                                                              4,150                 (33,793)
                                                                            -------------------    -------------------

   Net cash provided (used) by operating,
     investing and financing activities                                     $      (19,265)        $         5,908
                                                                            ===================    ===================
</TABLE>



     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  during the nine months 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 nine months of 2002
primarily as a result of cash  received from Tremont  through an  intercorporate
services  agreement  and from a  reduction  in sales  to  VALTIMET.  Inventories
increased  in the first nine months 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
the  Company's  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 and increases in reserves for excess  inventories  which
the Company  recorded in response to decreased demand for its products and other
changes in business conditions.  The Company expects inventory levels to decline
during the fourth  quarter of 2002.  Prepaid  expenses and other current  assets
decreased  in the first nine months 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.

                                     - 37 -

<PAGE>


     In October 2002, the Company  exercised its right to defer future  dividend
payments  on its  Convertible  Preferred  Securities  for a  period  of up to 20
consecutive  quarters.  Dividends  will continue to accrue at the coupon rate on
the principal and unpaid  dividends.  This deferral is effective  beginning with
the  Company's  December 1, 2002  scheduled  dividend  payment.  The Company may
consider resuming payment of dividends on the Convertible  Preferred  Securities
once the outlook for the Company's  business improves  substantially.  Since the
Company exercised its right to defer dividend  payments,  it is unable under the
terms of these securities to, among other things,  pay dividends on or reacquire
its capital stock during the deferral period.  However, the Company is permitted
to reacquire the Convertible Preferred Securities during the deferral period.

     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  advances  reflect the
application  of  customer   purchases  and  the  recognition  of  Boeing-related
take-or-pay  income during the first nine months of 2002. Under the terms of the
amended  Boeing LTA, in years 2002 through  2007,  Boeing  advances  TIMET $28.5
million  annually,  less $3.80 per pound of titanium product purchased 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
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  currently  estimates  that  the
reduction against the 2003 advance from Boeing will be less than $1 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 $16.3  million  ($3.6  million  from  purchases
directly by Boeing and $12.7 million from recognition of take-or-pay  income) to
$12.2 million during the first nine months 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 $4.8 million
for the nine months ended  September  30, 2002  compared to $7.9 million for the
same period in 2001, principally for capacity enhancements, capital maintenance,
and safety and environmental projects.

     Financing activities. Net borrowings of $5.7 million during the nine months
ended  September  30, 2002 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.

                                     - 38 -

<PAGE>


     Borrowing arrangements. At September 30, 2002, the Company's net debt (cash
and cash equivalents less  indebtedness,  excluding  capital lease  obligations,
Convertible   Preferred   Securities   and  deferred   dividends   thereon)  was
approximately $14.1 million,  consisting of $4.6 million of cash and equivalents
and $18.7 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.  During  January 2003,  the Company  expects to receive
approximately  $27.5 million from Boeing under the terms of the parties' amended
LTA,  which is expected to be used to reduce  outstanding  borrowings  under the
Company's credit agreements.

     On October 23,  2002,  the Company  amended its existing  U.S.  asset-based
revolving credit agreement,  extending the maturity date to February 2006. Under
the terms of the amendment,  borrowings are limited to the lesser of $90 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
essentially   unused   borrowing   availability  and  is  defined  as  borrowing
availability  less outstanding  borrowings and certain  contractual  commitments
such as letters of credit.  Subsequent to the aforementioned  amendment,  excess
availability was approximately $69 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 could have borrowed  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.

     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.  Although no assurance can be
given,  the Company expects the overdraft  facility to be renewed for a one-year
period in February 2003. In the event the overdraft facility is not renewed, the
Company believes it could refinance any outstanding  overdraft  borrowings under
either  the  revolving  or term loan  features  of the U.K.  facility.  The U.K.
facilities  expire in February 2005. As of September 30, 2002,  the  outstanding
balance of the U.K.  facilities  was  approximately  $1.3  million  with  unused
borrowing availability of approximately $37 million.

                                     - 39 -

<PAGE>


     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 September
30, 2002 under these facilities was approximately $13 million.

     Although excess  availability  under TIMET's U.S. credit agreement  remains
above $40 million, no dividends were paid by TIMET during the nine-month periods
ended September 30, 2002 and 2001.

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

     Other. On September 9, 2002, Moody's Investor Service lowered its rating on
the Company's Convertible Preferred Securities to Caa2 from B3. On September 10,
2002,  Standard & Poor's  Ratings  Services  ("S&P")  lowered  its rating on the
Company's Convertible Preferred Securities to CCC- from CCC, and subsequently on
October 29, 2002,  S&P again lowered its rating to C from CCC-.  S&P has further
indicated  that it will lower its credit  rating on these  securities to D after
the dividend payment due on December 1, 2002 is actually deferred. The Company's
ability to obtain additional capital in the future could be negatively  affected
by these rating actions.

     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.

                                     - 40 -

<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.

                                     - 41 -

<PAGE>


Item 4.       CONTROLS AND PROCEDURES

     The Company maintains a system of disclosure  controls and procedures.  The
term "disclosure controls and procedures," as defined by regulations of the SEC,
means controls and other procedures that are designed to ensure that information
required to be disclosed in the reports that the Company files or submits to the
SEC under the Securities  Exchange Act of 1934, as amended (the "Exchange Act"),
is  recorded,  processed,  summarized  and  reported,  within  the time  periods
specified  in the SEC's  rules and forms.  Disclosure  controls  and  procedures
include,  without  limitation,  controls and procedures  designed to ensure that
information required to be disclosed by the Company in the reports that it files
or submits to the SEC under the Exchange Act is accumulated and  communicated to
the Company's  management,  including its  principal  executive  officer and its
principal financial officer, as appropriate to allow timely decisions to be made
regarding  required  disclosure.  Both J. Landis  Martin,  the  Company's  Chief
Executive Officer,  and Mark A. Wallace,  the Company's Chief Financial Officer,
have  evaluated the Company's  disclosure  controls and  procedures as of a date
within 90 days of the  filing of this Form 10-Q.  Based  upon their  evaluation,
these executive officers have concluded that the Company's  disclosure  controls
and procedures are effective as of the date of such evaluation.

     The  Company  also  maintains  a  system  of  internal  controls.  The term
"internal  controls," as defined by the American  Institute of Certified  Public
Accountants'  Codification of Statement on Auditing  Standards,  AU Section 319,
means controls and other  procedures  designed to provide  reasonable  assurance
regarding the  achievement  of objectives  in the  reliability  of the Company's
financial   reporting,   the  effectiveness  and  efficiency  of  the  Company's
operations and the Company's  compliance with  applicable laws and  regulations.
There have been no significant  changes in the Company's internal controls or in
other factors that could  significantly  affect such controls  subsequent to the
date of their last evaluation,  including any corrective  actions with regard to
significant deficiencies and material weaknesses.

                                     - 42 -

<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 Amendment No. 2 to Loan and Security  Agreement by and among  Congress
          Financial  Corporation  (Southwest)  as  lender  and  Titanium  Metals
          Corporation and Titanium Hearth Technologies, Inc. as borrowers, dated
          October 23, 2002.

     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.

(b)  Reports on Form 8-K filed by the Registrant for the quarter ended September
     30, 2002 and through November 7, 2002:

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

             July 9, 2002                           5 and 7
             November 4, 2002                       5 and 7
             November 4, 2002                       5 and 7



                                     - 43 -


<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: November 7, 2002       By     /s/ Mark A. Wallace
                                    --------------------------------------------
                                    Mark A. Wallace
                                    Executive Vice President and
                                    Chief Financial Officer



Date: November 7, 2002       By     /s/ JoAnne A. Nadalin
                                    --------------------------------------------
                                    JoAnne A. Nadalin
                                    Vice President, Corporate Controller and
                                    Principal Accounting Officer


                                     - 44 -
<PAGE>


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, J.  Landis  Martin,  Chairman  of the Board,  President  and Chief  Executive
Officer of Titanium Metals Corporation, certify that:

     1.   I have reviewed this quarterly  report on Form 10-Q of Titanium Metals
          Corporation;

     2.   Based on my  knowledge,  this  quarterly  report  does not contain any
          untrue  statement of a material  fact or omit to state a material fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this quarterly report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this quarterly report,  fairly present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this quarterly report;

     4.   The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and we have:

          a.   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               quarterly report is being prepared;

          b.   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "Evaluation Date"); and

          c.   presented  in this  quarterly  report our  conclusions  about the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent  evaluation,  to the registrant's  auditors and the
          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing the equivalent function):

          a.   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

          b.   any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

                                     - 45 -
<PAGE>

     6.   The  registrant's  other  certifying  officers and I have indicated in
          this quarterly report whether or not there were significant changes in
          internal controls or in other factors that could significantly  affect
          internal   controls   subsequent  to  the  date  of  our  most  recent
          evaluation,   including   any   corrective   actions  with  regard  to
          significant deficiencies and material weaknesses.



Date:  November 7, 2002


/s/ J. Landis Martin
J. Landis Martin
Chairman of the Board, President
   and Chief Executive Officer

                                     - 46 -

<PAGE>


                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Mark A. Wallace,  Executive  Vice  President and Chief  Financial  Officer of
Titanium Metals Corporation, certify that:

     1.   I have reviewed this quarterly  report on Form 10-Q of Titanium Metals
          Corporation;

     2.   Based on my  knowledge,  this  quarterly  report  does not contain any
          untrue  statement of a material  fact or omit to state a material fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this quarterly report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this quarterly report,  fairly present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this quarterly report;

     4.   The registrant's  other certifying  officers and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and we have:

          a.   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               quarterly report is being prepared;

          b.   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this quarterly report (the "Evaluation Date"); and

          c.   presented  in this  quarterly  report our  conclusions  about the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent  evaluation,  to the registrant's  auditors and the
          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing the equivalent function):

          a.   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

          b.   any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

                                     - 47 -
<PAGE>


     6.   The  registrant's  other  certifying  officers and I have indicated in
          this quarterly report whether or not there were significant changes in
          internal controls or in other factors that could significantly  affect
          internal   controls   subsequent  to  the  date  of  our  most  recent
          evaluation,   including   any   corrective   actions  with  regard  to
          significant deficiencies and material weaknesses.



Date:  November 7, 2002


/s/ Mark A. Wallace
Mark A. Wallace
Executive Vice President and Chief Financial Officer


                                     - 48 -