SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K/A
                                 Amendment No. 2

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

                   For the fiscal year ended December 31, 2003
                                             -----------------

                                       OR

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

                         Commission file number 0-28538
                                                -------

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

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

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

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

           Securities registered pursuant to Section 12(b) of the Act:

       Title of each class          Name of Each Exchange on Which Registered
   --------------------------       -----------------------------------------
          Common Stock                       New York Stock Exchange
   ($.01 par value per share)

        Securities registered pursuant to Section 12(g) of the Act: None
                                                                    ----

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 if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K  X
          ---

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Exchange Act Rule 12b-2). Yes    No X
                                        ---   ---

As of June 30,  2003,  3,192,182  shares of common stock were  outstanding.  The
aggregate  market  value  of the  1,479,967  shares  of  voting  stock  held  by
nonaffiliates of Titanium Metals  Corporation as of such date approximated $47.5
million.  No shares of non-voting stock were held by nonaffiliates.  As of March
2, 2004, 3,179,602 shares of common stock were outstanding.

                      Documents incorporated by reference:

None.


<PAGE>


                                EXPLANATORY NOTE

     This Amendment No. 2 on Form 10-K/A is an amendment to the Titanium  Metals
Corporation  (the  "Company"  or "TIMET")  Annual  Report on Form 10-K  ("Annual
Report") for the year ended December 31, 2003. The purpose of the Form 10-K/A is
to replace,  in its entirety,  Item 7:  Management's  Discussion and Analysis of
Financial  Condition  and Results of  Operations  of the  Company's  2003 Annual
Report.  The changes to Item 7 consist of the following:  (i) a modification  of
footnote 3 and the addition of footnote 4 to the Contractual  Commitments  table
on page 16 to provide  additional  information  regarding such commitments,  and
(ii)  modifications  to  language in the  Impairment  of  long-lived  assets and
Valuation  and  impairment of securities  subsections  within the  discussion of
Critical  Accounting Policies and Estimates on pages 23 and 24. This Form 10-K/A
does not update or modify any other  disclosures to reflect  developments  since
the original filing date or otherwise.

                                        1

<PAGE>


ITEM 7: MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

RESULTS OF OPERATIONS

     Overview. The titanium industry derives a substantial portion of its demand
from the aerospace  industry,  most specifically the highly cyclical  commercial
aerospace sector.  The Company estimates that aggregate industry shipment volume
for titanium mill products in 2003 was derived from the following  markets:  42%
from  aerospace;  53% from  industrial;  and 5% from  emerging.  The  commercial
aerospace sector is the principal  driver of titanium  consumed in the aerospace
markets,  accounting for shipments of approximately  15,700 metric tons in 2003,
which represent about 78% of mill product aerospace industry shipments and about
33% of aggregate mill product industry  shipments.  Mill product  shipments into
the  military  aerospace  sector in 2003 were  approximately  4,400 metric tons,
which represent about 22% of mill product aerospace industry shipments and about
9% of aggregate mill product shipments. The Company's business is more dependent
on aerospace demand than the overall titanium industry,  as approximately 68% of
its mill product sales volume in 2003 was  represented by sales to the aerospace
industry (57% commercial aerospace and 11% military aerospace).

     During the third quarter of 2003,  the Company and  Wyman-Gordon  agreed to
terminate the 1998 purchase and sale agreement  associated with the formation of
the titanium  castings joint venture  previously  owned by the two parties.  The
Company agreed to pay  Wyman-Gordon  a total of $6.8 million in three  quarterly
installments in connection with this termination, which included the termination
of certain favorable  purchase terms. The Company recorded a one-time charge for
the entire $6.8  million as a reduction  to sales in the third  quarter of 2003.
The  Company  paid the  first  two  installments  aggregating  $4.0  million  to
Wyman-Gordon  during 2003 and will pay the  remaining  $2.8 million in the first
quarter of 2004.  Concurrently,  the Company and  Wyman-Gordon  entered into new
long-term  purchase and sale  agreements  covering the sale of TIMET products to
various  Wyman-Gordon  locations  through  2008.  The  Company  expects  the new
agreements to, among other things, improve its future plant operating rates.

     During  2003,  the  Company  focused  on  (i)  vigorously   reducing  costs
throughout the business,  (ii) increasing capacity utilization,  (iii) improving
management of working capital,  especially inventory, and (iv) improving on-time
delivery and customer  service.  Based upon this focus,  the Company was able to
realize  substantial  cost  savings  during  2003,  primarily  in the  areas  of
manufacturing  and  operational  performance,  yield  improvements  and selling,
general  and   administrative   costs.   While  some  of  these   savings   were
non-recurring,  a majority of the savings will  continue and  positively  affect
future results.

     The Company's  successful  cost  reduction  efforts and increased  capacity
utilization,  coupled with increased  melted product sales volume,  provided for
lower unit costs and  decreasing  book  inventories  during 2003,  for which the
Company reduced its LIFO inventory reserve at the end of 2003 as compared to the
end of 2002. As a result,  the Company reduced cost of sales by $11.4 million in
2003. This compared with an increase in the Company's LIFO inventory  reserve at
the end of 2002 as compared to the end of 2001, for which the Company  increased
cost of sales by $9.3 million in 2002, and with a decrease in the Company's LIFO
inventory  reserve at the end of 2001 as compared to the end of 2000,  for which
the Company decreased cost of sales by $5.0 million in 2001.

                                        2

<PAGE>


     In November  1996,  the Capital Trust issued  $201.3  million BUCS and $6.2
million  6.625%  common  securities.  TIMET owns all of the  outstanding  common
securities  of the  Capital  Trust,  and the  Capital  Trust  is a  wholly-owned
subsidiary  of TIMET.  The Capital Trust used the proceeds from such issuance to
purchase from the Company  $207.5  million  principal  amount of TIMET's  6.625%
Subordinated  Debentures.   The  sole  assets  of  the  Capital  Trust  are  the
Subordinated  Debentures.  Based on the  requirements  of  Financial  Accounting
Standards  Board   Interpretation  No.  46  Revised  ("FIN  46R"),  the  Company
deconsolidated   the  Capital   Trust  as  of  December  31,  2003.   Upon  such
deconsolidation,  the Company now  reflects  both its  investment  in the common
securities  of the  Capital  Trust,  as well as its debt  payable to the Capital
Trust,  separately on its Consolidated  Balance Sheets.  Additionally,  interest
payments on the debt are  reflected  as interest  expense and  dividends  on the
common  securities  are  reflected  as equity in earnings of the  unconsolidated
Capital Trust on the  Consolidated  Statements  of  Operations.  Under  previous
accounting  rules,  the  Company  consolidated  the Capital  Trust,  reflected a
minority  interest  related to the BUCS on its  Consolidated  Balance Sheets and
reported minority  interest  dividend expense on its Consolidated  Statements of
Operations.  All periods presented in this Annual Report have been retroactively
restated,  as permitted by FIN 46R, to allow for comparability with the December
31, 2003 presentation.

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

<TABLE>


                                                                               Year ended December 31,
                                                                ------------------------------------------------------
                                                                     2003               2002                2001
                                                                ---------------    ----------------    ---------------
                                                                                  ($ in thousands)

<S>                                                             <C>                <C>                 <C>
Net sales                                                       $     385,304      $     366,501       $     486,935
Gross margin                                                           17,030             (3,123)             39,893
Operating income (loss)                                                 5,432            (20,849)             64,480

Gross margin percent of net sales                                          4%                -1%                  8%

Percentage change in:
   Sales volume:
     Melted products                                                      +97                -46                 +27
     Mill products                                                          -                -27                  +7

   Average selling prices - includes changes in product mix:
       Melted products                                                    -16                  -                  +6
       Mill products                                                        -                 +5                  +4

   Selling prices - excludes changes in product mix:
       Melted products                                                    -12                 -1                  +8
       Mill products in U.S. dollars                                       -3                 +4                   -
       Mill products in billing currencies (1)                             -7                 +3                  +2
----------------------------------------------------------------------------------------------------------------------
(1) Excludes the effect of changes in foreign currencies.

</TABLE>

                                        3
<PAGE>


     Based upon the terms of the Company's amended  long-term  agreement ("LTA")
with Boeing,  the Company receives 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's
purchases  from TIMET for that year.  This advance  continues  through 2007. The
terms of the  amended LTA allow  Boeing to purchase up to 7.5 million  pounds of
titanium  product  annually from TIMET through 2007,  but limit TIMET's  maximum
quarterly  volume  obligation to 3.0 million pounds.  The LTA is structured as a
take-or-pay  agreement  such that,  beginning  in  calendar  year  2002,  Boeing
forfeits $3.80 per pound of its advance payment in the event that its orders for
delivery  are less  than 7.5  million  pounds in any given  calendar  year.  The
Company  recognizes  income  to the  extent  Boeing's  year-to-date  orders  for
delivery plus TIMET's maximum quarterly volume  obligations for the remainder of
the year total less than 7.5 million pounds.  This income is recognized as other
operating  income and is not  included in sales  revenue,  sales volume or gross
margin.  During 2003 and 2002,  the Company  recognized  $23.1 million and $23.4
million,  respectively,  of other operating income relative to these take-or-pay
provisions.  Had the Company not benefited from such  provisions,  the Company's
results would have been as follows:

<TABLE>

                                                                                       Year ended December 31,
                                                                                --------------------------------------
                                                                                      2003                 2002
                                                                                -----------------    -----------------
                                                                                           (In thousands)

<S>                                                                             <C>                  <C>
Operating income (loss), as reported                                            $         5,432      $       (20,849)
Less Boeing take-or-pay income                                                           23,083               23,408
                                                                                -----------------    -----------------
Operating loss, excluding Boeing take-or-pay                                    $       (17,651)     $       (44,257)
                                                                                =================    =================

Net loss, as reported                                                           $       (13,057)     $      (111,530)
Less Boeing take-or-pay income                                                           23,083               23,408
                                                                                -----------------    -----------------
Net loss, excluding Boeing take-or-pay                                          $       (36,140)     $      (134,938)
                                                                                =================    =================
</TABLE>


     Because the Boeing  take-or-pay  income  continues  only through 2007,  the
Company is striving to improve its results of  operations  such that the Company
will generate net income  exclusive of any Boeing  take-or-pay  income,  and the
Company analyses its historical results exclusive of such income. Therefore, the
Company  believes that  presenting its operating loss and net loss excluding the
Boeing  take-or-pay  income  better  measures  the  results  of  its  underlying
business.

     2003  operations.  The Company's  melted  product sales  increased 65% from
$34.8 million  during 2002 to $57.4 million  during 2003  primarily due to a 97%
increase in melted product sales volume,  partially  offset by a 16% decrease in
melted product average selling prices. Melted products consist of ingot and slab
and are generally  only sold in U.S.  dollars.  Melted  product sales  increased
principally as a result of new customer  relationships,  share gains and changes
in product mix.  Excluding the effects of changes in product mix, melted product
selling prices decreased 12% during 2003 compared to 2002.

     Mill product sales  increased 1% from $278.2  million during 2002 to $279.6
million during 2003. This increase was  principally  due to slight  increases in
both mill product sales volume and mill product  average selling prices (average
selling  prices use actual  product  mix and  foreign  currency  exchange  rates
prevailing  during the  respective  periods)  and changes in product  mix.  Mill
product average selling prices were positively  affected by the weakening of the
U.S.  dollar  compared to the British pound sterling and the euro.  Mill product
selling prices expressed in U.S. dollars (using actual foreign currency exchange
rates  prevailing  during  the  respective  periods)  decreased  3% during  2003
compared to 2002. In billing  currencies  (which  exclude the effects of foreign
currency  translation),  mill product  selling  prices  decreased 7% during 2003
compared to 2002.

                                        4

<PAGE>


     As  previously  discussed,  net sales  during 2003 were reduced by the $6.8
million one-time charge incurred by the Company to terminate a purchase and sale
agreement between the Company and Wyman-Gordon.

     Gross  margin  (net sales  less cost of sales)  was 4% of net sales  during
2003,  compared to negative 1% during 2002. The  improvement in gross margin was
primarily a result of the Company's  continued cost reduction efforts,  slightly
improved  plant  operating  rates (from 55% during 2002 to 56% during  2003) and
favorable raw material mix. Additionally,  as previously discussed,  the Company
reduced its LIFO inventory  reserve at the end of 2003 as compared to the end of
2002,  resulting in a reduction in cost of sales by $11.4 million in 2003.  This
compared with an increase in the Company's LIFO inventory  reserve at the end of
2002 compared to the end of 2001, for which the Company  increased cost of sales
by $9.3 million in 2002.  Gross margin during 2003 was also positively  impacted
by the Company's  revision of its estimate of probable loss  associated with the
previously  reported  tungsten  inclusion  matter.  Based  upon an  analysis  of
information  pertaining to asserted and unasserted  claims,  the Company reduced
its accrual for pending and future customer claims,  resulting in a $1.7 million
reduction  in  cost of  sales  during  2003.  See  Note  19 to the  Consolidated
Financial  Statements.  Gross margin during 2003 was  adversely  impacted by the
$6.8 million  reduction in sales relating to the termination of the Wyman-Gordon
agreement.

     Selling,  general,  administrative  and development  expenses decreased 15%
from $43.0 million  during 2002 to $36.4 million  during 2003,  principally as a
result of lower  personnel and travel costs,  as well as focused cost control in
other administrative areas.

     Equity in earnings of joint ventures decreased 77% from $2.0 million during
2002 to $0.5 million during 2003, principally due to a decrease in the operating
results of VALTIMET, the Company's minority-owned welded tube joint venture.

     Net other  operating  income  (expense)  increased  5% from income of $23.3
million during 2002 to income of $24.4 million during 2003,  principally  due to
gains of $0.5  million and $0.6  million  related to the  settlement  of certain
litigation  in the first  quarter and fourth  quarters,  respectively,  of 2003.
Based on actual purchases of  approximately  1.4 million pounds during 2003, the
Company  recognized  $23.1 million of other operating income for the 6.1 million
pounds of product  that Boeing did not purchase  under the LTA during 2003.  The
Company  recognized  $23.4 million of other  operating  income  related to these
take-or-pay provisions during 2002.

     2002  operations.  The Company's  melted  product sales  decreased 46% from
$64.1 million  during 2001 to $34.8 million  during 2002  primarily due to a 46%
decrease  in melted  product  sales  volume and changes in product  mix.  Melted
products consist of ingot and slab and are generally only sold in U.S.  dollars.
Melted  product  average  selling  prices did not change during 2002 compared to
2001.  Excluding the effects of changes in product mix,  melted product  selling
prices decreased 1% during 2002 compared to 2001.

     Mill  product  sales  decreased  23% from $363.3  million in 2001 to $278.2
million in 2002.  This  decrease was  principally  due to a 27% decrease in mill
product sales volume and changes in product mix. The Company's  estimated  sales
volume to the commercial aerospace sector declined approximately 37% during 2002
compared to 2001.  Mill product  average selling prices during 2002 increased 5%
compared to 2001. In billing  currencies,  mill product selling prices increased
3% over 2001  levels.  Mill product  selling  prices  expressed in U.S.  dollars
increased 4% during 2002 compared to 2001.

                                        5

<PAGE>


     Gross margin was  negative 1% of net sales  during 2002,  compared to 8% in
2001.  Gross  margin  in 2002 was most  adversely  impacted  by the  decline  in
production  volume and the related impact on  manufacturing  overhead  costs, as
average plant  operating  rates declined from  approximately  75% of capacity in
2001 to approximately  55% in 2002.  Because of higher unit costs and increasing
book inventories  during 2002, the Company  increased its LIFO inventory reserve
at the  end of 2002 as  compared  to the end of  2001,  for  which  the  Company
increased  cost of sales by $9.3 million in 2002.  This compared with a decrease
in the Company's LIFO  inventory  reserve at the end of 2001 compared to the end
of 2000, for which the Company  decreased cost of sales by $5.0 million in 2001.
In addition,  the Company recorded certain provisions for excess and slow moving
inventories  during 2002 that, due to business  conditions  existing during 2002
(including a number of customer order  cancellations)  were  approximately  $5.3
million  greater than in 2001.  The Company  also  incurred  severance  costs of
approximately  $1.7 million related to global  workforce  reductions  undertaken
throughout 2002. Gross margin during 2001 was adversely impacted by $3.3 million
of estimated costs related to the tungsten  inclusion matter described above and
$10.8 million of equipment impairment charges. Gross margin during 2001 was also
adversely  impacted by  goodwill  amortization  of $4.6  million,  as  effective
January 1, 2002 the Company ceased  amortization of its goodwill.  See Note 7 to
the Consolidated Financial Statements.

     Selling,  general,  administrative  and development  expenses decreased 17%
from $51.8 million during 2001 to $43.0 million during 2002,  principally due to
the  inclusion of a one-time  payment of $6.2 million of incentive  compensation
related to the Boeing  settlement in 2001 (discussed in "2001  operations")  and
lower personnel  related costs in 2002,  partially  offset by higher selling and
marketing costs in 2002.

     Equity in earnings of joint ventures decreased 21% from $2.5 million during
2001 to $2.0 million during 2002  principally  due to a decrease in the earnings
of VALTIMET.

     Net other  operating  income  (expense)  decreased 68% from income of $73.6
million during 2001 to income of $23.3 million during 2002. The decrease was due
to the  Company's  settlement  of  litigation  with  Boeing  whereby the Company
recognized  $73.0 million of income during 2001,  partially  offset by the $23.4
million of income the Company recognized under the take-or-pay provisions of its
LTA with Boeing for the 6.2 million  pounds of titanium  product that Boeing did
not  purchase  under  the LTA  during  2002.  See  Note  15 to the  Consolidated
Financial Statements.

<TABLE>

         Non-operating income (expense).

                                                                               Year ended December 31,
                                                                ------------------------------------------------------
                                                                     2003               2002                2001
                                                                ---------------    ----------------    ---------------
                                                                                    (In thousands)

<S>                                                             <C>                <C>                 <C>
Interest expense on bank debt                                   $      (2,017)     $      (3,381)      $      (4,060)
Interest expense on debt payable to the Capital Trust                 (14,402)           (13,763)            (14,273)
                                                                ---------------    ----------------    ---------------
                                                                $     (16,419)     $     (17,144)      $     (18,333)
                                                                ===============    ================    ===============

Dividends and interest income                                   $         383      $         118       $       5,460
Equity in earnings of common
  securities of the Capital Trust                                         432                413                 423
SMC impairment charge                                                       -            (27,500)            (61,519)
Surety bond guarantee                                                    (449)            (1,575)                  -
Foreign exchange (loss) gain                                             (189)              (587)                 92
Other income (expense), net                                              (471)              (762)                 18
                                                                ---------------    ----------------    ---------------
                                                                $        (294)     $     (29,893)      $     (55,526)
                                                                ===============    ================    ===============

</TABLE>

                                        6

<PAGE>

     Interest  expense on bank debt for 2003  decreased  40%  compared  to 2002,
primarily due to lower average outstanding borrowings,  as the Company generated
positive cash flow from operations and was able to reduce its bank borrowings to
zero by year-end  2003.  Interest  expense on bank debt for 2002  decreased  17%
compared to 2001 primarily due to lower average outstanding borrowings and lower
interest rates during 2002.

     Annual interest expense on the Company's Subordinated Debentures payable to
the Capital Trust approximates $13.7 million,  exclusive of any accrued interest
on deferred interest payments.  In October 2002, the Company exercised its right
to defer future  interest  payments on this debt  effective  with the  Company's
December 1, 2002 scheduled interest payment. Interest continues to accrue at the
6.625% coupon rate on the principal and unpaid  interest and has been classified
as long-term in the Consolidated  Financial  Statements.  The Company's Board of
Directors  will  consider  resuming  payment of  interest  on this debt once the
longer-term outlook for the Company's business improves substantially.  In April
2000, the Company also exercised its right to defer future interest  payments on
this debt. On June 1, 2001, the Company resumed those interest payments and paid
all  previously  deferred  interest  payments.  See Note 12 to the  Consolidated
Financial Statements.

     Dividends  and interest  income  during 2003 and 2002  consisted  solely of
interest  income  earned on cash and cash  equivalents.  Dividends  and interest
income in 2001 consisted principally of dividends on the Company's investment in
$80 million non-voting  convertible  preferred  securities of SMC. As previously
reported,  the Company assessed its investment in the SMC securities  during the
fourth quarter of 2001 and recorded a $61.5 million  impairment charge to reduce
the  carrying  amount  of  this  investment,  including  accrued  dividends  and
interest,  to an estimated  fair value of $27.5 million as of December 31, 2001.
In March 2002,  SMC and its U.S.  subsidiaries  filed a voluntary  petition  for
reorganization  under Chapter 11 of the U.S.  Bankruptcy Code. As a result,  the
Company  undertook  a further  assessment  of its  investment  and  subsequently
recorded a $27.5  million  impairment  charge  during the first quarter of 2002,
which  reduced  the  Company's  carrying  amount  of its  investment  in the SMC
securities  to zero.  Under  the terms of SMC's  Second  Amended  Joint  Plan of
Reorganization, which was approved by the Bankruptcy Court on November 26, 2003,
the convertible  preferred securities were cancelled.  Although the Company does
have  certain   rights  as  an  unsecured   creditor   under  the  SMC  Plan  of
Reorganization  related to the unpaid  dividends,  the Company  does not believe
that it will recover any material amount from this investment.

     TIMET is the  primary  obligor on two $1.5  million  workers'  compensation
bonds  issued  on  behalf  of a former  subsidiary,  Freedom  Forge  Corporation
("Freedom Forge"),  which TIMET sold in 1989. The bonds were provided as part of
the  conditions  imposed on Freedom Forge in order to  self-insure  its workers'
compensation  obligations.   Freedom  Forge  filed  for  Chapter  11  bankruptcy
protection on July 13, 2001, and discontinued payment on the underlying workers'
compensation  claims in November 2001.  During 2002, TIMET received notices that
the issuers of the bonds were required to make payments on one of the bonds with
respect to certain of these claims and were requesting reimbursement from TIMET.
Based upon loss  projections,  the  Company  accrued  $0.9  million in the third
quarter  of 2002  and  $0.7  million  (including  $0.1  million  in  legal  fees
reimbursable  to the issuer of the bonds) in the fourth quarter of 2002 for this
bond as other  non-operating  expense.  Through  December  31,  2003,  TIMET has
reimbursed  the  issuer  approximately  $0.8  million  under  this bond and $0.8
million remains accrued for future payments.  During 2003, TIMET received notice
that certain claimants had submitted claims under the second bond.  Accordingly,
the Company  accrued  $50,000 for this bond in the third  quarter of 2003 and an
additional  $0.4  million  for this bond in the fourth  quarter of 2003 as other
non-operating  expense.  As of December 31, 2003, payments under the second bond
have been less than $0.1 million,  and $0.4 million  remains  accrued for future
payments.  TIMET may revise its  estimated  liability  under  these bonds in the
future as additional facts become known or claims develop.

                                        7

<PAGE>

     Income taxes.  Based on the Company's  recent history of U.S.  losses,  its
near-term  outlook  and  management's   evaluation  of  available  tax  planning
strategies, in the fourth quarter of 2001 the Company concluded that realization
of its previously recorded U.S. deferred tax assets did not continue to meet the
"more-likely-than-not"  recognition criteria and increased its U.S. deferred tax
valuation allowance by $35.5 million.  Additionally, the Company determined that
it would not  recognize  a deferred  tax benefit  related to either  future U.S.
losses or future increases in U.S. minimum pension liabilities continuing for an
uncertain period of time.  Accordingly,  the Company increased its U.S. deferred
tax valuation allowance by $40.2 million in 2002 and by $0.2 million in 2003.

     During the fourth  quarter of 2002,  the Company  was  required to record a
charge to other  comprehensive  loss to reflect an increase in its U.K.  minimum
pension  liability.  The  related  tax  effect of this  charge  resulted  in the
Company's  shifting from a net deferred tax liability position to a net deferred
tax asset position.  Based on the Company's recent history of U.K.  losses,  its
near-term  outlook  and  management's   evaluation  of  available  tax  planning
strategies, the Company determined that it would not recognize this deferred tax
asset because it did not meet the  "more-likely-than-not"  recognition  criteria
and  recorded a U.K.  deferred  tax asset  valuation  allowance  of $7.2 million
through other comprehensive income. Additionally, the Company determined that it
would not recognize  deferred tax benefits  related either to future U.K. losses
or future increases in U.K. minimum pension  liabilities for an uncertain period
of time.  Accordingly,  the Company  increased  its U.K.  deferred tax valuation
allowance by $5.5 million in 2003.

     During the first  quarter of 2002,  the Job Creation and Worker  Assistance
Act of 2002 (the "JCWA Act") was signed  into law.  The  Company  benefits  from
provisions of the JCWA Act,  which  liberalized  certain net operating  loss and
alternative  minimum tax restrictions.  As a result, the Company recognized $1.8
million of refundable  U.S.  income taxes during the first quarter of 2002.  The
Company  received $0.8 million of this refund in the fourth  quarter of 2002 and
the remaining $1.0 million in the third quarter of 2003.

     See also Note 16 to the Consolidated Financial Statements.

     Minority interest.  Minority interest relates primarily to the 30% interest
in  TIMET  Savoie  held by  CEZUS.  See  Note 13 to the  Consolidated  Financial
Statements.

     Cumulative  effect of change in accounting  principle.  On January 1, 2003,
the Company adopted  Statement of Financial  Accounting  Standards  ("SFAS") No.
143,  Accounting for Asset Retirement  Obligations,  and recognized (i) an asset
retirement  cost  capitalized  as an  increase  to  the  carrying  value  of its
property,  plant and equipment of approximately  $0.2 million,  (ii) accumulated
depreciation on such capitalized cost of approximately  $0.1 million and (iii) a
liability for the asset retirement obligation of approximately $0.3 million. The
asset retirement obligation recognized relates primarily to landfill closure and
leasehold restoration costs.

     On January 1, 2002,  the Company  adopted SFAS No. 142,  Goodwill and Other
Intangible Assets,  and recorded a non-cash goodwill  impairment charge of $44.3
million,  representing the entire balance of the Company's  recorded goodwill at
January 1, 2002.

     See further discussion regarding the Company's adoption of these accounting
principles in Notes 2 and 7 to the Consolidated Financial Statements.

                                        8

<PAGE>


     European  operations.  The Company has  substantial  operations  and assets
located in Europe, principally in the United Kingdom, France and Italy. Titanium
is sold  worldwide,  and many similar  factors  influence the Company's U.S. and
European operations. Approximately 42% of the Company's sales revenue originated
in Europe in 2003, of which  approximately  64% was  denominated  in the British
pound  sterling or the euro.  Certain  purchases of raw  materials,  principally
titanium  sponge  and  alloys,  for  the  Company's   European   operations  are
denominated  in U.S.  dollars,  while  labor  and  other  production  costs  are
primarily  denominated in local  currencies.  The  functional  currencies of the
Company's European subsidiaries are those of their respective countries, and the
European  subsidiaries are subject to exchange rate fluctuations that may impact
reported earnings and may affect the comparability of period-to-period operating
results.  Borrowings of the Company's European operations may be in U.S. dollars
or in  functional  currencies.  The  Company's  export  sales from the U.S.  are
denominated  in U.S.  dollars and as such are not  subject to currency  exchange
rate fluctuations.

     The  Company  does  not  use  currency  contracts  to  hedge  its  currency
exposures.   Net  currency  transaction  gains/losses  included  in  results  of
operations  were losses of $0.2  million in 2003 and $0.6  million in 2002 and a
gain of $0.1  million in 2001.  At December 31,  2003,  consolidated  assets and
liabilities  denominated in currencies  other than  functional  currencies  were
approximately  $26.5  million  and  $41.7  million,   respectively,   consisting
primarily of U.S. dollar cash, accounts receivable and accounts payable.

     Related party transactions.  The Company is a party to certain transactions
with related parties. See Note 18 to the Consolidated Financial Statements.

     Supplemental  information.  The Company  completed  a reverse  split of its
common  stock (one share of  post-split  common stock for each  outstanding  ten
shares of  pre-split  common  stock)  effective  after the close of  trading  on
February 14, 2003. All share and per share disclosures for all periods presented
in this MD&A have been adjusted to give effect to the reverse stock split.

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

     The cyclical nature of the aerospace industry has been the principal driver
of the historical  fluctuations in the  performance of most titanium  companies.
Over the past 20 years, the titanium industry had cyclical peaks in mill product
shipments  in 1989,  1997 and 2001 and  cyclical  lows in 1983,  1991 and  1999.
Demand for titanium reached its highest level in 1997 when industry mill product
shipments reached  approximately  60,000 metric tons. However,  since that peak,
industry mill product shipments have fluctuated significantly,  primarily due to
a continued change in demand for titanium from the commercial  aerospace sector.
In 2002,  industry  shipments  approximated  50,000 metric tons, and in 2003 the
Company  estimates  industry  shipments  approximated  48,000  metric tons.  The
Company  currently  expects total  industry mill product  shipments in 2004 will
increase from 2003 levels to at least 51,000 metric tons.

                                        9

<PAGE>


     Although the  commercial  airline  industry  continues to face  significant
challenges, recent economic data show signs of an improving business environment
in that  sector.  According to The Airline  Monitor,  the  worldwide  commercial
airline  industry  reported an estimated  operating loss of  approximately  $3.5
billion in 2003,  compared to a $7.3 billion  loss in 2002 and an $11.7  billion
loss in 2001. The Airline Monitor is currently  forecasting  operating income of
approximately $6.3 billion for the industry in 2004. Furthermore, global airline
passenger traffic returned to pre-September 11, 2001 levels in November of 2003.
Although these appear to be positive signs, the Company currently  believes that
industry mill product  shipments  into the commercial  aerospace  sector will be
somewhat flat in 2004 and show a modest upturn in 2005.

     The Airline Monitor  traditionally issues forecasts for commercial aircraft
deliveries  each  January  and July.  According  to The Airline  Monitor,  large
commercial  aircraft deliveries totaled 579 (including 154 wide bodies) in 2003.
The Airline Monitor's most recently issued forecast (January 2004) calls for 575
deliveries in 2004, 540 deliveries in 2005 and 510 deliveries in 2006.  Relative
to 2003, these forecasted delivery rates represent anticipated declines of about
1% in 2004,  7% in 2005 and 12% in 2006.  From 2007  through  2011,  The Airline
Monitor calls for a continued  increase each year in large  commercial  aircraft
deliveries,  with forecasted  deliveries of 620 aircraft in 2008, exceeding 2003
levels.  Deliveries of titanium  generally precede aircraft  deliveries by about
one year, although this varies considerably by titanium product. This correlates
to the Company's cycle,  which  historically  precedes the cycle of the aircraft
industry and related deliveries.

     Although the current business environment continues to make it difficult to
predict  future  performance,  the  Company  expects  sales  revenue  in 2004 to
increase to between  $425  million and $445  million,  reflecting  the  combined
effects of increases  in sales volume and market share and relative  weakness of
the U.S.  dollar  as  compared  to the  British  pound  sterling  and the  euro,
partially  offset by customer and product mix. Mill product sales volume,  which
was 8,875  metric tons in 2003,  is  expected to increase to between  10,300 and
10,500 metric tons in 2004. Melted product sales volume,  which was 4,725 metric
tons in 2003,  is expected to increase to between 4,800 and 5,000 metric tons in
2004.  The  Company  expects  between  55% and 60% of its 2004  mill and  melted
product sales volume will be derived from the commercial aerospace sector (which
would be a slight decrease from 2003), with the balance from military aerospace,
industrial and emerging  markets.  The expected increase in sales volume in 2004
is principally  driven by an anticipated  increase in sales volume to industrial
and emerging markets.

     Additionally,  the Company's  backlog of unfilled orders was  approximately
$180 million at December 31, 2003, compared to $165 million at December 31, 2002
and $225 million at December 31, 2001.  Substantially  the entire 2003  year-end
backlog is scheduled for shipment  during 2004. The Company's  order backlog may
not be a reliable indicator of future business activity.

     The  Company's  cost of sales is affected by a number of factors  including
customer and product mix,  material yields,  plant operating rates, raw material
costs,  labor costs and energy costs.  Raw material costs  represent the largest
portion of the Company's manufacturing cost structure.  The Company has recently
been experiencing higher raw material prices due to a tightening in raw material
availability,  especially  in the scrap  markets.  The Company  also  expects an
increase in energy costs in 2004.

     The Company  expects to  manufacture a significant  portion of its titanium
sponge  requirements in 2004. The unit cost of titanium  sponge  manufactured at
TIMET's Henderson, Nevada facility is expected to decrease relative to 2003, due
primarily  to higher  sponge  plant  operating  rates as the plant moves to full
capacity by the third quarter of 2004. The Company expects the aggregate cost of
purchased sponge and scrap to increase during 2004.

                                       10

<PAGE>


     The Company  expects  production  volumes to  increase in 2004,  increasing
overall capacity  utilization to between 60% and 65% in 2004 (as compared to 56%
in  2003).   However,   practical   capacity   utilization   measures  can  vary
significantly  based on product mix. The Company continues to identify areas for
potential cost savings, in addition to the savings realized in 2003, and expects
gross margin in 2004 to range from 6% to 8% of net sales.

     Selling,  general,  administrative and development  expenses in 2004 should
approximate $35 million.

     The Company  anticipates  that it will receive orders from Boeing for about
1.5 million pounds of product during 2004. At this  projected  order level,  the
Company expects to recognize about $23 million of operating income in 2004 under
the Boeing LTA's take-or-pay provisions.

     The current outlook is for 2004 operating income of between $14 million and
$24  million,  which  includes  the effect of a $1.9  million  reduction  in the
Company's  vacation accrual for U.S.  employees  effective  January 1, 2004 (see
Note  9  to  the  Consolidated  Financial  Statements).   Excluding  the  Boeing
take-or-pay  income,  the Company currently expects operating results in 2004 to
range between operating income of $1 million and operating loss of $9 million.

     In 2004, interest expense on the Company's Subordinated  Debentures held by
the  Capital  Trust  should  approximate  $15.4  million,  including  additional
interest  costs  related  to  the  deferral  of  the  interest  payments  on the
Subordinated Debentures. The Company's Board of Directors will consider resuming
interest  payments on the Subordinated  Debentures once the longer-term  outlook
for the Company's business improves substantially.

     The Company  currently  expects its 2004 bottom line to range between a net
loss  of  $3  million  and  net  income  of $7  million.  Excluding  the  Boeing
take-or-pay  income, the Company currently expects a net loss in 2004 of between
$16 million and $26 million.

     The Company  expects to  generate  $25 million to $35 million in cash flows
from operations during 2004,  partially driven by the continued  deferral of the
interest payments on the Subordinated  Debentures.  Capital  expenditures during
2004 are expected to  approximate  $16 million.  The increase  over 2003 relates
primarily  to capital  needs  relative to the increase in sponge  production  at
TIMET's  Henderson,  Nevada  facility.   Depreciation  and  amortization  should
approximate  $32  million  in  2004.  The  Company  currently  expects  to  make
contributions  of  approximately  $11.5 million to its defined  benefit  pension
plans during 2004 and expects its pension  expense to  approximate $8 million in
2004.

     The  year-on-year  improvements  in  sales  and  operating  income  reflect
achievements in many areas,  most  specifically with regard to vigorous cost and
inventory reduction efforts, and the Company will continue its focus on reducing
costs in 2004. The Company  remains  cautiously  optimistic  that the commercial
aerospace  industry has begun to improve and feels that with its strong  balance
sheet and improved cost  structure,  the Company is well  positioned to maximize
profitability  during any upturn.  Additionally,  solid growth is expected  from
sales into the industrial  and emerging  markets during 2004, two areas in which
the Company's business is continuing to diversify.

                                       11

<PAGE>


     Non-GAAP  financial  measures.  In an  effort  to  provide  investors  with
information  in addition to the  Company's  results as  determined by accounting
principles  generally  accepted in the United  States of America  ("GAAP"),  the
Company has  provided  the  following  non-GAAP  financial  disclosures  that it
believes may provide useful information to investors:

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

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

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

LIQUIDITY AND CAPITAL RESOURCES

     The Company's  consolidated cash flows for each of the past three years are
presented  below. The following should be read in conjunction with the Company's
Consolidated Financial Statements and notes thereto.

<TABLE>

                                                                               Year ended December 31,
                                                                ------------------------------------------------------
                                                                     2003               2002                2001
                                                                ---------------    ----------------    ---------------
                                                                                   (In thousands)
<S>                                                             <C>                <C>                 <C>
Cash provided (used) by:
   Operating activities                                         $      65,821      $     (13,595)      $      62,574
   Investing activities                                               (14,534)            (7,467)            (16,093)
   Financing activities                                               (22,068)             3,523             (31,358)
                                                                ---------------    ----------------    ---------------

     Net cash provided (used) by operating,
       investing and financing activities                       $      29,219      $     (17,539)      $      15,123
                                                                ===============    ================    ===============

</TABLE>

                                       12


<PAGE>


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

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

     Net loss  decreased  from $111.5  million for the year ended  December  31,
2002,  to $13.1  million for the year ended  December 31, 2003.  See "Results of
Operations - Cumulative effect of change in accounting  principle" and Note 7 to
the Consolidated  Financial  Statements for discussion of the Company's adoption
of SFAS No. 142 and the related  effect on net loss for the year ended  December
31, 2002. See "Results of Operations - Non-operating  income (expense)" and Note
5 to the  Consolidated  Financial  Statements  for  discussion  of the Company's
impairment of its  investment in SMC  securities  and its effect on net loss for
the years ended December 31, 2002 and 2001.

     Accounts  receivable  decreased  during  2003  primarily  due  to  improved
collection  efforts with the  Company's  customers,  which  resulted in a 13-day
decrease in days sales outstanding ("DSO"),  from 75 days at year-end 2002 to 62
days at year-end  2003,  partially  offset by the  weakening of the U.S.  dollar
compared  to the  British  pound  sterling  and the  euro.  Accounts  receivable
decreased  significantly  during 2002  primarily  as a result of reduced  sales,
partially  offset by an  increase  in DSO as certain  customers  extended  their
payment  terms to the Company in response to  unfavorable  economic  conditions.
Accounts  receivable  increased  in 2001  principally  as a result of  increased
sales.

     Inventories  decreased during 2003 due to the Company's  concentrated focus
on inventory reduction during 2003.  Inventories decreased during 2002 primarily
as a result of reduced  production in the fourth quarter of 2002 and an increase
in the Company's reserves for excess inventories,  which the Company recorded in
response to  decreased  demand for its  products  and other  changes in business
conditions.  Inventories  increased in 2001,  reflecting  material purchases and
production  rates that were based on expected  sales  levels  higher than actual
sales levels  achieved.  Due to the impact of the September  11, 2001  terrorist
attacks,  a number of customer order deferrals and  cancellations  were received
late in 2001, contributing to the inventory increase.

     In April 2001, the Company  reached a settlement of the litigation  between
TIMET and  Boeing.  Pursuant  to the  settlement,  the  Company  received a cash
payment of $82 million  ($73  million  net of legal  fees) and in December  2001
received a $28.5  million  customer  advance from Boeing  related to fiscal 2002
purchases.  This  advance  was  reduced to $0.8  million at the end of 2002 as a
result  of  shipments  and  orders  from  Boeing as well as the  recognition  of
take-or-pay  income.  The Company  received a $27.9 million  advance for 2004 in
January 2004.  Through 2007 the Company will receive a similar annual advance in
January of the year to which the advance is  related.  See Notes 9 and 10 to the
Consolidated Financial Statements.

                                       13

<PAGE>


     Dividends  for  the  period  October  1998  through  December  1999  on the
Company's  investment  in  SMC  6.625%  convertible  preferred  securities  were
deferred by SMC. In April 2000, SMC resumed  current  dividend  payments of $1.3
million each quarter; however,  dividends and interest in arrears were not paid.
On October 11, 2001, the Company was notified by SMC of SMC's intention to again
defer the payment of  dividends  effective  with the dividend due on October 28,
2001.  As previously  discussed,  the Company  recorded an impairment  charge of
$61.5  million  related to these  securities,  including  accrued  dividends and
interest,  in the fourth quarter of 2001 and ceased accruing  dividend income on
these  securities at that time.  Additionally,  the Company recorded a charge of
$27.5  million  related to these  securities  in the first  quarter of 2002 that
reduced  the  carrying  amount of these  securities  to zero.  See Note 5 to the
Consolidated Financial Statements.

     The Company did not record any deferred income tax benefits  related to its
U.S. or U.K. losses during 2003. Deferred income tax benefits recognized in 2003
primarily relate to increases in net deferred income tax assets of the Company's
French and Italian subsidiaries.  The Company did not record any deferred income
tax  benefits  related  to its U.S.  losses  during  2002.  Deferred  income tax
benefits recognized in 2002 primarily relate to increases in net deferred income
tax assets of the Company's European subsidiaries. Deferred income taxes in 2001
were  primarily  due to an increase in the  Company's  U.S.  deferred  tax asset
valuation allowance to offset previously recorded tax benefits that did not meet
the "more-likely-than-not" recognition criteria. See Note 16 to the Consolidated
Financial Statements.

     As more fully  discussed in "Results of Operations -  Non-operating  income
(expense),"  in October  2002 the Company  exercised  its right to defer  future
interest  payments on its  Subordinated  Debentures  held by the Capital  Trust,
effective  beginning  with the  Company's  December 1, 2002  scheduled  interest
payment,  although  interest  continues  to  accrue  at the  coupon  rate on the
principal and unpaid interest.  In April 2000, the Company  similarly  exercised
its right to defer future interest payments,  and in the second quarter of 2001,
as noted  above,  a portion of the Boeing  settlement  funds was used to pay the
previously deferred aggregate interest of $14.3 million and resume the regularly
scheduled interest payments.  Changes in accrued interest payable to the Capital
Trust reflect this activity.

     Investing activities. The Company's capital expenditures were $12.5 million
in 2003,  $7.8  million  in 2002 and  $16.1  million  in 2001,  principally  for
replacement of machinery and equipment and for capacity maintenance.  During the
fourth quarter of 2003, the Company deposited funds into certificates of deposit
and  other  interest   bearing   accounts  as  collateral  for  certain  Company
obligations in lieu of entering into letters of credit.  These  deposits,  which
are restricted as to the Company's use, provide the Company with interest income
as opposed to interest expense incurred through the use of letters of credit.

     Financing  activities.  Cash used  during  2003  related  primarily  to the
Company's $19.3 million of net repayments on its outstanding borrowings upon the
Company's  receipt  of  the  $27.7  million  Boeing  advance  in  January  2003.
Additionally,  TIMET Savoie made a $1.9 million dividend payment to CEZUS during
2003.  Cash  provided  during 2002 related  primarily to net  borrowings of $6.3
million necessary to fulfill the Company's working capital needs.  Additionally,
TIMET Savoie made a $1.1  million  dividend  payment to CEZUS  during 2002.  The
Company  incurred  approximately  $1.1 million in financing costs in conjunction
with the Company's  amendment of its U.S.  revolving  credit  agreement in 2002.
These costs are deferred and  amortized  over the life of the  agreement,  which
matures in February 2006. See further discussion below in "Liquidity and Capital
Resources - Borrowing  arrangements." Cash used during 2001 related primarily to
net  repayments  of $31.7 million of  indebtedness  at the time of the Company's
litigation settlement with Boeing.

                                       14

<PAGE>


     Borrowing  arrangements.  Under the terms of the Company's U.S. asset-based
revolving  credit  agreement,  which matures in February  2006,  borrowings  are
limited to the lesser of $105  million or a  formula-determined  borrowing  base
derived  from  the  value  of  accounts  receivable,   inventory  and  equipment
("borrowing availability"). This facility requires the Company's U.S. daily cash
receipts  to be  used  to  reduce  outstanding  borrowings,  which  may  then be
reborrowed subject to the terms of the agreement.  Interest generally accrues at
rates  that  vary  from  LIBOR  plus  2% to  LIBOR  plus  2.5%.  Borrowings  are
collateralized  by substantially  all of the Company's U.S.  assets.  The credit
agreement  prohibits  the  payment of  distributions  in respect of the  Capital
Trust's  BUCS if "excess  availability,"  as defined,  is less than $25 million,
limits  additional  indebtedness,  prohibits  the  payment of  dividends  on the
Company's common stock if excess availability is less than $40 million, requires
compliance  with  certain  financial  covenants  and  contains  other  covenants
customary in lending transactions of this type. The Company was in compliance in
all material  respects with all covenants for all periods during the years ended
December  31,  2003 and  2002.  Excess  availability  is  defined  as  borrowing
availability  less outstanding  borrowings and certain  contractual  commitments
such as letters  of credit.  At  December  31,  2003,  excess  availability  was
approximately $82 million.  There were no outstanding  borrowings under the U.S.
credit  agreement as of December 31, 2003. The weighted average interest rate on
borrowings  outstanding  under this credit agreement as of December 31, 2002 was
3.7%.

     The  Company's  U.S.  credit  agreement  allows  the  lender to modify  the
borrowing base formulas at its discretion, subject to certain conditions. During
the second  quarter of 2002,  the  Company's  lender  elected to  exercise  such
discretion and modified the Company's borrowing base formulas, which reduced the
amount that the Company could have borrowed  against its inventory and equipment
by  approximately  $7 million.  In the event the lender  were to  exercise  this
discretion again in the future,  such event could have a material adverse impact
on the Company's liquidity.  Borrowings outstanding under this U.S. facility are
classified as a current liability.

     The Company's  subsidiary,  TIMET UK, has a credit  agreement that provides
for   borrowings   limited   to  the   lesser  of   (pound)22.5   million  or  a
formula-determined borrowing base derived from the value of accounts receivable,
inventory and  property,  plant and equipment  ("borrowing  availability").  The
credit  agreement  includes  revolving and term loan facilities and an overdraft
facility (the "U.K.  Facilities") and matures in December 2005. Borrowings under
the U.K. Facilities can be in various currencies including U.S. dollars, British
pounds  sterling and euros.  Borrowings  accrue interest at rates that vary from
LIBOR plus 1% to LIBOR plus 1.25% and are collateralized by substantially all of
TIMET UK's  assets.  The U.K.  Facilities  require  the  maintenance  of certain
financial   ratios  and  amounts  and  other  covenants   customary  in  lending
transactions of this type.  TIMET UK was in compliance in all material  respects
with all covenants for all periods  during the years ended December 31, 2003 and
2002.  The U.K.  overdraft  facility is subject to annual  review in December of
each year.  In the event the  overdraft  facility  is not  renewed,  the Company
believes it could refinance any outstanding  overdraft  borrowings  under either
the  revolving  or term loan  features  of the U.K.  Facilities.  The  overdraft
facility was reviewed and renewed in December 2003. During the second quarter of
2003,  TIMET UK  received  an  interest-bearing  intercompany  loan  from a U.S.
subsidiary of the Company  enabling TIMET UK to reduce its long-term  borrowings
under the U.K. Facilities to zero. Unused borrowing availability at December 31,
2003 under the U.K.  Facilities  was  approximately  $40 million.  There were no
borrowings  outstanding  under the U.K.  Facilities as of December 31, 2003. The
weighted  average  interest  rate  on  borrowings  outstanding  under  the  U.K.
Facilities as of December 31, 2002 was 4.6%.

                                       15

<PAGE>


     The Company also has  overdraft  and other credit  facilities at certain of
its other European  subsidiaries.  These  facilities  accrue interest at various
rates and are payable on demand.  Unused borrowing  availability at December 31,
2003  under  these  facilities  was  approximately  $20  million.  There were no
borrowings  outstanding  under the other European  facilities as of December 31,
2003. The weighted average interest rate on borrowings  outstanding  under these
credit agreements as of December 31, 2002 was 3.7%.

     Although excess  availability  under TIMET's U.S. credit agreement  remains
above $40 million,  no  dividends  were paid by TIMET on its common stock during
2003,  2002 or 2001.  TIMET does not anticipate  paying  dividends on its common
stock during 2004 and, as  previously  discussed,  is not  permitted to pay such
dividends while deferring interest payments on the Subordinated  Debentures held
by the Capital Trust.

     Contractual commitments. As more fully described in Notes 11, 12, 18 and 19
to the  Consolidated  Financial  Statements,  the Company was a party to various
debt,  lease and other  agreements at December 31, 2003 that  contractually  and
unconditionally  commit the  Company to pay certain  amounts in the future.  The
following table summarizes such contractual  commitments that are  unconditional
both in terms of timing and amount by the type and date of payment.

<TABLE>

                                                                  Unconditional Payment Due Date
                                             --------------------------------------------------------------------------
                                                              2005/           2007/           2009 &
                                                2004          2006            2008            After            Total
                                             ----------    ------------    ------------    ------------    ------------
       Contractual Commitment                                            (In thousands)
-----------------------------------

<S>                                          <C>           <C>             <C>             <C>              <C>
Capital leases (1)                           $     524     $      358      $     424       $     8,984      $   10,290

Operating leases                                 2,724          2,720            585               339           6,368

Debt payable to Capital Trust (and accrued
interest thereon) (2)                                -              -         19,003           207,465         226,468

Purchase obligations (3)                        36,843         20,303         10,103                 -          67,249

Other contractual obligations (4)               10,067         11,088          1,063               576          22,794
                                             ----------    ------------    ------------    ------------    ------------

                                             $  50,158      $  34,469      $  31,178       $   217,364      $  333,169
                                             ==========    ============    ============    ============    ============

-----------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Excludes   interest  payments  due  under  the  capital  lease  agreements.
     Inclusive of these interest payments,  the total contractual  commitment is
     $24.0  million  ($1.5  million in 2004,  $2.2  million in  2005/2006,  $2.2
     million in 2007/2008 and $18.1 million in 2009 and thereafter).
(2)  Represents the Company's  Subordinated  Debentures purchased by the Capital
     Trust from TIMET in  connection  with the Capital  Trust's  issuance of the
     BUCS and total interest accrued on the Subordinated  Debentures at December
     31, 2003. Under the Indenture related to the Subordinated  Debentures,  the
     currently  deferred  interest  payments  may  continue to be  contractually
     deferred until December 1, 2007.
(3)  Based  on an  average  price  and  an  assumed  constant  mix  of  products
     purchased,  where  appropriate.  These obligations  generally relate to the
     purchase of raw materials,  primarily  titanium sponge,  pursuant to an LTA
     and various open orders.  All open orders are for delivery in 2004, and the
     LTA  expires  on  December  31,  2007.  The LTA does not  contain a renewal
     provision; however, the Company may choose to enter into a new agreement to
     replace the current LTA in the future.
(4)  These obligations  consist primarily of contractual  operating fees paid to
     CEZUS  for use of a portion  of its  Ugine,  France  plant  pursuant  to an
     agreement  expiring in 2006 (as  described in Item 2:  Properties),  energy
     purchase  obligations with Basic Management,  Inc. which expire in 2010 (as
     described  in  Note  18 to  the  Consolidated  Financial  Statements),  the
     remaining   obligation  to  Wyman-Gordon   due  in  2004  relating  to  the
     termination of the agreement (as described  previously in this MD&A) and an
     obligation  to  Contran  Corporation  ("Contran")  under an  intercorporate
     services  agreement  ("ISA")  for  2004  (as  described  in  Note 18 to the
     Consolidated Financial  Statements).  The Company expects annually to enter
     into an ISA with Contran subsequent to 2004.

                                       16
<PAGE>


     The Company has excluded any potential commitment for funding of retirement
and postretirement benefit plans from this table. However, such potential future
contributions  are discussed  below, as  appropriate,  in "Liquidity and Capital
Resources - Defined benefit pension plans" and "Liquidity and Capital  Resources
- Postretirement benefit plans other than pensions."

     Off-balance  sheet  arrangements.  As more fully  discussed  in "Results of
Operations - Non-operating income (expense)," the Company is the primary obligor
on two $1.5  million  workers'  compensation  bonds  issued on behalf of Freedom
Forge. The Company has fully expensed the obligation under one of the bonds, but
based upon current claims  analysis,  the Company has only expensed $0.5 million
on the other bond,  although it is potentially  obligated for the remaining $1.0
million.

     Defined  benefit  pension  plans.  As of  December  31,  2003,  the Company
maintains  three defined  benefit pension plans - one each in the U.S., the U.K.
and France.  Prior to December 31, 2003, the U.S.  maintained  two plans,  which
were merged as of that date. The majority of the discussion below relates to the
U.S.  and U.K.  plans,  as the  French  plan is not  material  to the  Company's
Consolidated  Balance  Sheets,  Statements  of  Operations or Statements of Cash
Flows.

     The Company  recorded  consolidated  pension expense of $8.9 million,  $4.9
million and $1.4 million for the years ended  December 31, 2003,  2002 and 2001,
respectively.  Pension  expense for these  periods was  calculated  based upon a
number of actuarial assumptions, most significant of which are the discount rate
and the expected long-term rate of return.

     The discount rate the Company utilizes for determining  pension expense and
pension  obligations  is based on a review  of  long-term  bonds  (10 to 15 year
maturities)  that  receive one of the two highest  ratings  given by  recognized
rating agencies (generally Merrill Lynch, Moody's,  Solomon Smith Barney and UBS
Warburg)  as well as  composite  indices  provided by the  Company's  actuaries.
Changes in the  Company's  discount  rate over the past three years  reflect the
decline in such bond rates during that period.  The Company  establishes  a rate
that is used to determine  obligations  as of the year-end  date and expense for
the subsequent  year. The Company used the following  discount rate  assumptions
for its pension plans:

<TABLE>

                                                           Discount rates used for:
                      ------------------------------------------------------------------------------------------------
                              Obligation at                     Obligation at                    Obligation at
                            December 31, 2003                 December 31, 2002                December 31, 2001
                           and expense in 2004               and expense in 2003              and expense in 2002
                      ------------------------------    ------------------------------     ---------------------------
<S>                                <C>                               <C>                              <C>
U.S. Plan(s)                       6.00%                             6.25%                            7.00%
U.K. Plan                          5.50%                             5.70%                            6.00%
</TABLE>

     In developing the Company's expected long-term rate of return  assumptions,
the  Company  evaluates  historical  market  rates of return  and input from its
actuaries,  including a review of asset  class  return  expectations  as well as
long-term  inflation  assumptions.  Projected  returns are based on broad equity
(large cap, small cap and  international)  and bond  (corporate and  government)
indices as well as anticipation that the plans' active investment  managers will
generate  premiums above the standard market  projections.  The Company used the
following long-term rate of return assumptions for its pension plans:

<TABLE>

                                                     Long-term rates of return used for:
                      ------------------------------------------------------------------------------------------------
                              Obligation at                     Obligation at                    Obligation at
                            December 31, 2003                 December 31, 2002                December 31, 2001
                           and expense in 2004               and expense in 2003              and expense in 2002
                      ------------------------------    ------------------------------     ---------------------------
<S>                               <C>                                <C>                              <C>
U.S. Plan(s)                      10.00%                             8.50%                            9.00%
U.K. Plan                          7.10%                             6.70%                            7.50%

</TABLE>

                                       17
<PAGE>


     Lowering the expected long-term rate of return on the Company's U.S. plans'
assets by 0.25% (from 8.50% to 8.25%) would have increased 2003 pension  expense
by  approximately  $0.1 million,  and lowering the discount  rate  assumption by
0.25% (from 6.25% to 6.00%) would  similarly  have  increased the Company's U.S.
plans' 2003 pension expense by approximately $0.1 million. Lowering the expected
long-term  rate of return on the  Company's  U.K.  plan's  assets by 0.25% (from
7.10% to 6.85%) would have increased 2003 pension expense by approximately  $0.5
million,  and  lowering  the discount  rate  assumption  by 0.25% (from 5.70% to
5.45%) would have  increased the Company's U.K.  plan's 2003 pension  expense by
approximately $0.2 million.

     Based on continued  market  declines  and losses on the plan assets  during
2002,  as well as future  projected  asset mix, the Company  reduced its assumed
long-term  rate of return for 2003 to 8.50% for its U.S. plans and 6.70% for its
U.K. plan. The Company's future expected long-term rate of return on plan assets
for its  U.S.  and  U.K.  plans  at  December  31,  2002  was  based on an asset
allocation  assumption of 50% equity securities and 50% fixed income securities.
However,  because of market  fluctuations and prior funding  strategies,  actual
asset  allocation as of December 31, 2002 was 40% equity  securities,  57% fixed
income securities and 3% cash for the U.S. plans and 85% equity securities,  12%
fixed income securities and 3% cash for the U.K. plan.

     During the second quarter of 2003, the Company  transferred all of its U.S.
plans' assets into the Combined Master Retirement Trust ("CMRT").  The CMRT is a
collective  investment  trust  established  by Valhi to  permit  the  collective
investment by certain master trusts which fund certain  employee  benefits plans
sponsored by Valhi and certain  related  companies.  The CMRT held 9.0% of TIMET
common  stock at December  31,  2003;  however,  the  Company's  plan assets are
invested only in a portion of the CMRT that does not hold TIMET common stock. At
December 31,  2003,  Valhi and related  entities or persons  held  approximately
49.8% of TIMET's outstanding common stock and approximately 40.1% of the Capital
Trust's outstanding BUCS (which are convertible into TIMET common stock). Harold
C. Simmons, Chairman of the Board of Directors for Valhi, is the sole trustee of
the CMRT and a member of the trust investment committee for the CMRT.

     The CMRT's  long-term  investment  objective is to provide a rate of return
exceeding a composite of broad market equity and fixed income indices (including
the S&P 500 and certain Russell indices)  utilizing both third-party  investment
managers  as well as  investments  directed by Mr.  Simmons.  During the 16-year
history of the CMRT from  inception  (in 1987)  through  December 31, 2003,  the
average  annual rate of return earned by the CMRT,  as  calculated  based on the
average  percentage  change in the CMRT's net asset value per CMRT unit for each
applicable  year, was 12.7%.  The CMRT earned an annual return of 38.4% in 2003,
and the CMRT's last 5-year and 10-year  average  annual  returns  were 10.1% and
11.1%,  respectively.  The CMRT's annual rates of return from inception  through
December  31, 2003 have varied from a high of a 42.2%  return (in 1998) to a low
of a 20.7% loss (in 1990).  During that same period,  the S&P 500's annual rates
of return  have  varied  from a high of a 34.1%  return  (in 1995) to a low of a
23.4% loss (in 2002). The Company believes that such historical  volatility is a
reasonable  indicator  of future  levels of  volatility,  and a higher  level of
volatility  is  consistent  with a higher  level of risk in the  asset mix and a
higher level of expected return over the long-term.

                                       18

<PAGE>


     At December  31, 2003,  the CMRT's  asset mix (based on an aggregate  asset
value of $502 million) was 62.6% U.S.  equity  securities,  6.8% foreign  equity
securities,  23.6% debt  securities and 7.0% cash and other.  The CMRT`s trustee
and investment  committee  actively manage the investments within the CMRT. Such
parties have in the past, and may again in the future,  periodically  change the
relative  asset mix based upon,  among other  things,  advice they  receive from
third-party  advisors and their  expectation  as to what asset mix will generate
the greatest  overall  return.  Based on the above,  the Company  increased  its
long-term  rate of return  assumption  to 10.0% for  December  31, 2003  pension
obligations and for 2004 pension expense for its U.S. plan.

     Based  on  various  factors,   including   improved   economic  and  market
conditions,  gains on the plan assets during 2003 and  projected  asset mix, the
Company  increased  its assumed  long-term  rate of return for December 31, 2003
pension  obligations  and for 2004 pension  expense to 7.10% for its U.K.  plan.
Because  of market  fluctuations  and prior  funding  strategies,  actual  asset
allocation as of December 31, 2003 was 92% equity securities and 8% fixed income
securities  for the U.K.  plan.  During 2003,  the  trustees  for the U.K.  plan
selected a new  investment  advisor  (effective  in 2004) for the U.K.  plan and
modified its asset  allocation  goals.  As such, the Company's  future  expected
long-term  rate of return on plan assets for its U.K.  plan is based on an asset
allocation  assumption of 80% equity  securities and 20% fixed income securities
by the end of 2005 and 60% equity  securities and 40% fixed income securities by
the end of 2007. The Company believes that the plans' long-term asset allocation
on average  will  approximate  the ultimate  assumed  60/40  allocation,  as all
current contributions to the plan are invested wholly in fixed income securities
in order to gradually effect the shift.

     Although the expected  rate of return is a long-term  measure,  the Company
will continue to evaluate its expected rate of return,  at least  annually,  and
will adjust it as considered necessary.

     Among other things,  the Company bases its determination of pension expense
for all plans on the fair value of plan assets.  The expected return on the fair
value of the plan assets,  determined  based on the expected  long-term  rate of
return, is a component of pension expense.  This methodology  further recognizes
actual investment gains or losses (i.e., the difference between the expected and
actual returns based on the market value of assets) in pension  expense  through
amortization in future periods based upon the expected average remaining service
life of the plan  participants.  Unrealized  gains or losses may  impact  future
periods to the extent the accumulated gains or losses are outside the "corridor"
as defined by SFAS No. 87.

     Based on an expected  rate of return on plan  assets of 10.00%,  a discount
rate of 6.00% and various other assumptions, the Company estimates that its U.S.
plan will have pension expense of approximately $0.3 million in 2004 and pension
income of  approximately  $0.3 million in 2005 and $0.6 million in 2006. A 0.25%
increase  (decrease) in the discount rate would  decrease  (increase)  projected
pension  expense by  approximately  $0.1 million in 2004 and increase  (decease)
projected pension income by approximately  $0.1 million in 2005 and 2006. A 0.5%
increase  (decrease) in the long-term rate of return would  decrease  (increase)
projected  pension  expense by  approximately  $0.3 million in 2004 and increase
(decrease)  projected  pension income by approximately  $0.3 million in 2005 and
approximately $0.4 million in 2006.

                                       19

<PAGE>


     Based on an  expected  rate of return on plan  assets of 7.10%,  a discount
rate of 5.50% and various  other  assumptions  (including  an  exchange  rate of
$1.75/(pound)1.00), the Company estimates that pension expense for its U.K. plan
will  approximate $7.5 million in 2004, $6.9 million in 2005 and $6.4 million in
2006. A 0.25% increase (decrease) in the discount rate would decrease (increase)
projected pension expense by approximately $0.8 million in 2004 and $0.7 million
in 2005 and 2006. A 0.25%  increase  (decrease) in the long-term  rate of return
would  decrease  (increase)  projected  pension  expense by  approximately  $0.2
million in 2004, $0.3 million in 2005 and $0.4 million in 2006.

     Actual  future  pension  expense  will depend on actual  future  investment
performance,  changes in future discount rates and various other factors related
to the populations participating in the Company's pension plans.

     The Company made cash  contributions of approximately $4.4 million in 2003,
$1.2  million  in 2002  and $2.7  million  in 2001 to the  U.S.  plans  and cash
contributions  of  approximately  $7.3 million in 2003, $6.1 million in 2002 and
$3.6 million in 2001 to the U.K. plan. Based upon the current underfunded status
of the plans and the  actuarial  assumptions  being used for 2004,  the  Company
believes  that it will be  required  to make the  following  cash  contributions
(exclusive of any required employee contributions) over the next five years:

<TABLE>

                                                                          Projected cash contributions
                                                           -----------------------------------------------------------
                                                              U.S. Plan             U.K.Plan               Total
                                                           ----------------     -----------------    -----------------
                                                                                  (In millions)
<S>  <C>                                                     <C>                  <C>                  <C>
Year ending December 31,
     2004                                                    $      4.1           $       7.4          $      11.5
     2005                                                    $      3.2           $       7.7          $      10.9
     2006                                                    $      1.8           $       7.9          $       9.7
     2007                                                    $      0.6           $       8.2          $       8.8
     2008                                                    $      0.1           $       8.4          $       8.5

</TABLE>

     The value of the plans' assets has  fluctuated  dramatically  over the past
three years based mainly on  performance  of the plans' equity  securities.  The
U.S.  plans'  assets were $60.7  million,  $48.2  million  and $56.5  million at
December 31, 2003, 2002 and 2001, respectively,  and the U.K. plan's assets were
$97.8  million,  $69.8 million and $79.0 million at December 31, 2003,  2002 and
2001, respectively.

     The combination of actual  investment  returns and changing  discount rates
has a  significant  effect on the  Company's  funded  plan status  (plan  assets
compared to  projected  benefit  obligations).  In 2003,  the effect of positive
investment  returns was only  partially  offset by the  decline in the  discount
rate,  thereby reducing the underfunded status of the U.S. plan to $10.1 million
at December 31, 2003. In 2003, the effect of positive  investment returns in the
U.K.  plan was more than  offset by the  decline  in the  discount  rate and the
effect of the weakening  dollar compared to the British pound sterling,  thereby
increasing the underfunded  status of the U.K. plan to $53.6 million at December
31, 2003.  The U.S. and U.K.  plans were  underfunded by $21.3 million and $46.7
million, respectively, at December 31, 2002. Based upon the change in the funded
status of the plans  during  2003,  the  Company  was  required  to record a net
additional  minimum  pension  liability  credit  (net of tax) to  equity of $1.1
million, reflecting additional comprehensive income of $8.4 million for the U.S.
plan and additional comprehensive loss of $7.3 million related to the U.K. plan.

                                       20

<PAGE>


     Postretirement  benefit  plans other than  pensions.  The Company  provides
limited  postretirement  healthcare  and life insurance  ("OPEB")  benefits to a
portion of its U.S.  employees  upon  retirement.  The  Company  funds such OPEB
benefits as they are  incurred,  net of any retiree  contributions.  The Company
paid OPEB benefits, net of retiree contributions, in the amount of $3.1 million,
$4.6 million and $4.0 million during 2003, 2002 and 2001, respectively.

     The  Company  recorded  consolidated  OPEB  expense of $2.7  million,  $2.9
million and $1.8 million for the years ended  December 31, 2003,  2002 and 2001,
respectively.  OPEB expense for these periods was calculated based upon a number
of actuarial  assumptions,  most  significant of which are the discount rate and
the expected long-term health care trend rate.

     The discount  rate the Company  utilizes for  determining  OPEB expense and
OPEB  obligations is the same as that used for the Company's U.S. pension plans.
Lowering the discount rate  assumption by 0.25% (from 6.25% to 6.00%) would have
increased the Company's 2003 OPEB expense by less than $0.1 million.

     The Company  estimates the expected  long-term health care trend rate based
upon  input  from  specialists  in  this  area,  as  provided  by the  Company's
actuaries.  In  estimating  the health  care trend rate,  the Company  considers
industry  trends,  the  Company's  actual  healthcare  cost  experience  and the
Company's  future  benefit  structure.  For 2003,  the Company  used a beginning
health care trend rate of 11.35%,  which is  projected  to reduce to an ultimate
rate of 4.25% in 2010.  If the health care trend rate  changed by 1.00% for each
year, OPEB expense would have  increased/decreased by approximately $0.3 million
in 2003.

     For 2004,  the  Company  is using a  beginning  health  care  trend rate of
10.35%, which is projected to reduce to an ultimate rate of 4.00% in 2010.

     Based on a discount  rate of 6.00%,  a health care trend rate as  discussed
above and various other  assumptions,  the Company  estimates  that OPEB expense
will  approximate $2.6 million in 2004, $2.4 million in 2005 and $2.3 million in
2006. A 0.25% increase (decrease) in the discount rate would decrease (increase)
projected OPEB expense by less than $0.1 million in 2004,  2005 and 2006. A 1.0%
increase  (decrease) in the health care trend rate for each year would  increase
(decrease) the projected service and interest cost components of OPEB expense by
approximately $0.2 million in 2004, 2005 and 2006.

     Environmental   matters.  See  "Business  -  Regulatory  and  environmental
matters" in Item 1 and Note 19 to the  Consolidated  Financial  Statements for a
discussion of environmental matters.

     Other.  The Company  periodically  evaluates  its  liquidity  requirements,
capital needs and availability of resources in view of, among other things,  its
alternative  uses of capital,  debt service  requirements,  the cost of debt and
equity capital and estimated  future  operating cash flows.  As a result of this
process, the Company has in the past, or in light of its current outlook, may in
the future,  seek to raise additional  capital,  modify its common and preferred
dividend  policies,   restructure  ownership  interests,   incur,  refinance  or
restructure indebtedness, repurchase shares of common stock, purchase BUCS, sell
assets, or take a combination of such steps or other steps to increase or manage
its  liquidity  and capital  resources.  In the normal  course of business,  the
Company  investigates,  evaluates,  discusses and engages in acquisition,  joint
venture,  strategic relationship and other business combination opportunities in
the titanium,  specialty metal and other industries.  In the event of any future
acquisition  or joint  venture  opportunities,  the Company may  consider  using
then-available  liquidity,  issuing  equity  securities or incurring  additional
indebtedness.

                                       21

<PAGE>

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

     As of March 2, 2004,  the Company had  acquired  1,140,900  shares of CompX
International,  Inc.  ("CompX")  Class A common  stock  (the  "Class A  Shares,"
representing  approximately  22.3% of the outstanding  Class A Shares) for $11.1
million in open market or  privately-negotiated  transactions  with unaffiliated
parties.  Persons or entities related to Harold C. Simmons other than TIMET hold
an  additional  476,300  of the  Class  A  Shares  and  100%  of the  10,000,000
outstanding  shares of CompX Class B common  stock (the  "Class B  Shares").  As
reported in the Schedule 13D filed with the SEC on March 2, 2004, depending upon
the Company's evaluation of the business and prospects of CompX, and upon future
developments  (including,  but not limited to, performance of the Class A Shares
in the market,  availability  of funds,  alternative  uses of funds,  and money,
stock  market  and  general  economic  conditions),  TIMET may from time to time
purchase,  dispose of, or cease  buying or selling  Class A Shares.  The Class A
Shares held by TIMET, as of March 2, 2004, represented approximately 7.5% of the
aggregate number of outstanding Class A Shares and Class B Shares.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     The  Company's  consolidated  financial  statements  have been  prepared in
accordance with accounting principles generally accepted in the United States of
America.  The preparation of these financial  statements requires the Company to
make estimates and judgments,  and select from a range of possible estimates and
assumptions,  that affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements and the reported  amount of revenues and expenses during the reported
period.  On an on-going basis,  the Company  evaluates its estimates,  including
those related to allowances for  uncollectible  accounts  receivable,  inventory
allowances,  asset lives, impairments of investments in preferred securities and
investments  accounted for by the equity  method,  the  recoverability  of other
long-lived  assets,  including  property  and  equipment,   goodwill  and  other
intangible assets, pension and other post-retirement benefit obligations and the
related underlying actuarial assumptions, the realization of deferred income tax
assets,   and  accruals   for  asset   retirement   obligations,   environmental
remediation,  litigation, income tax and other contingencies.  The Company bases
its estimates  and  judgments,  to varying  degrees,  on historical  experience,
advice of  external  specialists  and  various  other  factors it believes to be
prudent  under the  circumstances.  Actual  results may differ  from  previously
estimated  amounts and such  estimates,  assumptions and judgments are regularly
subject to revision.

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<PAGE>


     The policies and estimates  discussed below are considered by management to
be critical to an understanding of the Company's  financial  statements  because
their  application  requires the most  significant  judgments from management in
estimating matters for financial  reporting that are inherently  uncertain.  See
Notes to the  Consolidated  Financial  Statements for additional  information on
these  policies and  estimates,  as well as discussion of additional  accounting
policies and estimates.

     Inventory  allowances.  The Company  values  approximately  one-half of its
inventory  using the LIFO method with the remainder  stated  primarily  using an
average  cost  method.  The  Company  periodically  reviews  its  inventory  for
estimated  obsolescence  or  unmarketable  inventory and records any  write-down
equal to the  difference  between the cost of inventory  and its  estimated  net
realizable  value  based  upon  assumptions   about   alternative  uses,  market
conditions and other factors.

     Impairment  of  long-lived  assets.  Generally,  when  events or changes in
circumstances indicate that the carrying amount of long-lived assets,  including
property  and  equipment,  goodwill  and  other  intangible  assets,  may not be
recoverable,  the Company undertakes an evaluation of the assets or asset group.
If this  evaluation  indicates  that the  carrying  amount of the asset or asset
group is not  recoverable,  the  amount of the  impairment  would  typically  be
calculated using discounted  expected future cash flows or appraised values. All
relevant factors are considered in determining  whether an impairment exists. In
2003,  no such  events  or  circumstances  indicated  the need to  perform  such
evaluation.

     During the fourth  quarter of 2002,  the Company  completed an  entity-wide
impairment assessment in response to continued poor conditions in the commercial
aerospace market. In order to complete this assessment,  the Company  identified
its lowest level of identifiable cash flows,  resulting in the identification of
four asset groups - U.S., U.K.,  France and Italy. Of these asset groups,  Italy
is not reliant on sales into the  commercial  aerospace  market and therefore an
analysis of the  potential  impairment  of this asset  group was not  considered
necessary.  Only the U.S., U.K. and France asset groups were evaluated,  and the
result  of this  assessment  led the  Company  to  conclude  that  there  was no
impairment  related to the long-lived assets in these three asset groups tested,
as the undiscounted cash flows exceeded the net carrying value of the applicable
net  assets in each of the three  asset  groups.  Although  management  utilizes
certain  external  information  sources such as The Airline Monitor as the basis
for  aerospace  sales volume  projections,  significant  management  judgment is
required in  estimating  other  factors  that are  material to future cash flows
including,  but not limited to, customer demand,  the Company's market position,
selling prices,  competitive forces and manufacturing  costs.  Future cash flows
are  inherently  uncertain,  and there can be no assurance that the Company will
achieve the future cash flows reflected in its projections.

     The Company also  completed an  impairment  assessment  of its goodwill and
intangible  assets upon its  adoption of SFAS No. 142 in 2002,  as  discussed in
"Results of Operations - Cumulative  effect of change in  accounting  principle"
and Note 7 to the Consolidated  Financial  Statements.  Management  judgment was
required in order to identify  the  Company's  reporting  units,  determine  the
carrying amount of each reporting unit by assigning its assets and  liabilities,
including  existing goodwill and intangible  assets, to those reporting units as
of January 1, 2002,  and determine the implied fair value of its goodwill.  This
evaluation  considered,   among  other  things,  a  combination  of  fair  value
indicators including quoted market prices,  prices of comparable  businesses and
discounted  projected cash flows based upon Company forecasts,  which considered
information  obtained  from review of The Airline  Monitor and from  discussions
with the Company's  customers  throughout the first half of 2002,  both of which
assisted the Company in better  estimating  the impact of the September 11, 2001
terrorist attacks on its business. As a result of this information,  step one of

                                       23

<PAGE>

the impairment evaluation completed in the second quarter of 2002 indicated that
the Company's  recorded goodwill might be impaired,  which obligated the Company
to complete the second step of the impairment  test. Based on the results of the
second step of the impairment  test completed  during the third quarter of 2002,
which  indicated the Company's  goodwill was  impaired,  the Company  recorded a
non-cash goodwill  impairment  charge of $44.3 million,  representing the entire
balance of the Company's recorded goodwill at January 1, 2002.

     The Company also  reviewed its goodwill for  impairment  as of December 31,
2001. However, such analysis was based upon prior GAAP, under which goodwill was
deemed impaired only if the applicable  estimated future undiscounted cash flows
were  insufficient  to recover  the  carrying  value of the  goodwill  and other
long-lived  assets.  Based upon the  information  then available to the Company,
including information from The Airline Monitor and the Company's customers,  the
Company  concluded  its goodwill  was not impaired as of December 31, 2001.  The
Company had more information to help it estimate the impact of the September 11,
2001  terrorist  attacks on its  business  when it  evaluated  its  goodwill for
impairment upon adoption of SFAS No. 142 than when it evaluated its goodwill for
impairment  as of December  31, 2001 under prior GAAP.  Therefore,  the goodwill
impairment  recognized in 2002 resulted in part from these revised forecasts and
in part from a change in methodology of assessing  impairment  upon the adoption
of SFAS No. 142.

     Valuation and  impairment of securities.  In accordance  with SFAS No. 115,
Accounting for Certain  Investments in Debt and Equity  Securities,  the Company
evaluates  its  investments  in debt and equity  securities  whenever  events or
conditions  occur  to  indicate  that the fair  value  of such  investments  has
declined below their carrying amounts. If the decline in fair value is judged to
be other than temporary,  the carrying amount of the security is written down to
fair value.

     In  response  to certain  events  previously  described  in this MD&A,  the
Company undertook  assessments of its investment in SMC in the fourth quarter of
2001 and the first  quarter of 2002.  Those  assessments  indicated  that it was
unlikely that the Company would recover its then existing carrying amount of the
SMC securities in accordance with the securities'  contractual terms and that an
other than  temporary  decline in the fair value of its investment had occurred.
Accordingly,  the Company  recorded  impairment  charges of $61.5 million in the
fourth  quarter  of 2001 and $27.5  million in the first  quarter  of 2002.  The
securities were not publicly traded and, accordingly,  quoted market prices were
unavailable.  The  estimate  of fair value  required  significant  judgment  and
considered  a number of factors  including,  but not limited  to, the  financial
health and prospects of SMC and market yields of comparable securities.

     Deferred income tax valuation  allowances.  Under SFAS No. 109,  Accounting
for Income  Taxes,  and  related  guidance,  the Company is required to record a
valuation   allowance   if   realization   of   deferred   tax   assets  is  not
"more-likely-than-not."  Substantial  weight must be given to recent  historical
results and near-term  projections,  and management must assess the availability
of tax planning  strategies that might impact either the need for, or amount of,
any valuation allowance.

                                       24

<PAGE>


     As more fully  discussed  in "Results of  Operations  - Income  taxes," the
Company has concluded that realization of its previously  recorded U.S. and U.K.
deferred  tax  assets  does  not  meet  the  "more-likely-than-not"  recognition
criteria.  Additionally,  the Company has determined  that it will not recognize
deferred tax benefits  related to future U.S. or U.K. losses or future increases
in the U.S. or U.K.  minimum  pension  liabilities  continuing  for an uncertain
period of time.  Accordingly,  the Company  increased its deferred tax valuation
allowance in 2001 through  2003 to offset  deferred tax benefits  related to net
U.S.  deferred  tax assets and in 2002 and 2003 to offset  deferred tax benefits
related to net U.K. deferred tax assets.

     Regular reviews of the "more-likely-than-not"  criteria and availability of
tax  planning  strategies  will  continue  to  require  significant   management
judgment.

     Pension and OPEB expenses and obligations.  The Company's  pension and OPEB
expenses and obligations are calculated  based on several  estimates,  including
discount  rates,  expected  rates of returns on plan assets and expected  health
care trend rates.  The Company  reviews these rates annually with the assistance
of its actuaries. See further discussion of the factors considered and potential
effect of these estimates in "Liquidity and Capital  Resources - Defined benefit
pension  plans" and "Liquidity and Capital  Resources -  Postretirement  benefit
plans other than pensions."

     Revenue recognition. Sales revenue is generally recognized when the Company
has certified that its product meets the related  customer  specifications,  the
product has been shipped,  and title and substantially all the risks and rewards
of ownership  have passed to the customer.  Payments  received from customers in
advance of these  criteria  being met are  recorded as customer  advances  until
earned.  Amounts  charged to customers for shipping and handling are included in
net sales. Sales revenue is stated net of price and early payment discounts.

     Other  loss  contingencies.  Accruals  for  estimated  loss  contingencies,
including,  but  not  limited  to,  product-related  liabilities,  environmental
remediation  and  litigation,  are recorded when it is probable that a liability
has been  incurred  and the  amount  of the loss  can be  reasonably  estimated.
Disclosure is made when there is a reasonable  possibility  that a loss may have
been incurred. Contingent liabilities are often resolved over long time periods.
Estimating  probable losses often requires analysis of various  projections that
are dependent upon the future outcome of multiple factors,  including costs, the
findings of investigations and actions by the Company and third parties.



ITEM 15: EXHIBITS

(c) 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.

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

                                       25

<PAGE>


                                    SIGNATURE

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                                  TITANIUM METALS CORPORATION
                                  (Registrant)


                                  By     /s/ J. Landis Martin
                                         --------------------------------
                                         J. Landis Martin, June 4, 2004
                                         Chairman of the Board, President
                                           and Chief Executive Officer


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