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, 2006

                                       OR

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

                         Commission file number 1-14368


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


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



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


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


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

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

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

Large accelerated filer__ Accelerated filer X Non-accelerated filer__.

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

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

Number of shares of common stock outstanding on November 1, 2006: 161,157,557

<PAGE>

                           TITANIUM METALS CORPORATION

                                      INDEX


<TABLE>
<CAPTION>
                                                                                                            Page
                                                                                                           Number
                                                                                                           ------

PART I.       FINANCIAL INFORMATION

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

                 Condensed Consolidated Balance Sheets as of September 30, 2006
                     (unaudited) and December 31, 2005 ...................................................    2

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

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

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

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

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

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

     Item 3.     Quantitative and Qualitative Disclosures About Market Risk...............................   32

     Item 4.     Controls and Procedures..................................................................   32

PART II.     OTHER INFORMATION

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

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

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


                                     - 1 -
<PAGE>


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


<TABLE>
<CAPTION>
                                                                               September 30,           December 31,
ASSETS                                                                             2006                    2005
                                                                            --------------------    --------------------
                                                                                 (unaudited)
Current assets:
<S>                                                                         <C>                     <C>
   Cash and cash equivalents                                                $          26,660       $          17,605
   Restricted cash and cash equivalents                                                   146                     146
   Accounts and other receivables, less allowance
      of $1,653 and $1,983, respectively                                              178,110                 142,902
   Inventories                                                                        489,155                 365,696
   Income tax receivable                                                                4,733                     953
   Prepaid expenses and other                                                           6,265                   3,532
   Deferred income taxes                                                               12,555                  19,436
                                                                            --------------------    --------------------

       Total current assets                                                           717,624                 550,270

Marketable securities                                                                  44,395                  46,477
Investment in joint ventures                                                           34,001                  25,978
Property and equipment, net                                                           295,865                 252,990
Prepaid pension cost                                                                   27,375                  22,337
Deferred income taxes                                                                   7,477                   8,009
Other                                                                                     889                   1,203
                                                                            --------------------    --------------------

       Total assets                                                         $       1,127,626       $         907,264
                                                                            ====================    ====================
</TABLE>




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


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


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

Current liabilities:
<S>                                                                         <C>                     <C>
   Accounts payable                                                         $          70,566       $          61,457
   Accrued liabilities                                                                 74,935                  75,698
   Customer advances                                                                   15,316                  15,577
   Income taxes payable                                                                18,163                  13,151
   Deferred income taxes                                                                  567                      30
   Other                                                                                  749                     937
                                                                            --------------------    --------------------

       Total current liabilities                                                      180,296                 166,850

Long-term debt                                                                         55,283                  51,359
Accrued OPEB cost                                                                      17,059                  15,580
Accrued pension cost                                                                   63,453                  58,450
Accrued environmental cost                                                              1,948                   1,948
Deferred income taxes                                                                  28,186                  27,445
Debt payable to TIMET Capital Trust I                                                       -                   5,852
Other                                                                                   4,865                   4,089
                                                                            --------------------    --------------------

       Total liabilities                                                              351,090                 331,573
                                                                            --------------------    --------------------

Minority interest                                                                      18,010                  13,523
                                                                            --------------------    --------------------

Stockholders' equity:
   Series A Preferred Stock, $.01 par value; $85,688
     liquidation preference; 4,025 shares authorized; 1,714
     and 2,983 shares issued and outstanding, respectively                             76,131                 132,493
   Common stock, $.01 par value; 200,000 shares
     authorized; 161,134 and 141,930 shares
     issued, respectively                                                               1,611                   1,419
   Additional paid-in capital                                                         482,770                 400,348
   Retained earnings                                                                  229,636                  66,179
   Accumulated other comprehensive loss                                               (31,622)                (38,271)
                                                                            --------------------    --------------------

         Total stockholders' equity                                                   758,526                 562,168
                                                                            --------------------    --------------------

       Total liabilities, minority interest and
                  stockholders' equity                                      $       1,127,626       $         907,264
                                                                            ====================    ====================
</TABLE>

Commitments and contingencies (Note 11)



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



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


<TABLE>
<CAPTION>
                                                                 Three months ended                     Nine months ended
                                                                    September 30,                         September 30,
                                                          ----------------------------------    ----------------------------------
                                                               2006               2005               2006               2005
                                                          ---------------    ---------------    ---------------    ---------------
                                                                                        (unaudited)

<S>                                                       <C>                <C>                <C>                <C>
Net sales                                                 $      271,808     $     190,032      $      859,644     $      529,013
Cost of sales                                                    174,031           134,284             547,246            396,430
                                                          ---------------    ---------------    ---------------    ---------------

   Gross margin                                                   97,777            55,748             312,398            132,583

Selling, general, administrative and
 development expense                                              17,163            13,287              49,781             38,625
Equity in earnings of joint ventures                               4,789             1,235              11,113              3,381
Other income (expense), net                                         (846)            8,048                (480)            10,723
                                                          ---------------    ---------------    ---------------    ---------------

  Operating income                                                84,557            51,744             273,250            108,062

Interest expense                                                     765             1,080               2,392              2,697
Other non-operating income (expense), net                            620             1,350                (762)            17,518
                                                          ---------------    ---------------    ---------------    ---------------

  Income before income taxes and minority
   interest                                                       84,412            52,014             270,096            122,883

Income tax expense                                                28,592            14,426              94,695              4,886
Minority interest in after tax earnings                            1,651             1,325               6,213              3,430
                                                          ---------------    ---------------    ---------------    ---------------

   Net income                                                     54,169            36,263             169,188            114,567

Dividends on Series A Preferred Stock                              1,445             2,830               5,374              9,426
                                                          ---------------    ---------------    ---------------    ---------------

   Net income attributable to
     common stockholders                                  $       52,724     $      33,433      $      163,814     $      105,141
                                                          ===============    ===============    ===============    ===============

Earnings per share attributable to common
 stockholders:
     Basic                                                $         0.33     $        0.26      $         1.07      $        0.82
     Diluted                                              $         0.29     $        0.20      $         0.92      $        0.63

Weighted average shares outstanding:
     Basic                                                       161,117           131,104             152,917            128,923
     Diluted                                                     184,184           182,063             183,750            181,461
</TABLE>


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


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



<TABLE>
<CAPTION>
                                                                                                 Nine months ended
                                                                                                   September 30,
                                                                                      ----------------------------------------
                                                                                            2006                  2005
                                                                                      ------------------    ------------------
                                                                                                    (unaudited)

<S>                                                                                   <C>                   <C>
Net income                                                                            $      169,188        $      114,567
                                                                                      ------------------    ------------------

Other comprehensive income (loss), net of tax:

   Currency translation adjustment                                                             9,225               (10,378)

   Unrealized losses on marketable securities                                                 (2,082)                 (935)

   TIMET's share of VALTIMET SAS's unrealized net losses on
     derivative financial instruments qualifying as cash flow hedges                            (494)                 (288)
                                                                                      ------------------    ------------------

     Total other comprehensive income (loss)                                                   6,649               (11,601)
                                                                                      ------------------    ------------------

   Comprehensive income                                                               $      175,837        $      102,966
                                                                                      ==================    ==================
</TABLE>






     See accompanying Notes to Condensed Consolidated Financial Statements.
                                     - 5 -
<PAGE>








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

<TABLE>
<CAPTION>
                                                                                  Nine months ended September 30,
                                                                              ----------------------------------------
                                                                                     2006                 2005
                                                                              -------------------   ------------------
                                                                                            (unaudited)
Cash flows from operating activities:
<S>                                                                           <C>                   <C>
   Net income                                                                 $       169,188       $       114,567
   Depreciation and amortization                                                       25,466                23,357
   Loss (gain) on disposal of property and equipment                                      601               (12,281)
   Equity in earnings of joint ventures, net
     of distributions                                                                  (7,703)               (3,381)
   Deferred income taxes                                                                9,761               (10,549)
   Excess tax benefit of stock option exercises                                        (9,953)                    -
   Minority interest, net of tax                                                        6,212                 3,429
   Other, net                                                                            (329)                  (50)
   Change in assets and liabilities:
     Receivables                                                                      (29,891)              (48,861)
     Inventories                                                                     (114,767)              (86,925)
     Prepaid expenses and other                                                        (2,642)               (3,298)
     Accounts payable and accrued liabilities                                           9,448                17,343
     Customer advances                                                                   (945)               12,298
     Income taxes                                                                       9,385                10,201
     Deferred revenue                                                                  (6,735)                  326
     Accrued OPEB and pension costs                                                     1,479                   384
     Other, net                                                                        (1,067)                  492
                                                                              -------------------   ------------------
       Net cash provided by operating activities                                       57,508                17,052
                                                                              -------------------   ------------------

Cash flows from investing activities:
   Capital expenditures                                                               (62,460)              (43,292)
   Purchase of marketable securities                                                        -                (2,223)
   Proceeds from sale of property                                                           -                 1,289
   Other, net                                                                            (660)                  576
                                                                              -------------------   ------------------
       Net cash used in investing activities                                          (63,120)              (43,650)
                                                                              -------------------   ------------------

Cash flows from financing activities:
   Indebtedness:
     Borrowings                                                                       505,219               255,248
     Repayments                                                                      (502,563)             (222,701)
   Dividends paid on Series A Preferred Stock                                          (5,731)               (9,687)
   Dividend paid to minority shareholder                                               (2,994)               (2,216)
   Issuance of common stock                                                            10,689                 5,256
   Excess tax benefit of stock option exercises                                         9,953                     -
   Other, net                                                                            (776)                  (16)
                                                                              -------------------   ------------------
       Net cash provided by financing activities                                       13,797                25,884
                                                                              -------------------   ------------------

Net cash provided by (used in) operating, investing and
   financing activities                                                       $         8,185       $          (714)
                                                                              ===================   ==================
</TABLE>

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

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


<TABLE>
<CAPTION>
                                                                                  Nine months ended September 30,
                                                                              ----------------------------------------
                                                                                    2006                  2005
                                                                              ------------------    ------------------
                                (unaudited)
Cash and cash equivalents:
   Net increase (decrease) from:
<S>                                                                           <C>                   <C>
     Operating, investing and financing activities                            $         8,185       $         (714)
     Effect of exchange rate changes on cash                                              870                 (940)
                                                                              ------------------    ------------------
                                                                                        9,055               (1,654)
   Cash and cash equivalents at beginning of period                                    17,605                7,194
                                                                              ------------------    ------------------

   Cash and cash equivalents at end of period                                 $        26,660       $        5,540
                                                                              ==================    ==================


Supplemental disclosures:
   Cash paid for:
     Interest                                                                 $         1,839       $        2,297
     Income taxes, net                                                        $        74,976       $        5,214

   Noncash investing and financing activities:
     Capital lease obligations incurred on certain leases
       entered into for new equipment                                         $           561       $            -
</TABLE>



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


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

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

<S>                                <C>      <C>        <C>          <C>             <C>           <C>              <C>
Balance at December 31, 2005       141,930  $   1,419  $  132,493   $   400,348     $  66,179     $      (38,271)  $   562,168
   Net income                            -          -           -             -       169,188                  -       169,188
   Other comprehensive
    income                               -          -           -             -             -              6,649         6,649
   Issuance of common stock          2,286         23           -        10,605                                -        10,628
   Conversion of Series A
    Preferred Stock                 16,918        169     (56,362)       61,864             -                  -         5,671
   Tax benefit of stock
    options exercised                    -          -           -         9,953             -                  -         9,953
   Dividends declared on
    Series A Preferred Stock             -          -           -             -        (5,731)                 -        (5,731)
                                 ---------  ---------  -----------  ------------    ----------    ---------------  ------------

Balance at September 30, 2006      161,134  $   1,611  $   76,131   $   482,770     $ 229,636     $      (31,622)  $   758,526
                                 =========  =========  ===========  ============    ==========    ===============  ============
</TABLE>



     See accompanying Notes to Condensed Consolidated Financial Statements.
                                     - 8 -
<PAGE>
                           TITANIUM METALS CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 1 - Basis of presentation and organization

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

     Organization.  At September 30, 2006,  Valhi,  Inc. and  subsidiaries  held
35.1% of our outstanding common stock and 0.9% of our 6.75% Series A Convertible
Preferred Stock. At September 30, 2006,  Contran  Corporation held,  directly or
through its subsidiaries, approximately 92% of Valhi's outstanding common stock.
At September 30, 2006, the Combined Master  Retirement  Trust ("CMRT"),  a trust
sponsored by Contran to permit the collective investment by trusts that maintain
the assets of certain  employee  benefit  plans  adopted by Contran  and certain
related companies, held 9.5% of our common stock. Substantially all of Contran's
outstanding  voting  stock is held by  trusts  established  for the  benefit  of
certain children and grandchildren of Harold C. Simmons, of which Mr. Simmons is
sole trustee,  or is held by Mr. Simmons or persons or other entities related to
Mr.  Simmons.  In  addition,  Mr.  Simmons is the sole trustee of the CMRT and a
member of the trust  investment  committee  for the CMRT. At September 30, 2006,
Mr. Simmons directly owned 3.0% of our outstanding common stock and Mr. Simmons'
spouse  owned 93.4% of our  outstanding  Series A Preferred  Stock and a nominal
number of shares of our common stock. Consequently, Mr. Simmons may be deemed to
control each of Contran, Valhi and us.

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

                                      - 9 -
<PAGE>
Recent Accounting Pronouncements

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

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

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

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

                                      - 10 -
<PAGE>
required to classify  any future  reserves  for  uncertain  tax  positions  in a
separate  current or  noncurrent  liability,  depending on the nature of the tax
position.  We are currently  evaluating the impact of FIN 48 on our consolidated
financial position and results of operations.

     Quantifying financial statement misstatements. In the third quarter of 2006
the SEC issued Staff Accounting  Bulletin ("SAB") No. 108 expressing their views
regarding the process of quantifying financial statement misstatements.  The SAB
is effective for us no later than the fourth  quarter of 2006.  According to SAB
108 both the "rollover" and "iron curtain"  approaches  must be considered  when
evaluating  a  misstatement  for  materiality.  This is referred to as the "dual
approach." For companies that have previously evaluated misstatements under one,
but not both,  of these  methods,  SAB 108  provides  companies  with a one-time
option to record the cumulative  effect of their prior unadjusted  misstatements
in a manner  similar to a change in  accounting  principle  in their 2006 annual
financial   statements  if  (i)  the   cumulative   amount  of  the   unadjusted
misstatements  as of January 1, 2006  would  have been  material  under the dual
approach to their  annual  financial  statements  for 2005 or (ii) the effect of
correcting  the  unadjusted  misstatements  during 2006 would cause those annual
financial statements to be materially misstated under the dual approach.  We are
still evaluating the impact,  if any, that SAB 108 will have on our consolidated
financial statements.

     Fair value measurements.  In the third quarter of 2006 the FASB issued SFAS
No. 157, Fair Value Measurements,  which will become effective for us on January
1, 2008. SFAS 157 generally provides a consistent,  single fair value definition
and measurement techniques for GAAP pronouncements.  SFAS 157 also establishes a
fair value hierarchy for different measurement techniques based on the objective
nature of the inputs in various valuation methods. We will be required to ensure
all of  our  fair  value  measurements  are in  compliance  with  SFAS  157 on a
prospective  basis beginning in the first quarter of 2008. In addition,  we will
be required to expand our disclosures  regarding the valuation methods and level
of inputs we utilize in the first quarter of 2008. The adoption of this standard
is not expected to have a material effect on our consolidated financial position
or results of operations.

     Pension and other  postretirement  plans.  In the third quarter of 2006 the
FASB issued SFAS No. 158, Employers'  Accounting for Defined Benefit Pension and
Other  Postretirement  Plans.  SFAS 158  requires  us to  recognize  an asset or
liability for the over or under funded status of each of our individual  defined
benefit pension and  postretirement  benefit plans on our  Consolidated  Balance
Sheets.  We  will  recognize,   through  other   comprehensive   income,   prior
unrecognized gains and losses and prior service costs or credits, net of tax, as
of December 31, 2006 that we  currently  amortize  through net periodic  benefit
cost.  All future changes in the funded status of these plans will be recognized
through comprehensive income (either net income or other comprehensive  income),
net of tax. We will also provide certain new disclosures related to these plans.
This  standard  does  not  change  the  existing   recognition  and  measurement
requirements  that determine the amount of periodic  benefit cost  recognized in
net income.

     The asset and liability  recognition  and disclosure  requirements  of this
standard  will become  effective  for us as of December 31, 2006 and are adopted
prospectively.  We will not complete the 2006 assessment of the funded status of
our pension and  postretirement  benefit plans until after December 31, 2006. At
December 31, 2005,  our U.S.  pension plan was over funded by $5.3 million,  our
European  pension  plans  were  under  funded  by $55.2  million  and our  other
postretirement  benefit plan was under funded by $17.8 million. At that date, we
had an $11.3 million  asset  related to our U.S.  pension plan, an $11.0 million
asset and a $63.8 million  liability related to our European pension plans and a
$17.8  million  liability  related  to our  other  postretirement  benefit  plan
recognized on our  consolidated  balance  sheet.  Our 2006 funded status will be

                                     - 11 -
<PAGE>

based in part on certain actuarial  assumptions that we cannot yet determine and
differences  between the actual and  expected  return on plan assets  during the
year. Therefore,  we are not yet able to determine the impact this standard will
have on our Consolidated  Financial  Statements.  However, upon adoption of SFAS
158, we believe our U.S.  pension  plan will  continue to be over funded and our
European  pension  plans and our OPEB plan will  continue to be under  funded at
December  31,  2006,  which is  expected  to  result in a net  reduction  of our
stockholders'  equity at December 31, 2006.  The full  disclosure  of the funded
status of our  defined  benefit  pension  and  postretirement  benefit  plans at
December 31, 2005 can be found in Note 16 to our 2005 Annual Report.

Note 2 - Inventories

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

<S>                                                                       <C>                      <C>
Raw materials                                                             $          141,552       $        89,956
Work-in-process                                                                      225,980               169,856
Finished products                                                                     82,582                73,395
Inventory consigned to customers                                                      21,020                20,000
Supplies                                                                              18,021                12,489
                                                                          ---------------------    -------------------

                           Total inventories                              $          489,155       $       365,696
                                                                          =====================    ===================
</TABLE>

Note 3 - Marketable securities

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

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

<S>                       <C>       <C>                <C>            <C>                <C>           <C>
CompX International, Inc. ("CompX") (1)                2,696,420      $    42,037        2,696,420     $    43,197
NL Industries, Inc. ("NL")                               222,100            2,208          222,100           3,129
Kronos Worldwide, Inc. ("Kronos")                          5,203              150            5,203             151
                                                                      ------------                     -------------

         Total marketable securities                                  $   44,395                       $   46,477
                                                                      ============                     =============
</TABLE>

-------------------------------------------------------------------------------
(1)  We  directly  held  483,600  shares of CompX as of  September  30, 2006 and
     December 31, 2005.  The remaining  2,212,820  shares are held through CompX
     Group Inc.

     As of September 30, 2006 and December 31, 2005, the aggregate cost basis of
our marketable securities was $36.9 million. We recognized an unrealized loss of
$2.1 million (net of tax benefits) for the nine months ended  September 30, 2006
and an unrealized loss of $0.9 million (net of tax benefits) for the nine months
ended  September  30,  2005 in  stockholders'  equity  as a  component  of other
comprehensive income (loss).


                                     - 12 -
<PAGE>

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

<S>                                                                         <C>                     <C>
Land and improvements                                                       $           8,821       $         8,922
Buildings and improvements                                                             37,797                37,259
Information technology systems                                                         64,390                61,175
Manufacturing equipment and other                                                     366,504               348,080
Construction in progress                                                               75,464                31,488
                                                                            --------------------    ------------------

Total property and equipment                                                          552,976               486,924
Less accumulated depreciation                                                         257,111               233,934
                                                                            --------------------    ------------------

     Total property and equipment, net                                      $         295,865       $       252,990
                                                                            ====================    ==================
</TABLE>

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

<S>                                                                        <C>                      <C>
OPEB cost                                                                  $           2,682        $         2,181
Pension cost                                                                           5,813                  5,353
Payroll and vacation                                                                   4,697                  6,227
Incentive compensation                                                                16,808                 20,091
Other employee benefits                                                               13,596                  9,938
Deferred revenue                                                                       7,804                 14,525
Environmental costs                                                                    1,001                  1,718
Taxes, other than income                                                               6,765                  5,318
Other                                                                                 15,769                 10,347
                                                                           ---------------------    ------------------

     Total accrued liabilities                                             $          74,935        $        75,698
                                                                           =====================    ==================
</TABLE>

Note 6 - Bank debt and capital lease obligations
<TABLE>
<CAPTION>
                                                                               September 30,            December 31,
                                                                                   2006                    2005
                                                                           ---------------------    ------------------
                                                                                         (In thousands)

Long-term debt:
<S>                                                                        <C>                      <C>
  U.S. credit facility                                                     $          55,283        $        40,255
  U.K. credit facility                                                                     -                 11,104
                                                                           ---------------------    ------------------

     Total long-term debt                                                  $          55,283        $        51,359
                                                                           =====================    ==================

Capital lease obligations:
  Current                                                                  $             241        $            19
  Non-current                                                                            485                    138
                                                                           ---------------------    ------------------

     Total capital lease obligations                                       $             726        $           157
                                                                           =====================    ==================
</TABLE>


                                     - 13 -
<PAGE>

     Credit agreements. On February 17, 2006, we entered into a new $175 million
long-term U.S. credit  agreement,  replacing the previous U.S. credit  agreement
terminated on that date. We incurred $0.7 million of financing  costs related to
this new credit  agreement  that were deferred and are being  amortized over the
five-year term of the credit agreement.  The amount we show as outstanding under
our U.S.  credit  facility at  September  30,  2006  includes  $12.4  million of
outstanding  checks.  We are required to classify  these  outstanding  checks as
borrowings  under this facility.  As of September 30, 2006, the weighted average
interest  rate on borrowings  outstanding  under our U.S.  credit  agreement was
6.3%. At September 30, 2006 we had no outstanding  borrowings under our European
credit facilities. Our borrowing availability under our U.S. and European credit
facilities,  including the effect of our outstanding  checks, was $172.7 million
as of September 30, 2006.

     Letters of credit. As of September 30, 2006, we had $4.1 million of letters
of credit  outstanding  under  our U.S.  credit  facility  required  by  various
utilities and government entities for performance and insurance guarantees,  and
we had $3.6 million of letters of credit  outstanding  under our European credit
facilities  as collateral  under certain  inventory  purchase  contracts.  These
letters of credit reduce our borrowing availability under our credit facilities.

Note 7 - Capital trust

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

Note 8 - Employee benefits

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

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

<S>                                            <C>                 <C>              <C>               <C>
Service cost                                   $         1,159     $        901     $     3,381       $      2,798
Interest cost                                            3,518            3,346          10,322             10,298
Expected return on plan assets                          (4,642)          (3,651)        (13,682)           (11,198)
Amortization of net losses                                 839            1,186           2,438              3,640
Amortization of unrecognized prior
 service cost                                              139              139             417                417
                                               ----------------    -------------    --------------    -------------

  Total pension expense                        $         1,013     $      1,921     $     2,876       $      5,955
                                               ================    =============    ==============    =============
</TABLE>


                                     - 14 -
<PAGE>



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

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

<S>                                                 <C>               <C>              <C>               <C>
Service cost                                        $        213      $        165     $        639      $        496
Interest cost                                                450               413            1,349             1,239
Amortization of unrecognized prior
  service cost                                              (116)             (116)            (348)             (348)
Amortization of net losses                                   354               245            1,061               735
                                                    --------------    ------------- -- --------------    -------------

  Total OPEB expense                                $        901      $        707     $      2,701      $      2,122
                                                    ==============    =============    ==============    =============
</TABLE>

Note 9 - Other income and expense

<TABLE>
<CAPTION>
                                                           Three months ended                   Nine months ended
                                                               September 30,                      September 30,
                                                      -------------------------------    -------------------------------
                                                          2006             2005              2006             2005
                                                      -------------    --------------    -------------    --------------
                                                                               (In thousands)
Other operating income (expense):
<S>                                                   <C>              <C>               <C>              <C>
   Settlement of customer claim                       $          -     $          -      $          -     $      1,800
   Boeing take-or-pay                                            -            8,285                 -            8,729
   Other, net                                                 (846)            (237)             (480)             194
                                                      -------------    --------------    -------------    --------------

     Total other operating income, net                $       (846)    $      8,048      $       (480)    $     10,723
                                                      =============    ==============    =============    ==============

Other non-operating income (expense):
   Dividends and interest                             $        922     $        491      $      2,378     $      1,440
   Gain on sale of property                                      -                -                 -           13,881
   Foreign exchange gain (loss), net                          (238)             498            (1,733)           2,030
   Other, net                                                  (64)             361            (1,407)             167
                                                      -------------    --------------    -------------    --------------

     Total other non-operating income
        (expense), net                                $        620     $      1,350      $       (762)    $     17,518
                                                      =============    ==============    =============    ==============
</TABLE>

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



                                     - 15 -
<PAGE>

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

<S>                                                           <C>         <C>
Expected income tax expense, at 35%                           $ 94,534    $ 43,009
Non-U.S. tax rates                                              (1,645)       (863)
U.S. state income taxes, net                                     4,580       1,706
Dividends received deduction                                      (249)       (227)
Change in state income tax law                                       -         550
Tax on repatriation of foreign earnings                              -         998
Adjustment of deferred income tax asset valuation allowance          -     (41,345)
Nontaxable income                                                 (995)       (165)
Domestic manufacturing credit                                   (1,445)          -
Other, net                                                         (85)      1,223
                                                              --------    --------

         Total income tax expense                             $ 94,695    $  4,886
                                                              ========    ========
</TABLE>

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

     In October  2004,  the American  Jobs Creation Act of 2004 was enacted into
law. The new law provides for a special deduction from U.S. taxable income equal
to a specified  percentage of a U.S.  company's  qualified  income from domestic
manufacturing activities (as defined). Our provision for income taxes includes a
tax benefit of $1.4  million  for the first nine months of 2006  related to such
special  deduction  and no tax  benefit on our income tax  provision  during the
first nine months of 2005.


Note 11 - Commitments and contingencies

     Environmental  matters.  We are continuing  assessment work with respect to
our active plant site in  Henderson,  Nevada.  As of September 30, 2006, we have
accrued  $2.0  million  representing  our  estimate  of the  probable  costs for
remediation  of this site. We expect these accrued  expenses to be paid over the
remediation period of up to thirty years. We estimate the upper end of the range
of  reasonably  possible  costs  related to this matter,  including  the current
accrual,  to be  approximately  $4.2  million.  In  addition  to  the  remaining
estimated  costs for our remediation  efforts at our Henderson site,  during the
third quarter of 2006 we accrued for a $1.1 million asset retirement  obligation
related to asbestos removal at our Henderson site.

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

                                     - 16 -
<PAGE>

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

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

Note 12 - Earnings per share

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

<TABLE>
<CAPTION>
                                                          Three months ended                 Nine months ended
                                                             September 30,                     September 30,
                                                    -------------------------------    -------------------------------
                                                        2006              2005             2006              2005
                                                    --------------    -------------    --------------    -------------
                                                                              (In thousands)
Numerator:
  Net income attributable to common
<S>                                                 <C>               <C>              <C>               <C>
     stockholders (1)                               $     52,724      $     33,433     $    163,814      $    105,141
  Dividends on Series A
     Preferred Stock                                       1,445             2,830            5,374             9,426
  Interest expense on BUCS, net of tax                         -                73               43               235
                                                    --------------    -------------    --------------    -------------

  Diluted net income attributable
     to common stockholders                         $     54,169      $     36,336     $    169,231      $    114,802
                                                    ==============    =============    ==============    =============

Denominator:
  Average common shares outstanding                      161,117           131,104          152,917           128,923
  Average dilutive stock options
     and restricted stock (2)                                210               701              403               649
  Series A Preferred Stock                                22,857            49,638           30,340            51,269
  BUCS                                                         -               620               90               620
                                                    --------------    -------------    --------------    -------------

  Diluted shares                                         184,184           182,063          183,750           181,461
                                                    ==============    =============    ==============    =============
</TABLE>

-------------------------------------------------------------------------------
(1)  Net  income  attributable  to  common  stockholders  for the three and nine
     months ended  September  30, 2006 and 2005  included  $0.5 million and $0.9
     million,  respectively,  of undeclared  dividends on our Series A Preferred
     Stock.

(2)  Stock option conversion  excludes  anti-dilutive  shares of 2,306 and 2,905
     during the three and nine months ended September 30, 2005, respectively.

                                     - 17 -
<PAGE>

Note 13 - Business segment information

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

<TABLE>
<CAPTION>
                                                         Three months ended                  Nine months ended
                                                            September 30,                      September 30,
                                                    -------------------------------    -------------------------------
                                                        2006              2005             2006              2005
                                                    --------------    -------------    --------------    -------------
                                                            (Dollars in thousands, except selling price data)
Titanium melted and mill products:
<S>                                                 <C>               <C>              <C>               <C>
   Melted product net sales                         $     49,661      $     31,137     $    156,006      $     77,044
   Mill product net sales                                188,213           128,184          600,660           373,793
   Other product sales                                    33,934            30,711          102,978            78,176
                                                    --------------    -------------    --------------    -------------

         Total net sales                            $    271,808      $    190,032     $    859,644      $    529,013
                                                    ==============    =============    ==============    =============

Melted product shipments:
   Volume (metric tons)                                    1,275             1,345            4,280             4,120
   Average selling price (per kilogram)             $      38.95      $      23.15     $      36.45      $      18.70

Mill product shipments:
   Volume (metric tons)                                    3,150             2,940           10,575             9,380
   Average selling price (per kilogram)             $      59.75      $      43.60     $      56.80      $      39.85
</TABLE>









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

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

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

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

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


                                     - 19 -
<PAGE>


RESULTS OF OPERATIONS

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

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


<TABLE>
<CAPTION>
                                                                      Three months ended September 30,
                                                       ---------------------------------------------------------------
                                                                        % of Total                        % of Total
                                                           2006          Net Sales          2005           Net Sales
                                                       -------------    ------------    --------------    ------------
                                                             (Dollars in thousands, except selling price data)
Net sales:
<S>                                                    <C>                    <C>       <C>                     <C>
   Melted products                                     $    49,661            18%       $     31,137            16%
   Mill products                                           188,213            69%            128,184            68%
   Other products                                           33,934            13%             30,711            16%
                                                       -------------    ------------    --------------    ------------

   Total net sales                                         271,808           100%            190,032           100%

Cost of sales                                             (174,031)           64%           (134,284)           71%
                                                       -------------    ------------    --------------    ------------

Gross margin                                                97,777            36%             55,748            29%

Selling, general, administrative and
   development expense                                     (17,163)            6%            (13,287)            7%
Other operating income and expenses, net                     3,943             1%              9,283             5%
                                                       -------------    ------------    --------------    ------------

Operating income                                       $    84,557            31%       $     51,744            27%
                                                       =============    ============    ==============    ============

Melted product shipments:
   Volume (metric tons)                                      1,275                             1,345
   Average selling price (per kilogram)                $     38.95                      $      23.15

Mill product shipments:
   Volume (metric tons)                                      3,150                             2,940
   Average selling price (per kilogram)                $     59.75                      $      43.60
</TABLE>

     Net sales. We experienced significant sales growth during the third quarter
of 2006, as net sales  increased  43%, or $81.8  million,  compared to the third
quarter  of  2005.  We,  and  the  industry  as a  whole,  have  benefited  from
significantly  increased  demand for titanium  across all major industry  market
sectors that has driven melted and mill titanium  prices to record levels.  As a
result of these  market  factors,  average  selling  prices  for melted and mill
products have increased 68% and 37%,  respectively,  over the same period in the
prior year. Our combined volume of melted and mill product  shipments during the
third quarter of 2006 was consistent  with the volumes of shipments in the prior
year period,  but in response to market demands,  our product mix shifted toward
an increased level of mill products. In addition,  other product sales have also
increased  10%  compared  to the prior year period due  principally  to improved
demand for our fabrication products related primarily to increased  construction
of chemical, power and other industrial facilities.

                                     - 20 -
<PAGE>

     Cost of sales.  Our cost of sales increased  $39.7 million,  or 30%, in the
third  quarter of 2006 as compared to the third  quarter of 2005. A  substantial
portion  of the  increase  in our  cost of sales  is due to  higher  cost of raw
materials, including purchased titanium sponge and purchased titanium scrap. The
higher cost of our purchased  sponge is due  principally  to our  utilization in
2005 of  lower-cost  sponge we had  purchased  from the U.S.  Defense  Logistics
Agency ("DLA")  stockpile.  We had purchased sponge from the DLA stockpile since
2000,  but the stockpile  became fully  depleted in 2005. The higher cost of our
purchased  titanium  scrap is due to increased  industry-wide  demand as well as
demand in  non-titanium  markets  that use  titanium as an alloying  agent.  The
impact of market increases in the cost of sponge and scrap was mitigated in part
because  certain  of our  raw  material  purchases  are  subject  to  long  term
agreements.  In addition to the impact of higher raw material costs, our cost of
sales  increased  as  we  increased  our  manufacturing  employee  headcount  by
approximately 160 full time equivalents  compared to the 2005 period in order to
support the continued growth of our business.  Despite these increases,  cost of
sales improved to 64% of sales for the third quarter of 2006 compared to 71% for
the third quarter of 2005 as increases in selling prices more than offset higher
raw material, energy and other operating costs.

     Our  cost of sales  was  favorably  impacted  by our  increased  production
levels, as our plant operating rate improved in the third quarter of 2006 to 84%
compared  to the prior year  period  plant  operating  rate of 77%. We expect to
maintain  production levels near 90% of practical  capacity for the remainder of
2006.  As a result of  current  production  levels,  current  demand  and future
outlook of the demand for our  products,  we have  initiated  several  strategic
capital  improvement  projects at our existing facilities that will add capacity
to capitalize on the anticipated increase in demand.

     Gross margin.  During the third quarter 2006, our gross margin increased to
$97.8  million  compared to $55.7  million for the same period in 2005,  and our
resulting gross margin percentage  increased to 36% in the third quarter of 2006
from 29% in the third quarter of 2005. The improved  profitability was generally
driven by the  increases  in sales  prices for each of our  products,  favorable
product  mix and  improved  plant  operating  rates,  which more than offset the
effect of our higher raw materials, energy and other operating costs.

     Operating income.  Our third quarter of 2006 operating income increased 63%
to $84.6 million  compared to the same period in 2005, and our operating  income
percentage  increased to 31% in the third  quarter of 2006 from 27% in the third
quarter  of 2005.  The  increase  in  operating  income is driven  primarily  by
increases in gross  margin  which is somewhat  offset by an increase in selling,
general,  administrative  and  development  expense  ("SGA&D") and a decrease in
other operating income.

     During the third quarter of 2006, our SGA&D increased $3.9 million to $17.2
million compared to the same period of 2005 primarily due to increased  employee
compensation  as a result of  additional  personnel to support  expansion of our
business  and  costs   incurred  in  connection   with  the  relocation  of  our
headquarters  to Dallas,  Texas and our  operational  management and information
technology group to Exton, Pennsylvania.

                                     - 21 -
<PAGE>

     Our other  operating  income for the third quarter of 2006  decreased  $5.3
million to $4.0  million.  During the third  quarter of 2005,  we recorded  $8.3
million of other operating  income related to the take-or-pay  provisions  which
were part of our previous LTA with Boeing.  Effective  July 1, 2005,  we entered
into  a new  LTA  with  Boeing,  pursuant  to  which,  beginning  in  2006,  the
take-or-pay  provisions  under the  previous  LTA were  replaced  with an annual
makeup  payment early in the following  year in the event Boeing  purchases less
than its annual  commitment in any year. Based on the provisions of the new LTA,
no take-or-pay income has been earned in 2006. Somewhat offsetting this decrease
was an increase in our equity in  earnings of VALTIMET  (our 43.7% owned  welded
tube joint  venture)  in the 2006 period due to  stronger  demand and  increased
pricing in the industrial tubing market.

     Income taxes.  We incurred income tax expense of $28.6 million in the third
quarter of 2006  compared to $14.4  million in the same  period  last year.  The
increase in income tax expense in 2006 is primarily  due to  increased  earnings
and the $5.7 million reversal of the valuation allowance in 2005 attributable to
our U.S. and U.K. deferred income tax assets.

     Dividends  on Series A Preferred  Stock.  Holders of our Series A Preferred
Stock  are  entitled  to  receive  when,  as and if  declared  by our  board  of
directors,  cumulative  cash dividends at the rate of 6.75% of the $50 per share
liquidation  preference per annum per share  (equivalent to $3.375 per annum per
share). Shares of our Series A Preferred Stock are convertible,  at any time, at
the option of the holder  thereof,  into  thirteen and  one-third  shares of our
common stock,  subject to adjustment in certain  events.  The Series A Preferred
Stock is not  mandatorily  redeemable,  but is  redeemable  at our option  after
September 1, 2007. During the first two quarters of 2006,  holders of the Series
A Preferred  Stock  converted 1.3 million shares of our Series A Preferred Stock
into 16.9 million  shares of our common  stock,  and during the third quarter of
2006,  a  nominal  number  of  shares  were  converted.  As a  result  of  these
conversions,  cumulative dividends  attributable to our Series A Preferred Stock
were $1.4 million during the three months ended September 30, 2006,  compared to
$3.1 million during the three months ended September 30, 2005.

First nine months of 2006 compared to first nine months of 2005

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





                                     - 22 -
<PAGE>

<TABLE>
<CAPTION>
                                                                     Nine months ended September 30,
                                                   ---------------------------------------------------------------------
                                                                    % of Total Net                         % of Total
                                                       2006              Sales               2005           Net Sales
                                                   --------------   ----------------     --------------   --------------
                                                            (Dollars in thousands, except selling price data)
Net sales:
<S>                                                <C>                    <C>            <C>                    <C>
   Melted products                                 $   156,006            18%            $     77,044           14%
   Mill products                                       600,660            70%                 373,793           71%
   Other products                                      102,978            12%                  78,176           15%
                                                   --------------   ----------------     --------------   --------------

   Total net sales                                     859,644           100%                 529,013          100%

Cost of sales                                         (547,246)           64%              (396,430)            75%
                                                   --------------   ----------------     --------------   --------------

Gross margin                                           312,398            36%                 132,583           25%

Selling, general, administrative and
   development expense                                 (49,781)            5%                 (38,625)           6%
Other operating income and expenses, net                10,633             1%                  14,104            3%
                                                   --------------   ----------------     --------------   --------------

Operating income                                   $   273,250            32%            $    108,062           22%
                                                   ==============   ================     ==============   ==============

Melted product shipments:
   Volume (metric tons)                                  4,280                                  4,120
   Average selling price (per kilogram)            $     36.45                           $      18.70

Mill product shipments:
   Volume (metric tons)                                 10,575                                  9,380
   Average selling price (per kilogram)            $     56.80                           $      39.85
</TABLE>


     Net sales.  We experienced  significant  sales growth during the first nine
months of 2006, as net sales increased 62%, or $330.6  million,  compared to the
first nine months of 2005. We, and the industry as a whole,  have benefited from
significantly  increased  demand for titanium  across all major industry  market
sectors that has driven melted and mill titanium  prices to record levels.  As a
result of these  market  factors,  average  selling  prices  for melted and mill
products have increased 95% and 43%,  respectively,  over the same period in the
prior year.  In addition to the improved  pricing we have  experienced,  we have
delivered  4% more melted  products and 13% more mill  products  compared to the
2005 period.  In addition,  other  product  sales  increased 32% compared to the
prior year  period  due  principally  to  improved  demand  for our  fabrication
products  related  primarily to increased  construction  of chemical,  power and
other industrial facilities.

     Cost of sales. Our cost of sales increased  $150.8 million,  or 38%, in the
first nine months of 2006 compared to the first nine months of 2005.  Consistent
with our quarter-to-quarter comparisons, a substantial portion of the inrease in
our cost of sales is due to higher cost of raw  materials,  including  purchased
titanium  sponge and  titanium  scrap.  In  addition to the impact of higher raw
material costs,  our cost of sales  increased as we increased our  manufacturing
employee  headcount by approximately  170 full time equivalents  compared to the
2005 period in order to support the continued  growth of our  business.  Despite
these  increases,  cost of sales  improved  to 64% of sales for the  first  nine
months of 2006 compared to 75% for the first nine months of 2005 as increases in
selling prices more than offset higher raw material,  energy and other operating
costs.

                                     - 23 -
<PAGE>

     Our  cost of sales  was  favorably  impacted  by our  increased  production
levels, as our plant operating rate improved in the first nine months of 2006 to
88% compared to the prior year period plant  operating rate of 78%. We expect to
maintain  production levels near 90% of practical  capacity for the remainder of
2006.  As a result of  current  production  levels,  current  demand  and future
outlook of the demand for our  products,  we have  initiated  several  strategic
capital  improvement  projects at our existing facilities that will add capacity
to capitalize on the anticipated increase in demand, as further discussed below.

     Gross  margin.  During  the first  nine  months of 2006,  our gross  margin
increased 136% to $312.4 million  compared to the same period in 2005. Our gross
margin percentage  increased to 36% in the first nine months of 2006 from 25% in
the first nine months of 2005. The improved  profitability  was generally driven
by the increase in sales  prices for each of our  products  and  improved  plant
operating  rates,  which more than offset the effect of our higher raw materials
and energy costs.

     Operating  income.  Our operating  income for the first nine months of 2006
increased  153% to $273.3  million  compared to the same period in 2005, and our
operating  income  percentage  increased to 32% in the first nine months of 2006
from 22% in the first nine months of 2005.  The increase in operating  income is
driven  primarily  by an increase in gross  margin  which is somewhat  offset by
increases in SGA&D and a decrease in other operating income.

     During the first nine months of 2006, our SGA&D  increased $11.2 million to
$49.8  million  compared  to the same period of 2005  primarily  due to (i) $7.5
million of travel, relocation and severance expenses incurred in connection with
the  relocation  of our  headquarters  to  Dallas,  Texas  and  our  operational
management and  information  technology  group to Exton,  Pennsylvania  and (ii)
increased employee  compensation as a result of additional  personnel to support
expansion of our business.

     Our other operating income for the first nine months of 2006 decreased $3.4
million to $10.7 million. During the first nine months of 2005, we recorded $8.7
million of other operating  income related to the take-or-pay  provisions  which
were part of our previous LTA with Boeing.  As previously  discussed,  under our
current LTA with Boeing,  beginning in 2006 the take-or-pay provisions under the
previous LTA were replaced with an annual makeup  payment early in the following
year in the event Boeing purchases less than its annual  commitment in any year.
Based on the provisions of the new LTA, no take-or-pay income has been earned in
2006. Also  contributing to this decrease in other operating income for the nine
months ended September 30, 2006, we recognized  other  operating  income of $1.8
million in the first  quarter of 2005  related to our  settlement  of a customer
claim regarding prior order  cancellations.  Somewhat offsetting these decreases
was an  increase  of $7.7  million in our equity in  earnings of VALTIMET in the
2006  period due to  stronger  demand and  increased  pricing in the  industrial
tubing market.

     Net other  non-operating  income and expense.  During the nine months ended
September 30, 2006, we recognized  other  non-operating  expense of $0.8 million
compared to other  non-operating  income of $17.5 million during the nine months
ended September 30, 2005. As disclosed  previously,  our net other non-operating
expense  during the first nine months of 2006  included  expense of $1.3 million
related to a change in our estimated liability for certain worker's compensation
bonds, and net other  non-operating  income during the first nine months of 2005
included  a gain  on the  sale  of  certain  real  property  of  $13.9  million.
Additionally,  during the nine months ended  September 30, 2006, the U.S. dollar
weakened  relative to British  pound  sterling and euro,  which  resulted in net
currency  transaction  losses of $1.7  million.  In  contrast,  we realized  net
currency  transaction  gains  of $2.0  million  during  the  nine  months  ended
September 30, 2005 as the U.S. dollar strengthened relative to the British pound
sterling and the euro.

                                     - 24 -
<PAGE>
     Income taxes.  We incurred income tax expense of $94.7 million in the first
nine months of 2006  compared  to an income tax  expense of $4.9  million in the
same  period  last year.  The  increase  in income tax expense in the first nine
months of 2006 is  primarily  due to increased  earnings  and the $41.3  million
benefit  resulting  from  the  reversal  of  the  valuation  allowance  in  2005
attributable to our U.S. and U.K. deferred income tax assets.

     Minority  interest.  Minority  interest  relates  principally  to Compagnie
Europeenne du Zirconium-CEZUS,  S.A. ("CEZUS"),  the 30% holder of our 70%-owned
French subsidiary, TIMET Savoie, S.A. ("TIMET Savoie"). Minority interest during
the first nine months of 2006 increased $2.8 million over the comparable  period
in 2005 due to increased net income at TIMET Savoie.

     Dividends  on Series A  Preferred  Stock.  During the first nine  months of
2006,  holders of the Series A Preferred  Stock  converted 1.3 million shares of
our Series A Preferred  Stock into 16.9 million shares of our common stock. As a
result of these conversions,  cumulative dividends  attributable to our Series A
Preferred  Stock were $5.7 million  during the nine months ended  September  30,
2006, compared to $9.7 million during the nine months ended September 30, 2005.

European operations

     We have  substantial  operations  located  in the U.K.,  France  and Italy.
Approximately  36% of our sales  originated  in Europe for the nine months ended
September 30, 2006, of which  approximately  53% were denominated in the British
pound  sterling or the euro.  Certain  purchases of raw  materials,  principally
titanium sponge and alloys, for our European  operations are denominated in U.S.
dollars,  while labor and other  production  costs are primarily  denominated in
local  currencies.  The functional  currencies of our European  subsidiaries are
those of their respective  countries,  and the European subsidiaries are subject
to exchange rate  fluctuations  that may impact reported earnings and may affect
the  comparability  of  period-to-period  operating  results.  Borrowings of our
European  operations  may be in U.S.  dollars or in functional  currencies.  Our
export sales from the U.S. are  denominated in U.S.  dollars and are not subject
to currency exchange rate fluctuations.

     We do not use  currency  contracts  to hedge  our  currency  exposures.  At
September  30,  2006,   consolidated  assets  and  liabilities   denominated  in
currencies other than functional currencies were approximately $84.5 million and
$65.5 million, respectively,  consisting primarily of U.S. dollar cash, accounts
receivable and accounts payable.

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



                                     - 25 -
<PAGE>


Outlook

     We continued to achieve record levels for net sales,  operating  income and
net income through the first nine months of 2006.  These operating  results were
largely driven by increased  demand in all market sectors  including  commercial
aerospace,  industrial,  military and other  emerging  markets,  as well as cost
efficiency benefits of improved production levels. Capacity constraints for both
melted and mill products in the titanium  industry coupled with relatively tight
supplies of raw materials also  contributed to improved  selling prices for both
melted  and mill  products.  With our plant  production  levels  near  practical
capacity,  we have initiated several strategic capital  improvement  projects at
our existing  facilities that will add capacity to capitalize on the anticipated
increase in demand,  as further  discussed  below. We are also in the process of
pursuing additional capacity expansion  alternatives in melted and mill products
conversion,  which could provide a significant  increase in existing  production
capabilities.  Our backlog at September 30, 2006 was $1.0  billion,  compared to
$870 million at December 31, 2005 and $710 million at September 30, 2005.

     We  expect  that   industry-wide   demand  trends  will  continue  for  the
foreseeable  future.  However,  we are  seeing a  near-term  decrease  in demand
relative to the production delays for the Airbus A380 commercial aircraft. We do
not know the degree to which our  average  selling  prices  will  increase  as a
result  of the  expected  continuing  growth  in  demand.  We  currently  expect
production  volumes to remain at current levels for the remainder of 2006,  with
overall capacity  utilization  expected to approximate 90% of practical capacity
for the full year 2006 (as compared to 80% in 2005). However, practical capacity
utilization  measures  can vary  significantly  based on product mix. We further
anticipate  maintaining  high  production  levels  through  2007,  and  once our
additional electron beam ("EB") cold hearth melt capacity becomes operational in
2008,  we  anticipate  our EB melt  practical  capacity to increase 54% or 8,500
metric tons.

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



                                     - 26 -
<PAGE>

     Our cost of sales is affected by a number of factors including customer and
product mix, material yields,  plant operating rates, raw material costs,  labor
costs and energy costs.  Raw material  costs,  which include  sponge,  scrap and
alloys, represent the largest portion of our manufacturing cost structure,  and,
as previously discussed, continued cost increases for certain raw materials have
occurred  during the first nine months of 2006.  We expect the  availability  of
certain raw  materials to remain tight in the near term and improve as announced
capacity expansion  throughout the industry becomes  operational.  Consequently,
while prices have  somewhat  fluctuated  in 2006, we expect prices for these raw
materials  to  remain  high for the  remainder  of 2006 and in 2007,  and we are
unable to predict the extent to which these market  driven costs will impact our
future results of operations.  In addition,  we have certain long-term  customer
agreements  that will somewhat limit our ability to pass on all of our increased
raw material costs. However, we expect that the impact of higher average selling
prices for  melted and mill  products  in the  remainder  of 2006 will more than
offset such increased raw materials  costs,  as has been the case to date during
2006.

     Based on the foregoing,  we anticipate our full year 2006 net sales revenue
to range from $1.1  billion  to $1.2  billion  and our full year 2006  operating
income to range from $350 million to $365 million.

LIQUIDITY AND CAPITAL RESOURCES

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

<TABLE>
<CAPTION>
                                                                              Nine months ended September 30,
                                                                        --------------------------------------------
                                                                               2006                    2005
                                                                        --------------------    --------------------
Cash provided by (used in):
<S>                                                                     <C>                     <C>
   Operating activities                                                 $          57,508       $         17,052
   Investing activities                                                           (63,120)               (43,650)
   Financing activities                                                            13,797                 25,884
                                                                        --------------------    --------------------

   Net cash provided by (used in) operating, investing
     and financing activities                                           $           8,185       $           (714)
                                                                        ====================    ====================
</TABLE>

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

     The  increase in cash  provided by operating  activities  was driven by the
increase in net income which  increased by $54.6  million to $169.2  million for
the nine  months  ended  September  30,  2006,  compared to net income of $114.6
million for the nine months ended September 30, 2005.

     The  increase in net income was offset by  additional  cash used by working
capital  during the nine months ended  September 30, 2006.  Accounts  receivable
increased during the first nine months of 2006 and 2005 primarily as a result of
increased sales.  Inventories increased during the first nine months of 2006 and
2005 as a result of increased run rates and related  inventory build in order to
meet expected  customer demand, as well as the effects of increased raw material
costs.


                                     - 27 -
<PAGE>

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

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

     We utilized  the  remainder  of our U.S. net  operating  loss  carryforward
during the first quarter of 2006, which loss  carryforward only partially offset
the U.S.  current tax provision for the nine months ended September 30, 2006. As
a result, our provision for income taxes includes a provision for current income
taxes of  approximately  $84.9 million  (including a provision for U.S. taxes of
approximately $59.3 million). We also recognized a current income tax benefit in
the first nine months of 2006 of $10.0  million  related to the tax benefit from
the exercise of stock options.  In accordance with GAAP, such income tax benefit
is  recognized  as a direct  increase in  additional  paid-in  capital.  We made
aggregate  cash  payments  for income  taxes of $75.0  million in the first nine
months of 2006  compared to $5.2 million in the first nine months of 2005.  As a
result of the  changes  in our  provision  for  income  taxes  and tax  payments
discussed  above,  our income  taxes  payable  increased  from $13.2  million at
December 31, 2005 to $18.2 million at September  30, 2006.  See also "Results of
Operations - Income taxes" for further discussion of income taxes.

     Investing  activities.  Our capital expenditures were $62.5 million for the
nine  months  ended  September  30,  2006,  compared  to $43.3  million  for the
comparable period in 2005. The 2006 amount includes  expenditures related to our
sponge plant  expansion  in  Henderson,  Nevada and our new  electron  beam cold
hearth melt furnace at our facility in Morgantown, Pennsylvania. The 2005 amount
includes  expenditures  related  to  construction  on our  now  completed  water
conservation  facility located in Henderson,  Nevada as well as the expansion of
our sponge plant.

     Financing activities.  Cash provided during the nine months ended September
30, 2006  related  primarily to $10.7  million of proceeds  from the issuance of
common  stock upon  exercise  of options  and the  related  tax benefit of $10.0
million.  These cash inflows were partially offset by our net debt repayments of
$2.7 million, dividends paid on our Series A Preferred Stock of $5.7 million and
dividends paid to CEZUS of $3.0 million during the first nine months of 2006.


                                     - 28 -
<PAGE>

     Cash  provided  during the nine months  ended  September  30, 2005  related
primarily  to our net  borrowings  of  $32.5  million  used in part to fund  the
ongoing  construction  projects  and support the  increase in  inventory  levels
required to meet  anticipated  customer demand.  Additionally,  we received $5.3
million of cash from the  issuance of common  stock  related to the  exercise of
certain employee stock options during the 2005 period. These cash inflows during
the first nine months of 2005 were  partially  offset by  dividends  paid on our
Series A Preferred  Stock of $9.7  million and  dividends  paid to CEZUS of $2.2
million.

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

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

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

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

     As of September  30, 2006, we had  outstanding  borrowings of $55.3 million
under  our U.S.  credit  agreement  and no  borrowings  under  our  U.K.  credit
facility.  As of September  30,  2006,  the weighted  average  interest  rate on
borrowings outstanding under our U.S. credit facility was 6.3%.


                                     - 29 -
<PAGE>
     As of  September  30,  2006,  we had $4.1  million  of  letters  of  credit
outstanding  under our U.S.  credit facility  required by various  utilities and
government  entities for performance and insurance  guarantees,  and we had $3.6
million of letters of credit outstanding under our European credit facilities as
collateral under certain inventory purchase  contracts.  These letters of credit
reduce our borrowing availability under our credit facilities.  Aggregate unused
borrowing   availability   under  our  U.S.  and  U.K.  credit   facilities  was
approximately  $157.8  million as of September 30, 2006. We also have  overdraft
and other credit facilities at certain of our other European subsidiaries,  with
aggregate unused borrowing availability of $15.0 million at September 30, 2006.

Future cash requirements

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

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

     Based  upon  our  expectations  of  our  operating  performance,   and  the
anticipated demands on our cash resources we expect to have sufficient liquidity
to meet our short-term obligations (defined as the next twelve-month period) and
our long-term obligations.  If actual developments differ from our expectations,
our liquidity could be adversely affected.

     At  September  30, 2006,  we had credit  available  under  existing U.S and
European credit  facilities of $172.7 million,  and we had an aggregate of $26.8
million of  restricted  and  unrestricted  cash and cash  equivalents.  Our U.S.
credit facility  matures in February 2011, and our U.K. credit facility  matures
in April 2008.  We expect to be able to provide  sufficient  liquidity  from our
cash flows from operations and our expected  borrowing  availability to fund our
operations after the maturity of these credit facilities.

     Capital  expenditures.  We intend to invest a total of  approximately  $100
million  to  $110  million  for  capital   expenditures   during  2006.  Capital
expenditures are primarily for improvements and upgrades to existing facilities,
including  expansions  of sponge and melting  capacity,  and other  additions of
plant  machinery  and  equipment.   We  have  spent  $62.5  million  on  capital
expenditures through September 30, 2006.

                                     - 30 -
<PAGE>

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

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

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

Other

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


                                     - 31 -
<PAGE>
Item 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

Item 4.     CONTROLS AND PROCEDURES

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

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

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

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

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

                                     - 32 -
<PAGE>
     Changes in internal  control over  financial  reporting.  There has been no
change to our internal control over financial reporting during the quarter ended
September 30, 2006 that has  materially  affected,  or is  reasonably  likely to
materially  affect,  our internal  control over financial  reporting,  except as
specifically  discussed  below.  We are in the process of remediating  the three
material  weaknesses  discussed  in our 2005 Annual  Report and continue to work
toward  completion of such  remediation by or before December 31, 2006. To date,
we have completed the following remediation activities:

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

          We  have   implemented   additional   levels  of  manual   review  and
          authorization of journal entries at all of our significant  locations.
          We will  also  further  explore  our IT  solution  options  as  deemed
          appropriate; and

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

PART II. - OTHER INFORMATION

Item 1.    LEGAL PROCEEDINGS

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

Item 1A.   RISK FACTORS

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

Item 6.    EXHIBITS


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

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

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


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


                                     - 33 -
<PAGE>


                                   SIGNATURES

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


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



Date: November 7, 2006             By  /s/ Bobby D. O'Brien
                                       ----------------------------------------
                                       Bobby D. O'Brien
                                       Executive Vice President and
                                         Chief Financial Officer


Date: November 7, 2006             By  /s/ Scott E. Sullivan
                                       ----------------------------------------
                                       Scott E. Sullivan
                                       Vice President and Controller
                                         Principal Accounting Officer