SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934 - For the fiscal year ended DECEMBER 31, 1999

                                       OR

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

                         COMMISSION FILE NUMBER 0-28538

                           TITANIUM METALS CORPORATION

             (Exact name of registrant as specified in its charter)

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

1999 BROADWAY, SUITE 4300, DENVER, COLORADO                          80202
-------------------------------------------                        ---------
(Address of principal executive offices)                           (Zip code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:              (303) 296-5600
                                                                 --------------

           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 __

As of March 16, 2000,  31,371,405 shares of common stock were  outstanding.  The
aggregate  market  value of the 16.5  million  shares  of voting  stock  held by
nonaffiliates  of Titanium Metals  Corporation as of such date  approximated $77
million.

                                          Documents incorporated by reference:

The  information  required by Part III is  incorporated  by  reference  from the
Registrant's definitive proxy statement to be filed with the Commission pursuant
to  Regulation  14A not later  than 120 days  after the end of the  fiscal  year
covered by this report.


<PAGE>















Forward-Looking Information

         The  statements  contained in this Annual  Report on Form 10-K that are
not historical facts, including,  but not limited to, statements found in Item 1
-  Business,  Item 2 -  Properties,  Item 3 -  Legal  Proceedings  and  Item 7 -
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations are forward-looking  statements that represent  management's  beliefs
and  assumptions  based  on  currently  available  information.  Forward-looking
statements can be identified by the use of words such as "believes,"  "intends,"
"may,"  "will,"  "looks,"  "should,"  "anticipates,"  "expected"  or  comparable
terminology  or by  discussions  of  strategy  or trends.  Although  the Company
believes that the expectations reflected in such forward-looking  statements are
reasonable,  it cannot give any assurances that these expectations will prove to
be correct.  Such  statements  by their  nature  involve  substantial  risks and
uncertainties that could  significantly  affect expected results.  Actual future
results could differ  materially  from those  described in such  forward-looking
statements,  and the Company  disclaims any intention or obligation to update or
revise any forward-looking  statements,  whether as a result of new information,
future events or otherwise. Among the factors that could cause actual results to
differ  materially  are the risks and  uncertainties  discussed  in this  Annual
Report,  including in those portions  referenced  above and those described from
time to time in the  Company's  other filings with the  Securities  and Exchange
Commission  include,  but are not limited to, the  cyclicality of the commercial
aerospace  industry,  the  performance of The Boeing Company and other aerospace
manufacturers under their long-term purchase agreements with the Company, global
economic conditions, global productive capacity for titanium, changes in product
pricing,  the impact of long-term  contracts  with vendors on the ability of the
Company to reduce or increase supply or achieve lower costs,  the possibility of
labor  disruptions,  control by certain  stockholders and possible  conflicts of
interest,  uncertainties  associated with new product development and the supply
of raw materials and services and other risks and  uncertainties.  Should one or
more of these  risks  materialize  (or the  consequences  of such a  development
worsen),  or should the underlying  assumptions prove incorrect,  actual results
could differ materially from those forecasted or expected.


<PAGE>






                                     PART I

ITEM 1:  BUSINESS

         GENERAL.  Titanium Metals Corporation ("TIMET" or the "Company") is one
of the world's leading integrated producers of titanium sponge,  ingot, slab and
mill  products and has the largest  sales volume  worldwide.  The Company is the
only integrated producer with major titanium  processing  facilities in both the
United States and Europe, the world's principal markets for titanium. The demand
for  titanium  reached a peak in 1997 when  worldwide  mill  products  shipments
reached 60,000 metric tons. Since this peak,  annual  shipments  declined 10% to
54,000 metric tons in 1998 and a further 11% to 48,000 metric tons in 1999.  The
Company  estimates that in 1999 it accounted for  approximately 24% of worldwide
industry  shipments  of mill  products  and  approximately  13% of world  sponge
production.

         Titanium  was  first  manufactured  for  commercial  use in the  1950s.
Titanium's  unique  combination  of corrosion  resistance,  elevated-temperature
performance and high  strength-to-weight  ratio makes it particularly  desirable
for use in  commercial  and  military  aerospace  applications  in  which  these
qualities are essential  design  requirements for certain critical parts such as
wing  supports and jet engine  components.  While  aerospace  applications  have
historically  accounted  for a substantial  portion of the worldwide  demand for
titanium and were  approximately 40% of industry mill product shipments in 1999,
the  number  of   non-aerospace   end-use  markets  for  titanium  has  expanded
substantially.  Today,  numerous  industrial uses for titanium exist,  including
chemical and industrial power plants,  desalination plants and pollution control
equipment.  Demand for  titanium  is also  increasing  in  diverse  uses such as
medical  implants,   sporting   equipment,   offshore  oil  and  gas  production
installations,   geothermal  facilities,   military  armor  and  automotive  and
architectural uses.

         TIMET's products include:  titanium sponge,  the basic form of titanium
metal used in processed titanium  products;  titanium ingot and slab, the result
of  melting  sponge and  titanium  scrap,  either  alone or with  various  other
alloying  elements;  and forged and rolled products produced from ingot or slab,
including billet, bar, flat products (plate, sheet and strip), welded pipe, pipe
fittings,  extrusions and wire. The Company  believes it is among the lower cost
producers of titanium  sponge and melt  products due in part to its economies of
scale,  manufacturing  expertise  and  investment  in  technology.  The titanium
industry is comprised of several manufacturers which, like the Company,  produce
a relatively  complete  range of titanium  products and a significant  number of
producers  worldwide that manufacture a limited range of titanium mill products.
The  Company  believes  that at least  90% of the  world's  titanium  sponge  is
produced by six companies.


<PAGE>


         The Company  intends to continue its focus on the  following  long-term
goals and objectives to change the traditional way business is conducted:

o             Maximize the  long-term  value of its core  aerospace  business by
              focusing on the Company's  basic  strengths of sponge  production,
              melting and forging of various shapes of titanium products, and by
              entering into  strategic  agreements  with major titanium users to
              help mitigate the cyclicality of the Company's aerospace business.

o             Invest  in  strategic   alliances,   including   joint   ventures,
              acquisitions  and  entrepreneurial  arrangements,  as  well as new
              markets,  applications  and products,  to help reduce  traditional
              dependence on the aerospace sector.

o             Invest in technology,  capacity and  innovative  projects aimed at
              reducing  costs  and  enhancing  productivity,  quality,  customer
              service and production capabilities.

o             Stabilize the cost and supply of raw materials.

o             Maintain a strong balance sheet.

         The Company's focus in the short-term is to return to  profitability as
quickly as possible by reducing costs,  improving  quality and  streamlining its
overall business and manufacturing processes. To that end, the Company has:

o             Limited planned capital  expenditures to include those principally
              intended for capital maintenance, environmental, health and safety
              purposes.

o             Rationalized  staffing and  production  worldwide to fit current
              market conditions.

o             Suspended the dividend on its common stock.

o             Negotiated new credit agreements to provide liquidity through the
              current down-cycle.

o             Initiated a plan to reduce overhead, inventory and receivables.

The Company  intends to consider  further means to reduce costs if the foregoing
do not prove sufficient to return to profitability.

         CURRENT INDUSTRY CONDITIONS AND OUTLOOK FOR 2000. The titanium industry
historically  has  derived  the  majority  of its  business  from the  aerospace
industry.  The cyclical nature of the aerospace  industry has been the principal
cause of the historical fluctuations in performance of titanium companies, which
had  cyclical  peaks  in mill  products  shipments  in  1980,  1989 and 1997 and
cyclical  lows in 1983 and  1991.  During  the  1996-1998  period,  the  Company
reported  aggregate net income of $176 million,  which  substantially  more than
offset the aggregate net losses of $93 million it reported  during the difficult
1991-1995  period.  The  Company  currently  expects  that the loss in 2000 will
exceed the 1999 loss and looks to return to profitability in late 2001.

<PAGE>

         Worldwide  industry mill  products  shipments of  approximately  60,000
metric tons in 1997 were 65% above 1994 levels.  In 1998,  industry mill product
shipments declined  approximately 10%, to approximately 54,000 metric tons, with
a further 11% decline to approximately 48,000 metric tons in 1999.  Expectations
for 2000 are a further decline in mill product shipments although it is expected
to be less than the  decline as  experienced  during each of the last two years.
The Company  believes  that the  reduction in demand for  aerospace  products is
attributable  to a decline in the number of aircraft  forecast  to be  produced,
particularly in titanium-intensive wide body planes, compounded by reductions in
inventories  throughout the aerospace  industry supply chain as customers adjust
to the decreases in overall production rates. Industrial demand for titanium has
also declined due to weakness in Asian and other economies.

         Aerospace demand for titanium products,  which includes both jet engine
components such as rotor blades,  discs,  rings and engine cases,  and air frame
components,  such as bulkheads,  tail sections,  landing gear and wing supports,
can be broken down into commercial and military sectors.  Industry  shipments to
the commercial aerospace sector in 1999 accounted for approximately 85% of total
aerospace demand (35% of total titanium demand).

         ACCORDING TO THE AIRLINE MONITOR, a leading aerospace publication,  the
commercial  airline  industry  reported  operating  income  of over $17  billion
(estimated)  in 1999,  compared  to $16  billion  in each of 1998 and 1997.  The
Company believes that commercial  aircraft  deliveries  peaked in 1999.  Current
expected deliveries for 2000 and 2001, while below the record levels of 1998 and
1999,  are still high by historical  standards,  and the current  generations of
airplanes use substantially  more titanium than their  predecessors.  The demand
for titanium  generally  precedes  aircraft  deliveries  by about a year,  which
results  in the  Company's  cycle  preceding  that of the cycle of the  aircraft
industry  and related  deliveries.  The Company can give no  assurance as to the
extent or duration of the current  commercial  aerospace  cycle or the extent to
which it will result in demand for titanium products.

         Since  titanium's  initial  applications in the aerospace  sector,  the
number of end-use  markets for titanium has expanded.  Existing  industrial uses
for titanium  include chemical  plants,  industrial  power plants,  desalination
plants, and pollution control equipment. Titanium is also experiencing increased
customer demand in diverse uses such as medical  implants,  sporting  equipment,
offshore oil and gas production installations,  geothermal facilities,  military
armor and  automotive  and  architectural  uses.  Several of these are  emerging
applications  and  represent  potential  growth  opportunities  that the Company
believes  may reduce  the  industry's  historical  dependence  on the  aerospace
market.

     The business  environment  in which TIMET finds itself in 2000 remains very
different from 1996-1998.  During the second half of 1998 it became evident that
the anticipated  record rates of aircraft  production would not be reached,  and
that a decline in overall  production  rates would begin earlier than  forecast,
particularly  in  titanium-intensive  wide body planes.  During 1999,  aerospace
customers continued to reduce inventories,  and customers and end users continue
to  indicate  that a  substantial  inventory  overhang  exists.  As a result,  a
significant  number of the  Company's  major  aerospace  customers  canceled  or
delayed  previously  scheduled orders.  Most importantly,  TIMET believes orders
under the Company's  long-term  contract with The Boeing Company ("Boeing") were
significantly  below the  contractual  volume  requirements  for 1999.  Although
Boeing  has  informed  the  Company  that  it will  either  order  the  required
contractual  volume  under the  contract in 2000 or pay the  liquidated  damages
provided for in the agreement,  TIMET has received  virtually no  Boeing-related
orders  under the  contract  for the year  2000.  Boeing has also  informed  the
Company that it is unwilling to commit to the contract beyond the year 2000, and
TIMET has filed a lawsuit  against  Boeing  for  repudiation  and  breach of the
Boeing  contract.  These factors lead TIMET to believe that year 2000 sales will
be somewhat lower than the fourth quarter 1999 annualized amount.

<PAGE>

         Adding to the challenges in the aerospace sector, industrial demand for
titanium remains soft due to the weakness in Asian and other economies. Assuming
overall market demand remains at currently expected levels,  which is lower than
1999, the Company  currently expects operating and net losses in each quarter of
2000. In both the aerospace and  industrial  sectors,  reduced  demand and lower
prices  (including prices under new long-term  contracts  referred to below) are
expected to cause sales,  gross margin and operating  income  excluding  special
charges to be lower in 2000 than in 1999.

         In the fourth quarter of 1999 and January 2000 TIMET began implementing
a  plan  of  action  designed  to  address  current  market  conditions  without
abandoning  key elements of its  long-term  strategy,  which it believes  remain
sound. The action plan entails the following:

o             TIMET's global manufacturing  operations and commercial operations
              have  been  consolidated  into two  organizations  with  personnel
              reductions  of about 250 people  compared to year end 1999 levels.
              This  comes on top of a  reduction  of  approximately  700  people
              during 1998 and 1999.

o             TIMET will focus  significant  efforts in improving  manufacturing
              performance.  Considerable resources will be devoted to continuous
              improvement  programs  to improve  the  quality of  manufacturing,
              customer service and management processes.

o             Reductions  in  plant overhead costs as  well as  in selling  and
              administrative costs have been targeted.

o             Supply contracts with key vendors have been  renegotiated in order
              to reduce  volumes and, to some extent,  prices.  Similar  efforts
              will continue throughout 2000.

o             Capital  expenditures  will be  reduced  from 1999  levels.  Total
              capital  expenditures are expected to be approximately $15 million
              in 2000,  compared  to  approximately  $25  million in 1999 and an
              aggregate of approximately $180 million in 1997 and 1998.

         In addition to its short-term plan of actions as described  above,  the
Company  has  long-term  agreements  with  certain  major  aerospace  customers,
including Boeing,  Rolls-Royce plc, United Technologies Corporation (and related
companies) and Wyman-Gordon  Company.  These agreements  provide for (i) minimum
market shares of the customers' titanium  requirements  (generally at least 70%)
for extended  periods  (nine to ten years) and (ii) fixed or  formula-determined
prices  generally  for at  least  the  first  five  years.  The  contracts  were
structured  to provide  incentives  to both parties to lower  TIMET's  costs and
share in the  savings.  These  contracts  and others  represent  the core of the
Company's long-term  aerospace  strategy.  These agreements should limit pricing
volatility  (both up and down) for the long term benefit of both parties,  while
providing TIMET with a solid base of aerospace volume.

     The Boeing  contract  requires  Boeing to purchase a minimum  percentage of
their  titanium  requirements  from TIMET.  Although  Boeing  placed  orders and
accepted delivery of certain volumes in 1999, TIMET believes the level of orders
was significantly  below the contractual volume  requirements for 1999. Although
Boeing  has  informed  the  Company  that  it will  either  order  the  required
contractual  volume  under the  contract in 2000 or pay the  liquidated  damages
provided for in the agreement,  TIMET has received  virtually no  Boeing-related
orders  under the  contract  for the year  2000.  Boeing has also  informed  the
Company that it is unwilling to commit to the contract  beyond the year 2000. On
March 21, 2000,  the Company filed a lawsuit  against Boeing in a Colorado state
court  seeking  damages  for  Boeing's  repudiation  and  breach  of the  Boeing
contract. TIMET's complaint seeks damages from Boeing that TIMET believes are in
excess of $600 million and a declaration  from the court of TIMET's rights under
the contract.

<PAGE>

         As a  complement  to the  long-term  agreements  entered  into with the
Company's  key  customers,  the Company has also  entered into  agreements  with
certain key  suppliers  that were  intended to assure  anticipated  raw material
needs to  satisfy  production  requirements  for the  Company's  key  customers.
Primarily  because  of the lack of Boeing  orders,  the order  flow did not meet
expectations in 1999;  therefore,  the Company restructured the terms of certain
agreements.

         ACQUISITIONS  AND  CAPITAL  TRANSACTIONS  DURING THE PAST THREE  YEARS.
During 1997, the Company  entered into a welded tube joint venture  ("ValTimet")
intended to combine best  manufacturing  practices  and market  coverage in this
market.  In 1998, TIMET (i) acquired Loterios S.p.A. to increase market share in
industrial markets,  particularly oil and gas, and provide increased  geographic
sales  coverage in Europe,  (ii)  purchased  for cash $80 million of  non-voting
preferred  securities of Special  Metals  Corporation,  a U.S.  manufacturer  of
wrought  nickel-based  superalloys  and special alloy long  products,  and (iii)
entered into a castings  joint venture with  Wyman-Gordon.  In January 2000, the
Company sold its interest in the castings joint venture.  These transactions are
more fully described in Notes 3 and 4 to the Consolidated Financial Statements.

         During the fourth quarter of 1999, the Company  recorded a $2.3 million
charge to pretax  earnings  for the  write-down  associated  with the  Company's
investment in certain  start-up joint ventures.  See Note 4 to the  Consolidated
Financial Statements.

         In 1998, Tremont Corporation purchased additional TIMET common stock in
market    transactions.    In   1999,    Tremont    exercised   an   option   to
purchaseapproximately two million shares of the Company's common stock. At March
1, 2000, Tremont held approximately 39% of TIMET's  outstanding common stock. An
additional  8% of  TIMET's  outstanding  common  stock is owned by the  Combined
Master Retirement Trust, a trust formed by Valhi, Inc., an affiliate of Tremont,
to permit  the  collective  investment  by trusts  that  maintain  the assets of
certain employee benefit plans adopted by Valhi and related  entities.  See Note
15 to the Consolidated Financial Statements.

         PRODUCTS  AND  OPERATIONS.  The  Company  is  a  vertically  integrated
titanium  producer whose products  include:  titanium sponge,  the basic form of
titanium metal used in processed titanium products; titanium ingot and slab, the
result of melting sponge and titanium scrap,  either alone or with various other
alloying  elements;  and forged and rolled products produced from ingot or slab,
including billet, bar, flat products (plate, sheet and strip), welded pipe, pipe
fittings,  extrusions  and wire.  In 1999,  virtually  all of TIMET's sales were
generated by the Company's  integrated titanium operations (its "Titanium melted
and mill products" segment). The titanium product chain is described below.

         Titanium   sponge  (so  called  because  of  its   appearance)  is  the
commercially  pure,  elemental form of titanium metal.  The first step in sponge
production involves the chlorination of titanium-containing rutile ores, derived
from beach  sand,  with  chlorine  and coke to produce  titanium  tetrachloride.
Titanium  tetrachloride  is purified and then reacted with magnesium in a closed
system,  producing  titanium sponge and magnesium  chloride as co-products.  The
Company's titanium sponge production capacity in Henderson, Nevada, incorporates
vacuum distillation process ("VDP") technology,  which removes the magnesium and
magnesium   chloride  residues  by  applying  heat  to  the  sponge  mass  while
maintaining vacuum in the chamber.  The combination of heat and vacuum boils the
residues from the reactor mass into the condensing  vessel. The titanium mass is
then mechanically pushed out of the original reactor, sheared and crushed, while
the residual magnesium chloride is electrolytically separated and recycled.

<PAGE>

         Titanium   ingots  and  slabs  are  solid   shapes   (cylindrical   and
rectangular,  respectively) that weigh up to 8 metric tons in the case of ingots
and up to 16  metric  tons in the  case of  slabs.  Each is  formed  by  melting
titanium sponge or scrap or both,  usually with various other alloying  elements
such as vanadium, aluminum,  molybdenum, tin and zirconium.  Titanium scrap is a
by-product  of the  forging,  rolling,  milling and  machining  operations,  and
significant  quantities  of scrap are  generated in the  production  process for
finished titanium products.  The melting process for ingots and slabs is closely
controlled and monitored  utilizing computer control systems to maintain product
quality and consistency and meet customer  specifications.  Ingots and slabs are
both sold to customers and further processed into mill products.

         Titanium  mill  products  result from the  forging,  rolling,  drawing,
welding  and/or  extrusion of titanium  ingots or slabs into products of various
sizes and grades.  These mill products include titanium billet, bar, rod, plate,
sheet, strip, welded pipe, pipe fittings, extrusions and wire. The Company sends
certain products to outside vendors for further  processing before being shipped
to  customers or to the  Company's  service  centers.  The  Company's  customers
usually process the Company's products for their ultimate end-use or for sale to
third parties.

         During the production process and following the completion of products,
the Company performs extensive testing on its products,  including sponge, ingot
and mill products. Testing may involve chemical analysis, mechanical testing and
ultrasonic  and x-ray testing.  The  inspection  process is critical to ensuring
that the  Company's  products meet the high quality  requirements  of customers,
particularly in aerospace components production.

         The Company is  dependent  upon the services of outside  processors  to
perform important  processing functions with respect to certain of its products.
In particular,  the Company  currently relies upon a single processor to perform
certain  rolling  steps  with  respect  to some of its  plate,  sheet  and strip
products.  Although the Company  believes  that there are other metal  producers
with the capability to perform these same  processing  functions,  arranging for
alternative   processors,   or  possibly  acquiring  or  installing   comparable
capabilities,  could take several months and any interruption in these functions
could have a material and adverse effect on the Company's  business,  results of
operations, financial condition and cash flows in the short term. The Company is
exploring ways to lessen its dependence on any individual processor.

         RAW  MATERIALS.  The principal raw materials  used in the production of
titanium  mill  products  are  titanium  sponge,  titanium  scrap  and  alloying
elements.  The Company  processes  rutile ore into  titanium  tetrachloride  and
further processes the titanium  tetrachloride into titanium sponge. During 1999,
approximately 25% of the Company's  production was made from internally produced
sponge,  35% from purchased sponge, 32% from titanium scrap and 8% from alloying
elements.

         While the Company is one of six major  worldwide  producers of titanium
sponge,  it cannot  supply  all of its needs for all grades of  titanium  sponge
internally  and is dependent,  therefore,  on third parties for a portion of its
sponge needs in 2000.  Based upon the Company's  evaluation of the relative cost
of raw materials and the technical  requirements  of its customers,  the Company
expects the mix of raw materials in 2000 to be 25% internally  produced  sponge,
32% purchased sponge,  36% scrap and 7% alloying  elements.  Sponge producers in
Japan  and  Kazakhstan  are  expected  to  supply  all of the  Company's  sponge
purchases in 2000.

<PAGE>

         TIMET has a long-term agreement, concluded in 1997, for the purchase of
titanium  sponge produced in Kazakhstan to support demand for both aerospace and
non-aerospace  applications.  This sponge  purchase  agreement is for ten years,
with  firm  pricing  for the first  five  years  (subject  to  certain  possible
adjustments).  This  contract  provides  for annual  purchases by the Company of
6,000 to 10,000 metric tons. The parties agreed to reduced minimums for 1999 and
2000. Due to the decrease in demand for titanium,  the Company has abandoned its
plans to purchase on a long-term basis premium quality sponge produced in Japan.

         The primary raw materials used in the production of titanium sponge are
titanium-containing   rutile  ore,  chlorine,   magnesium  and  petroleum  coke.
Titanium-containing rutile ore is currently available from a number of suppliers
around the world,  principally  located in  Australia,  Africa (South Africa and
Sierra Leone),  India and the United States.  A majority of the Company's supply
of rutile ore is currently  purchased  from  Australian  suppliers.  The Company
believes the  availability  of rutile ore will be adequate  for the  foreseeable
future and does not anticipate any  interruptions of its raw material  supplies,
although  political  or economic  instability  in the  countries  from which the
Company  purchases  its raw materials  could  materially  and  adversely  affect
availability.  In addition,  although the Company believes that the availability
of rutile ore is adequate in the  near-term,  there can be no assurance that the
Company will not experience interruptions. Chlorine is currently obtained from a
single source near the Company's plant, but alternative suppliers are available.
Magnesium and petroleum coke are generally available from a number of suppliers.
Various alloying elements used in the production of titanium ingot are available
from a number of suppliers.

         MARKETS AND CUSTOMER  BASE.  About 50% of the Company's 1999 sales were
to customers within North America,  with about 42% to European customers and the
balance to other  regions.  While no customer  accounts for more than 10% of the
Company's  direct sales in 1999,  about 85% of the Company's  mill product sales
were used by the Company's  customers to produce  parts and other  materials for
the aerospace industry.  The Company has long-term agreements with certain major
aerospace customers, which accounted for approximately 44% of aerospace sales in
1999. The Company expects that while a majority of its 2000 sales will be to the
aerospace sector, other markets will continue to represent a significant portion
of sales.

         The commercial  aerospace industry consists of two major  manufacturers
of large (over 100 seats) commercial  aircraft (Boeing Commercial Airplane Group
and the Airbus  consortium)  and four major  manufacturers  of aircraft  engines
(Rolls-Royce,  Pratt &  Whitney  (a unit of  United  Technologies  Corporation),
General  Electric and SNECMA).  The  Company's  sales are made both  directly to
these  major   manufacturers  and  to  companies   (including  forgers  such  as
Wyman-Gordon)  that use the  Company's  titanium  to  produce  parts  and  other
materials for such  manufacturers.  If any of the major aerospace  manufacturers
were to significantly reduce aircraft build rates from those currently expected,
there could be a material adverse effect,  both directly and indirectly,  on the
Company.

         The Company's order backlog was approximately  $195 million at December
31,  1999,  compared to $350  million at December  31, 1998 and $530  million at
December 31, 1997.  Substantially  all of the 1999 year end backlog is scheduled
to be shipped during 2000.  Although the Company  believes that the backlog is a
reliable indicator of near-term  business activity,  conditions in the aerospace
industry  could  change  and  result in future  cancellations  or  deferrals  of
existing  aircraft  orders and  materially  and  adversely  affect the Company's
existing backlog, orders, and future financial condition and operating results.

<PAGE>

         As of December 31, 1999,  the  estimated  firm order backlog for Boeing
and Airbus,  as reported by the airline monitor,  was 2,943 planes versus 3,224
planes at the end of 1998 and 2,753  planes at the end of 1997.  The newer  wide
body planes,  such as the Boeing 777 and the Airbus A-330 and A-340, tend to use
a higher percentage of titanium in their frames,  engines and parts (as measured
by total fly weight) than narrow body  planes.  "Fly weight" is the empty weight
of a finished  aircraft with engines but without fuel or passengers.  The Boeing
777, for example,  utilizes  titanium for  approximately 9% of total fly weight,
compared to between 2% to 3% on the older 737, 747 and 767 models. The estimated
firm order  backlog  for wide body planes at year end 1999 was 679 (23% of total
backlog) compared to 820 (25% of total backlog) at the end of 1998.

         Through  various  strategic  relationships,  the Company  seeks to gain
access to unique process technologies for the manufacture of its products and to
expand  existing  markets and create and develop new markets for  titanium.  The
Company has explored and will continue to explore strategic  arrangements in the
areas of product development, production and distribution. The Company also will
continue to work with existing and  potential  customers to identify and develop
new or improved  applications  for  titanium  that take  advantage of its unique
qualities.

         COMPETITION.  The titanium metals  industry is highly  competitive on a
worldwide basis.  Producers of mill products are located primarily in the United
States, Japan, Europe, Former Soviet Union ("FSU") and China. The Company is one
of five integrated  producers in the world,  with  "integrated  producers" being
considered as those that produce at least both sponge and ingot.  There are also
a number of  non-integrated  producers that produce mill products from purchased
sponge,  scrap or ingot.  The Company believes that most producers will continue
to generally operate at lower capacity  utilization levels in 2000 than in 1999,
increasing price competition.

         The Company's principal  competitors in aerospace markets are Allegheny
Technologies   Inc.,  RTI  International   Metals,   Inc.  and  Verkhanya  Salda
Metallurgical Production Organization ("VSMPO"). These companies, along with the
Japanese  producers  and other  companies,  are also  principal  competitors  in
industrial  markets.  The  Company  competes  primarily  on the  basis of price,
quality of products,  technical support and the availability of products to meet
customers' delivery schedules.

         In the U.S. market,  the increasing  presence of non-U.S.  participants
has become a  significant  competitive  factor.  Until 1993,  imports of foreign
titanium  products  into the U.S. had not been  significant.  This was primarily
attributable to relative currency  exchange rates,  tariffs and, with respect to
Japan and the FSU,  existing and prior duties  (including  antidumping  duties).
However, imports of titanium sponge, scrap, and mill products,  principally from
the FSU, have  increased in recent years and have had a significant  competitive
impact on the U.S. titanium industry. To the extent the Company has been able to
take  advantage  of  this  situation  by  purchasing   such  sponge,   scrap  or
intermediate  mill  products from such  countries for use in its own  operations
during  recent  years,  the negative  effect of these imports on the Company has
been somewhat mitigated.

         Generally,  imports into the U.S. of titanium  products from  countries
designated by the U.S. Government as "most favored nations" are subject to a 15%
tariff (45% for other  countries).  Titanium  products  for tariff  purposes are
broadly classified as either wrought or unwrought. Wrought products include bar,
sheet, strip, plate and tubing.  Unwrought products include sponge,  ingot, slab
and billet.  Starting in 1993,  imports of titanium wrought products from Russia
were exempted from this duty under the  "generalized  system of  preferences" or
"GSP" program  designed to aid  developing  economies.  The GSP program has been
renewed for two years and is scheduled to expire during the second quarter 2001.

<PAGE>

         In 1997,  GSP benefits to these  products were suspended when the level
of Russian  wrought  products  imports  reached  50% of all  imports of titanium
wrought  products.  A petition was filed in 1997 to restore  duty-free status to
these  products,  and that  petition was granted in June 1998.  In  addition,  a
petition was also filed to bring unwrought products under the GSP program, which
would allow such products from the countries of the FSU (notably  Russia and, in
the case of sponge, Kazakhstan and Ukraine) to be imported into the U.S. without
the payment of regular duties. This petition  concerning  unwrought products has
not been  acted  upon  pending  further  investigation  of the  merits of such a
change.

         In addition to regular duties,  titanium sponge imported from countries
of the FSU (Russia,  Kazakhstan  and Ukraine) had for many years been subject to
substantial antidumping penalties.  Titanium sponge imports from Japan were also
subject to a standing  antidumping  order, but no penalties had been attached in
recent years. In 1998, the  International  Trade Commission  ("ITC") revoked all
outstanding  antidumping  orders on titanium  sponge based upon a  determination
that changed  circumstances in the industry did not warrant  continuation of the
orders.  TIMET has appealed  that  decision,  and the briefing of the appeal was
concluded in the third  quarter of 1999. A decision is expected  during 2000 and
until such decision is reached, the orders remain revoked.

         Further  reductions in, or the complete  elimination  of, all or any of
these tariffs could lead to increased imports of foreign sponge, ingot, and mill
products  into the U.S.  and an increase  in the amount of such  products on the
market  generally,  which could adversely affect pricing for titanium sponge and
mill products and thus the business,  financial condition, results of operations
and cash flows of the Company.  However,  the Company has, in recent years, been
one of the largest  importers of foreign  titanium sponge and mill products into
the U.S.  To the extent the Company  remains a  substantial  purchaser  of these
products,  any adverse  effects on product  pricing as a result of any reduction
in, or  elimination  of, any of these tariffs would be partially  ameliorated by
the decreased  cost to the Company for these products to the extent it currently
bears the cost of the import duties.

         Producers of other metal products, such as steel and aluminum, maintain
forging,  rolling  and  finishing  facilities  that  could be  modified  without
substantial  expenditures to process titanium  products.  The Company  believes,
however, that entry as a producer of titanium sponge would require a significant
capital investment and substantial  technical expertise.  Titanium mill products
also compete with stainless steels, nickel alloys, steel, plastics, aluminum and
composites in many applications.

         RESEARCH  AND  DEVELOPMENT.  The  Company's  research  and  development
activities are directed  toward  improving  process  technology,  developing new
alloys,   enhancing  the  performance  of  the  Company's  products  in  current
applications,  and  searching  for new uses of titanium  products.  For example,
aerospace  applications  continue to grow for some of the Company's  proprietary
alloys such as TIMETAL(R) 21S and TIMETAL 834.  Additionally,  testing of alloys
such as TIMETAL  LCB and TIMETAL  5-1-1-1 is  increasing  for new  non-aerospace
applications.  The Company conducts the majority of its research and development
activities at its Henderson,  Nevada  laboratory,  which the Company believes is
one of the  largest  titanium  research  and  development  centers in the world.
Additional  research and  development  activities  are  performed at the Witton,
England facility.

         PATENTS AND  TRADEMARKS.  The Company  holds U.S. and non-U.S.  patents
applicable to certain of its titanium alloys and manufacturing  technology.  The
Company  continually  seeks patent protection with respect to its technical base
and has  occasionally  entered  into  cross-licensing  arrangements  with  third
parties.  However, most of the titanium alloys and manufacturing technology used
by the  Company  do not  benefit  from  patent  or other  intellectual  property
protection. The Company believes that the trademarks TIMET(R) and TIMETAL, which
are protected by registration in the U.S. and other  countries,  are significant
to its business.

<PAGE>

       EMPLOYEES.  The following  table shows the  significant  reduction in the
number of employees  over the past 3 years.  The 23% reduction in employees from
the peak in 1997 was in response to a 25%  reduction  in market  demand.  During
2000, the Company expects to reduce  employment by an additional 250 people,  or
approximately  10% of TIMET's  worldwide  workforce.  The vast  majority  of the
employee reductions are expected to occur during the first half of the year.

<TABLE>
<CAPTION>
                                       Employees at December 31,
                      ----------------------------------------------------------
                            1997                 1998                 1999
                      -----------------    ----------------    -----------------
<S>                   <C>                   <C>                 <C>
U.S.                        2,125                1,715                1,490
Europe                        900                1,025                  860
                      ------------------    ----------------    ----------------

Total                       3,025                2,740                2,350
                      ==================    ================    ================
</TABLE>

         The Company's  production and maintenance workers in Henderson,  Nevada
and its production, maintenance, clerical and technical workers in Toronto, Ohio
are represented by the United  Steelworkers of America  ("USWA") under contracts
expiring in October 2000 and June 2002, respectively.  Negotiations with respect
to the  Henderson  contract are  expected to begin  during the third  quarter of
2000.  Employees  at the  Company's  other U.S.  facilities  are not  covered by
collective bargaining agreements.

         Over 70% of the salaried and hourly employees at the Company's European
facilities are  represented by various  European labor unions,  generally  under
annual  agreements,  the majority of which are still under negotiation for 2000.
The Company  expects to complete the  negotiation  of one year  contracts in the
U.K. and France that would include modest wage increases.

         While the Company  currently  considers  its  employee  relations to be
satisfactory,  it is possible  that there could be future  work  stoppages  that
could  materially  and  adversely  affect  the  Company's  business,   financial
condition, results of operations or cash flows.

         REGULATORY  AND  ENVIRONMENTAL  MATTERS.  The Company's  operations are
governed by various Federal,  state, local and foreign  environmental and worker
safety  laws and  regulations.  In the U.S.,  such laws  include  the  following
Federal  acts:  the  Clean  Air  Act,  the  Clean  Water  Act and  the  Resource
Conservation  and Recovery  Act. The Company uses and  manufactures  substantial
quantities  of  substances   that  are  considered   hazardous  or  toxic  under
environmental and worker safety and health laws and regulations. In addition, at
the  Company's  Henderson,   Nevada  facility,   the  Company  uses  substantial
quantities  of  titanium  tetrachloride,  a  material  classified  as  extremely
hazardous under Federal environmental laws. The Company has used such substances
throughout the history of its  operations.  As a result,  risk of  environmental
damage is inherent in the Company's operations.  The Company's operations pose a
continuing risk of accidental  releases of, and worker exposure to, hazardous or
toxic   substances.   There  is  also  a  risk  that  government   environmental
requirements,  or enforcement  thereof, may become more stringent in the future.
There can be no assurances  that some, or all, of the risks discussed under this
heading will not result in  liabilities  that would be material to the Company's
business, results of operations, financial condition or cash flows.

         The Company's  operations  in Europe are  similarly  subject to foreign
laws and regulations  respecting  environmental and worker safety matters, which
laws have not had, and are not  presently  expected to have, a material  adverse
effect on the Company.

<PAGE>

         The Company  believes  that its  operations  are in  compliance  in all
material  respects with  applicable  requirements  of  environmental  and worker
health and safety laws. The Company's policy is to continually strive to improve
environmental, health and safety performance. From time to time, the Company may
be subject to  environmental  regulatory  enforcement  under  various  statutes,
resolution of which typically involves the establishment of compliance programs.
Occasionally,  resolution  of  these  matters  may  result  in  the  payment  of
penalties.  The Company  incurred capital  expenditures  for health,  safety and
environmental  compliance  matters of  approximately $4 million in each of 1997,
1998 and 1999 and its capital budget  provides for  approximately  $5 million of
such expenditures in 2000.  However,  the imposition of more strict standards or
requirements  under  environmental,  health or safety laws and regulations could
result in  expenditures  in excess of amounts  estimated to be required for such
matters. See Note 16 to the Consolidated Financial Statements - "Commitments and
Contingencies - Environmental Matters," which information is incorporated herein
by reference.

ITEM 2:  PROPERTIES

         Set forth below is a listing of the Company's manufacturing facilities.
In addition to its U.S. sponge capacity discussed below, the Company's worldwide
melting capacity in 2000 aggregates  approximately 48,000 metric tons (estimated
26% of world capacity),  and its mill products capacity aggregates approximately
20,000  metric tons  (estimated  16% of world  capacity).  Approximately  35% of
TIMET's  worldwide  melting capacity is represented by electron beam cold hearth
melting ("EB") furnaces,  62% by vacuum arc remelting ("VAR") furnaces and 3% by
a vacuum induction melting ("VIM") furnace.

         The Company has operated  its major  production  facilities  at varying
levels of practical  capacity  during the past three years.  In 1997, the plants
operated at 90% of practical  capacity,  decreasing to 80% in 1998 and a further
reduction to 55% in 1999. In 2000, the Company's  plants are expected to operate
at 50% of practical capacity.  During 1998, the Company closed 2,500 metric tons
of melting capacity by permanently shutting down facilities in Verdi, Nevada and
Millbury,  Massachusetts. In 1999, the Company temporarily idled its Kroll-leach
process sponge facility in Nevada due to changing market  conditions for certain
grades of titanium sponge.

<TABLE>
                                                                                                ANNUAL PRACTICAL
                                                                                                    CAPACITIES
                                                                                             ------------------------
                                                                                                              MILL
MANUFACTURING LOCATION                        PRODUCTS MANUFACTURED                             MELTING     PRODUCTS
                                                                                                  (METRIC TONS)
<S>                                           <C>                                               <C>           <C>
Henderson, Nevada+                            Sponge, Ingot                                      13,600            -
Morgantown, Pennsylvania+                     Slab, Ingot, Raw Materials Processing              20,700            -
Vallejo, California*                          Ingot (including non-titanium                       1,600            -
                                                superalloys)

Toronto, Ohio+                                Billet, Bar, Plate, Sheet, Strip                        -        9,200
Witton, England*                              Ingot, Billet, Bar                                  9,800        6,000
Ugine, France*                                Ingot, Bar, Billet, Wire, Extrusions                2,200        1,600
Waunarlwydd (Swansea), Wales+                 Bar, Plate, Sheet                                       -        3,400

<FN>
+  Owned facilities
*   Leased facilities
</FN>
</TABLE>


         TIMET UK's Witton,  England facilities are leased pursuant to long-term
capital  leases.  TIMET Savoie has the right,  on a long-term  basis, to utilize
portions of CEZUS' plant in Ugine, France.

<PAGE>

         UNITED STATES PRODUCTION. The Company's VDP sponge facility is expected
to operate at approximately 60% of its annual practical capacity of 9,100 metric
tons  during  2000,  which   approximates  the  1999  level  and  is  down  from
approximately  85% in 1998. VDP sponge is used principally as a raw material for
the Company's  ingot melting  facilities  in the U.S.  During 1999,  the Company
expanded the use of VDP sponge to its European  facilities and approximately 900
metric  tons  of  VDP   production  was  used  in  Europe,   which   represented
approximately 15% of the sponge consumed in the Company's  European  operations.
The Company expects the consumption of VDP sponge in its European  operations to
increase to one-third of their sponge requirements in 2000, which is expected to
assist the  Henderson,  Nevada  facility in  maintaining  operating  volumes and
manufacturing  cost rates. Due to changing market  conditions for certain grades
of sponge,  the Company's older  Kroll-leach  process sponge plant in Nevada was
temporarily  idled  at the  end of  March  1999.  The raw  materials  processing
facilities in  Morgantown  primarily  process  scrap used as melting  feedstock,
either in combination with sponge or separately.

         The Company's  U.S.  melting  facilities  produce ingots and slabs both
sold to customers and used as feedstock for its mill products operations.  These
melting  facilities  are expected to operate at  approximately  50% of aggregate
capacity in 2000, with certain production facilities temporarily idled.

         Titanium mill products are principally  produced at TIMET's forging and
rolling facility in Toronto, Ohio, which receives titanium ingots and slabs from
the  Company's  U.S.  melting  facilities.  The  Company's  forging  and rolling
facilities are expected to operate at approximately 55% of practical capacity in
2000.

         EUROPEAN  PRODUCTION.  TIMET UK's melting  facility in Witton,  England
produces VAR ingots used primarily as feedstock for its forging operations, also
in Witton.  The forging  operations  process the ingots  principally into billet
product for sale to customers  or into an  intermediate  for further  processing
into bar and plate at its facility in Waunarlwydd,  Wales. U.K. melting and mill
products  production  in 2000  is  expected  to be  approximately  60% and  55%,
respectively, of capacity.

         Capacity of  70%-owned  TIMET  Savoie in Ugine,  France is to a certain
extent dependent upon the level of activity in CEZUS' zirconium business,  which
may from time to time  provide  TIMET  Savoie  with  capacity  in excess of that
contractually  required  to be provided  by CEZUS (the 30%  minority  partner in
TIMET Savoie). During 2000, TIMET Savoie expects to operate at approximately 70%
of the maximum capacity required to be provided by CEZUS.

         Sponge  for  melting  requirements  in both  the  U.K.  and  France  is
purchased principally from suppliers in Japan and Kazakhstan, with approximately
one-third of TIMET's 2000 European  requirements  expected to be provided by the
Company's Henderson, Nevada VDP plant.

        DISTRIBUTION. The Company sells its products through its own sales force
based in the U.S. and Europe,  and through  independent  agents  worldwide.  The
Company's  marketing and  distribution  system also  includes ten  Company-owned
service  centers (six in the U.S. and four in Europe),  which sell the Company's
products on a just-in-time basis.

         The Company believes that it has a competitive sales and cost advantage
arising from the location of its production  plants and service  centers,  which
are in  close  proximity  to  major  customers.  These  centers  primarily  sell
value-added and customized mill products including bar and flat-rolled sheet and
strip. The Company believes its service centers give it a competitive  advantage
because of their ability to foster customer relationships, customize products to
suit specific customer requirements and respond quickly to customer needs.

<PAGE>

ITEM 3:  LEGAL PROCEEDINGS

         From time to time,  the Company is involved in  litigation  relating to
claims arising out of its operations in the normal course of business.  See Note
16 of the Consolidated  Financial Statements,  which information is incorporated
herein by reference.

ITEM 4:  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters  were  submitted  to a vote of security  holders  during the
quarter ended December 31, 1999.


<PAGE>


                                     PART II

ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         TIMET's common stock is traded on the New York Stock Exchange  (symbol:
"TIE"). On March 16, 2000, the closing price of TIMET common stock was $4.81 per
share.  The high and low sales prices for the  Company's  common  stock  (NASDAQ
prior to July 16, 1998) are set forth below.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998:                         HIGH             LOW
<S>                                                  <C>              <C>
   First Quarter                                  $   32.13        $   24.25
   Second Quarter                                     27.88            21.38
   Third Quarter                                      21.56            11.50
   Fourth Quarter                                     15.81             7.31

YEAR ENDED DECEMBER 31, 1999:                         HIGH             LOW
                                                      ----             ---
   First Quarter                                       9.88             5.69
   Second Quarter                                     12.13             5.81
   Third Quarter                                      13.06             7.13
   Fourth Quarter                                      6.88             4.12
</TABLE>

         As  of  March  16,  2000,  there  were   approximately   10,700  common
shareholders of record.

         In the third  quarter of 1999,  the  Company  suspended  payment of the
regular  quarterly  common  stock  dividend  that had been paid since the second
quarter of 1998. In September 1998, the Company's Board of Directors  authorized
the repurchase of up to four million shares of TIMET common stock in open market
or private transactions.  During 1998, the Company repurchased 90,000 shares for
approximately $1.2 million. No shares were repurchased in 1999.

         The Company's new U.S. credit facility,  entered into in February 2000,
prohibits  both  the  payment  of  common  stock   dividends  and  common  stock
repurchases.


<PAGE>
ITEM 6:  SELECTED FINANCIAL DATA

         The  selected  financial  data  set  forth  below  should  be  read  in
conjunction with the Company's  Consolidated  Financial  Statements and Item 7 -
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations."
<TABLE>
<CAPTION>
                                                                    Years Ended December 31,
                                           -------------------------------------------------------------------------
                                                1995          1996(1)          1997           1998           1999
                                                ----          -------          ----           ----           ----
                                                             ($ in millions, except per share data)
STATEMENT OF OPERATIONS DATA:
<S>                                           <C>              <C>            <C>            <C>             <C>
   Net sales                                $  184.7          $ 507.1        $ 733.6        $ 707.7        $  480.0
   Operating income (loss)                       5.4             59.8          133.0           82.7           (31.4)
   Interest expense                             10.4              9.0            2.0            2.9             7.1
   Net income (loss)                            (4.2)            47.6           83.0           45.8           (31.4)
   Earnings per share (2):

     Basic                                  $   (.27)        $   1.72        $  2.64        $  1.46        $  (1.00)
     Diluted (3)                                -                1.72           2.49           -               -
   Cash dividends per share                     -                -              -               .12             .12

BALANCE SHEET DATA:

   Cash and cash equivalents                $    -           $   86.5        $  69.0        $  15.5        $   20.7
   Total assets                                248.8            703.0          793.1          953.2           883.1
   Indebtedness (4)                             89.6             10.5            5.0          105.6           117.4
   Capital lease obligations                     -               11.6           11.2           10.3            10.1
   Minority interest - Convertible
    Preferred     Securities                     -              201.2          201.2          201.2           201.2
   Stockholders' equity                         68.1            326.2          408.9          448.4           408.1

OTHER OPERATING DATA:
   Cash flows provided (used):

     Operating activities                   $   (6.1)        $    (.7)       $  72.6        $  76.1        $   19.5
     Investing activities                       (2.5)          (131.4)         (79.8)        (223.2)          (21.7)
     Financing activities                        8.6            215.1           (9.8)          92.2             8.6
                                            -------------    -----------    -----------    ------------    ----------
          Net provided (used)               $     -          $   83.0        $ (17.0)       $ (54.9)       $    6.4

   Mill product shipments (metric tons           5.5             12.4           15.1           14.8            11.4
     000's)
   Average mill product prices per Kg       $  26.00         $  32.00        $ 35.00        $ 35.25        $  33.00
   Active employees at year end                1,020            2,950          3,025          2,740           2,350
   Order backlog at year end (5)            $  125.0         $  440.0        $ 530.0        $ 350.0        $  195.0
   Capital expenditures                     $    3.0         $   21.7        $  66.3        $ 115.2        $   24.8

<FN>
(1)      Significant acquisitions accounted for by the purchase method were made
         during 1996,  which included the  acquisitions  of the titanium  metals
         businesses  of IMI  plc  and  affiliates,  Axel  Johnson  Metals,  Inc.
         (including the remaining 50% interest in Titanium Hearth  Technologies)
         and a 70% interest in TIMET Savoie.

(2)      Common shares used to compute  earnings per share have been adjusted to
         reflect the 65-for-1  split of the Company's  common stock  effected in
         connection  with TIMET's June 1996  initial  public  offering of common
         stock.

(3)      Antidilutive in 1995, 1998 and 1999.

(4)  Includes bank and other debt, including loans payable to related parties.

(5)  "Order backlog" is defined as firm purchase orders (which are generally
     subject to cancellation by the customer upon payment of specified charges).
</FN>
</TABLE>


<PAGE>


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

                              RESULTS OF OPERATIONS

         GENERAL.  The  aerospace  industry in recent  history has accounted for
approximately  three-fourths  of U.S. and 40% to 50% of worldwide  titanium mill
products consumption,  and has had a significant effect on the overall sales and
profitability of the titanium industry. The aerospace industry, and consequently
the titanium  metals  industry,  is highly  cyclical.  During the second half of
1998,  it became  evident to the Company  that the  anticipated  record rates of
aircraft  production  would  not be  reached  and  that  a  decline  in  overall
production   rates  would  begin   earlier  than   forecast,   particularly   in
titanium-intensive  wide body planes.  During 1999,  aerospace customers reduced
inventories  and  adjusted to decreases  in overall  production  rates and, as a
result,  the  Company's  mill products  shipments  declined 23% to 11,400 metric
tons.  The Company's  fourth quarter 1999 sales of $105.5 million was the lowest
quarterly  sales  amount in four years.  At  present,  a  substantial  inventory
overhang still exists throughout the aerospace industry supply chain and current
expectations  are that 2000 sales will be somewhat below the fourth quarter 1999
annualized due to lower expected  sales volumes and selling  prices.  Industrial
demand  for  titanium  has also  declined  due to  weakness  in Asian  and other
economies and is expected to remain soft during 2000.

         The Company  estimates  that worldwide  industry  shipments of titanium
mill products peaked in 1997 at  approximately  60,000 metric tons and decreased
10% in 1998 to  approximately  54,000 metric tons and decreased a further 11% in
1999 to 48,000 metric tons.  Expectations for 2000 are a further decline in mill
product  shipments  although  the  decline  is  expected  to be less  than  that
experienced during each of the last two years.

         The Company's order backlog decreased to approximately  $195 million at
December  31, 1999 from $350  million at December  31, 1998 and $530  million at
December 31, 1997.  Substantially  all of the 1999 year end backlog is scheduled
to be shipped during 2000.

         The Company expects that production levels, capacity utilization, sales
volumes,  sales prices,  gross margins and operating  income  excluding  special
charges,  will all be lower in 2000  than they  were in 1999.  Accordingly,  the
Company  currently expects that its 2000 loss before special charges will exceed
its 1999 loss before  special  charges and looks to return to  profitability  in
late 2001.  In January  2000,  the  Company  adopted a plan to  restructure  the
organization  and  reduce  costs.  As part of this  reorganization,  the  global
manufacturing  and  commercial   operations  have  been  consolidated  into  two
organizations,  and the Company will further  reduce  personnel by about 10%, or
250 employees,  primarily  during the first half of 2000.  Additional  resources
will be  focused  in an effort  to  significantly  improve  the  quality  of the
Company's manufacturing,  customer service and management processes to return to
profitability. The restructuring actions taken in January are expected to result
in an additional  restructuring charge in the first quarter of 2000 of up to $10
million,  primarily  related to employee  termination  costs.  Additionally,  in
February 2000, the Company entered into new U.S. and U.K. credit facilities.  In
connection  therewith,  the Company wrote off $1.3 million of deferred financing
costs associated with its previous U.S. facility.

<PAGE>

         SALES AND  OPERATING  INCOME  (LOSS) - 1999  COMPARED  WITH  1998.  The
"Titanium  melted and mill  product"  segment  net sales in 1999  decreased  30%
compared  to 1998  primarily  due to a 23%  decrease in mill  products  shipment
volume  resulting  primarily  from reduced  demand in the aerospace  market,  as
described  above.  Average selling prices for 1999 were  approximately  7% lower
than 1998 reflecting both the price effect of long-term agreements and increased
price competition on non-contract business. Average prices on 2000 shipments are
expected to be as much as 15% lower than average 1999 in certain  product lines,
but only slightly  lower than average  prices in the fourth  quarter of 1999. As
described  in  Note 9 to the  Consolidated  Financial  Statements,  the  Company
produced  approximately  $16  million of titanium  ingot in 1999,  for which the
customer was billed but income recognition was deferred. The Company anticipates
the majority of this ingot will be converted  and shipped in 2000, at which time
the related income will be recorded.

         The  decrease  in net sales of the  "Other"  segment is a result of the
Company's ceasing to consolidate its castings business after July 1998. See Note
4 to the Consolidated Financial Statements.

         Total cost of sales in 1999 was 95% of sales  compared  to 77% in 1998.
The increase in the  percentage is a result of the lower selling  prices,  lower
production volumes, higher depreciation,  and increased reserves for slow-moving
inventory.  Yield, rework and deviated material costs were also higher and plant
operating rates were lower. Selling,  general,  administrative and developmental
expenses  in 1999 were lower than 1998 in dollar  terms due in large part to the
completion  of  the  implementation  of  the  initial  phase  of  the  Company's
business-enterprise  system  during  the first  half of 1999.  These  costs as a
percentage of sales,  however,  increased to approximately  10% primarily due to
the decline in sales.

         In the fourth  quarter of 1999,  the Company  recorded  $6.8 million of
special  charges  consisting of $4.5 million of  restructuring  charges and $2.3
million of  write-downs  associated  with the  Company's  investment  in certain
start-up joint  ventures.  During the same quarter,  the Company also recorded a
$4.3 million charge to cost of sales for  slow-moving  inventory.  Approximately
half of the  restructuring  charges  were  non-cash,  primarily  related  to the
disposition of a Germany  subsidiary,  with the cash  component  relating to the
termination of 100 people. The $4.3 million charge for slow-moving inventory and
$4.7  million  of the $6.8  million  of  special  charges  are  included  in the
operating  loss of the  "Titanium  melted  and mill  products"  segment in 1999.
Operating  income of the  "Titanium  melted and mill  products"  segment in 1998
included  special  charges of $19.5  million.  Operating  losses of the  "Other"
segment  included  $4.5 million and $2.1 million of special  charges in 1998 and
1999, respectively. See Note 6 to the Consolidated Financial Statements.

         Equity in earnings  (losses) of joint ventures of the "Titanium  melted
and mill products"  segment  decreased by $1.3 million from 1998 principally due
to the decline in earnings of ValTimet.  Equity in losses of the "Other" segment
were  higher in 1999 due to the Company  recording a higher  share of the losses
for a full year in 1999 as a result of  increased  ownership in certain of these
ventures in mid-1998.

         SALES AND OPERATING  INCOME - 1998 COMPARED WITH 1997. Net sales of the
"Titanium  melted and mill  products"  segment in 1998 were 2% below 1997 levels
primarily due to lower  volumes from reduced  demand during the last half of the
year in both aerospace and industrial  markets, as described above. Mill product
shipment  volume for the year declined 2% to 14,800 metric tons.  Selling prices
on shipments were relatively flat, in large part due to prices on orders entered
prior to the decline in demand.

         Net sales of the "Other" segment were down 34% primarily as a result of
the Company's  ceasing to consolidate its castings business after July 1998. See
Note 4 to the Consolidated Financial Statements.

<PAGE>

         Total  cost of sales  was 77% of sales  in 1998,  comparable  to 76% of
sales in 1997. Selling,  general,  administrative and developmental  expenses in
1998 were higher than in 1997,  in both total  dollar and percent of sales terms
(8.5%,  up from  6.2%),  in large  part  due to  information  technology  costs,
including implementation of the Company's business-enterprise information system
and addressing Y2K issues.

         Equity in earnings of joint  ventures of the "Titanium  melted and mill
products"  segment  improved  in 1998  over  1997  principally  due to  improved
earnings of ValTimet.  Equity losses of the "Other"  segment were higher in 1998
as  certain  ventures  were held for the full year,  compared  to a part year in
1997.

         EUROPEAN OPERATIONS.  The Company has substantial operations and assets
located in Europe,  principally the United Kingdom,  with smaller  operations in
France,  Italy and  Germany.  Titanium  is a  worldwide  market and the  factors
influencing  the Company's U.S. and European  operations are  substantially  the
same.

         Approximately  60% of the Company's  European sales are  denominated in
currencies  other  than the U.S.  dollar,  principally  the  British  pound  and
European  currencies  tied to the  euro.  Certain  purchases  of raw  materials,
principally  titanium sponge and alloys, for the Company's  European  operations
are  denominated in U.S.  dollars,  while labor and other  production  costs are
primarily  denominated in local  currencies.  The  functional  currencies of the
Company's European subsidiaries are those of their respective  countries;  thus,
the U.S.  dollar value of these  subsidiaries'  sales and costs  denominated  in
currencies  other  than their  functional  currency,  including  sales and costs
denominated in U.S. dollars, are subject to exchange rate fluctuations which 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  U.S.  dollar  sales  and  purchases  of  the  Company's   European
operations   described  above  provide  some  natural  hedge  of  non-functional
currencies,  and the  Company  does not use  currency  contracts  to  hedge  its
currency exposures.  Net currency transaction  gains/losses included in earnings
was a $1.2 million loss in 1999, a $.4 million gain in 1998 and nominal in 1997.
At  December  31,  1999,  consolidated  assets and  liabilities  denominated  in
currencies other than functional  currencies were  approximately $20 million and
$24 million,  respectively,  consisting primarily of U. S. dollar cash, accounts
receivable,  accounts  payable and borrowings.  Exchange rates among 11 European
currencies  (including  the French  franc,  Italian  lira and German  mark,  but
excluding the British  pound) became fixed relative to each other as a result of
the  implementation  of the  euro  effective  in  1999.  Costs  associated  with
modifications  of  systems  to  handle  euro-denominated  transactions  were not
significant.

         DIVIDENDS AND INTEREST INCOME.  In 1999,  dividends and interest income
consists principally of accrued dividends on $80 million of non-voting preferred
securities of Special Metals Corporation, which were purchased by the Company in
October  1998. In 1997 and 1998,  the amount  represents  primarily  earnings on
corporate cash equivalents and varies with cash levels and interest rates.

See "Liquidity and Capital Resources - Financing Activities".

         GENERAL CORPORATE INCOME (EXPENSE).  General corporate income (expense)
consists principally of currency transaction gains/losses.

<PAGE>

         INTEREST EXPENSE.  Interest expense for 1999 more than doubled from the
levels of 1998  primarily  due to higher  levels of average  debt and  increased
interest rates. Also contributing to the higher comparative  interest expense is
a lower level of interest  being  capitalized  in 1999 compared to 1998 as major
capital projects have been completed.  While average  borrowing levels increased
in 1998 over 1997, interest rates declined and interest  capitalized  increased.
Interest  expense  in 2000 is  expected  to be  higher  than  1999 due to higher
average borrowing levels and higher interest rates on the new credit facilities.
See Note 10 to the Consolidated Financial Statements.

         MINORITY  INTEREST.  Annual  dividend  expense  related  to the  6.625%
Convertible  Preferred  Securities,  issued in November 1996,  approximates  $13
million and is reported as minority  interest  net of  allocable  income  taxes.
Other minority  interest  relates  primarily to the 30% interest in TIMET Savoie
held by Compagnie Europeene du Zirconium-CEZUS, S.A. ("CEZUS").

         INCOME TAXES. The Company operates in several tax  jurisdictions and is
subject to varying income tax rates.  As a result,  the geographic mix of pretax
income (loss) can impact the Company's  overall effective tax rate. In 1997, the
Company's  income  tax rate  also  varied  from the U.S.  statutory  rate due to
reductions  in the  deferred  tax  valuation  allowance  related to current year
utilization of tax attributes. For financial reporting purposes, the Company has
recognized the tax benefit of all of its net operating loss  carryforwards,  and
expects that tax  benefits to be  recognized  during 2000 will be deferred.  See
Note 13 to the Consolidated Financial Statements.

         YEAR  2000  ("Y2K").   As  a  result  of  many  computer   systems  and
applications  being  written to use two-digit  fields to designate a year,  many
date-sensitive systems may have recognized the year 2000 as 1900, or not at all.
This could have resulted in a system failure or miscalculations  causing systems
to  incorrectly  process  critical  financial,   manufacturing  and  operational
information. These are generally referred to as the "Y2K Issues".

         During 1999,  the  Company,  with the help of outside  specialists  and
consultants,  completed all Y2K readiness  procedures and did not experience any
significant  adverse effects on its systems or operations as a result of the Y2K
Issues.  These  readiness  procedures  included  (i) an  initial  assessment  of
potential Y2K Issues in its non-information systems (e.g., its manufacturing and
communication  systems),  as well as in those information  systems that were not
replaced by the new business-enterprise  system, (ii) determining,  prioritizing
and  implementing  remedial  actions,  including  testing,  and (iii) developing
contingency plans in the event internal or external Y2K Issues were not resolved
by the  target  date for  completion.  The  Company  expended  in the  aggregate
approximately  $4.5 million in 1998-99 ($2.5 million in 1999) on these  specific
non-information  system Y2K  Issues,  principally  embedded  system  technology.
Additionally,  most of the Company's  information  systems have been replaced in
connection with the implementation of the Company's  business-enterprise system,
the initial implementation of which was substantially completed with the rollout
of the system to the U.K. sites in 1999.  The cost of the new system,  including
related  equipment  and  networks,  aggregated  approximately  $54.0  million in
1997-99 ($43.5 million capital;  $10.5 million  expense),  of which $4.0 million
($2.5 million  capital;  $1.5 million  expense) was expended in 1999. To date in
2000, none of the Company's manufacturing  facilities have suffered any downtime
due to noncompliant  systems,  nor have any significant problems associated with
the Y2K Issues been  identified  in any systems.  The Company  will  continue to
monitor its major  systems in order to ensure that such  systems  continue to be
year 2000 compliant.  However, based primarily upon success to date, the Company
does not currently expect any significant Y2K Issues will develop for any of its
systems.  Furthermore,  the Company is not aware of any significant  adverse Y2K
Issues that may have arisen for its key suppliers or customers.

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

         At  December 31, 1999, the Company  had $21  million  of cash  and cash
equivalents  and $21  million  of  borrowing  availability  under  its U.S.  and
European  bank credit  lines.  Net debt at year end 1999 was  approximately  $96
million ($21 million of cash and  equivalents  and $117 million of notes payable
and debt,  principally  borrowings  under the  Company's  U.S.  and U.K.  credit
agreements).

         In February 2000, the Company completed a new $125 million,  three-year
U.S.-based  revolving credit  agreement  replacing its previous U.S. bank credit
facility.  Borrowings under the new facility are limited to a formula-determined
borrowing  base derived  from the value of accounts  receivable,  inventory  and
equipment.  The credit agreement limits additional  indebtedness,  prohibits the
payment of common stock  dividends,  and contains other  covenants  customary in
lending  transactions  of this type. The Company also increased its U.K.  credit
agreement  from  (pound)18  million  ($29  million) to  (pound)30  million  ($48
million) with its existing U.K. lender.

         Borrowings under these U.S. and U.K. agreements at closing were used to
repay the $58 million in then-outstanding borrowings under the prior U.S. credit
agreement,  which was terminated.  Upon closing on the new credit  facilities on
February 25, 2000,  the Company had about $96 million of borrowing  availability
under these agreements.  See Note 10 to the Consolidated  Financial  Statements.
The Company  believes the new U.S. and U.K.  credit  facilities  will provide it
with the liquidity necessary for current market and operating conditions.

         OPERATING  ACTIVITIES.  Cash  provided  by  operating  activities was
approximately $19 million in 1999, $76 million in 1998 and $73 million in 1997.
<TABLE>
<CAPTION>
                                                            1997              1998              1999
                                                        --------------    --------------    --------------
                                                                          (In millions)
<S>                                                        <C>              <C>              <C>
Excluding changes in assets and liabilities               $   121.3        $   108.7         $    23.9
Changes in assets and liabilities                             (48.7)           (32.6)             (4.4)
                                                        --------------    --------------    --------------

                                                          $    72.6        $    76.1         $    19.5
                                                        ==============    ==============    ==============
</TABLE>

         Cash provided by operating activities,  excluding changes in assets and
liabilities,  during  the  past  three  years  generally  follows  the  trend in
operating  results.  Changes in assets  and  liabilities  reflect  the timing of
purchases,  production  and sales,  and can vary  significantly  from  period to
period.  Accounts  receivable  increased  (used cash) in 1997 primarily  because
sales levels were increasing, and provided cash in 1998 and 1999 as sales levels
were decreasing.

         Inventories  decreased in 1997 as a result of very high shipment levels
in the fourth quarter of that year. Inventories increased significantly in 1998,
reflecting  material  purchases and production rates that were based on expected
sales  levels  higher than the actual  sales level turned out to be. The Company
reduced  inventories during 1999 as excess raw materials were consumed and other
reduction and control  efforts were put in place.  The Company expects a further
reduction during 2000 in raw materials and finished goods inventory.

<PAGE>

         Changes in net  current  income  taxes  payable  increased  in 1997 and
decreased in 1998 in part due to the delayed  timing of cash  payments for taxes
in Europe relative to earnings.  In 1999,  income taxes payable decreased and is
principally a receivable at December 31, 1999 as the current  year's losses will
be carried  back to recover a portion of prior  years'  taxes  paid.  Changes in
accounts  with related  parties  resulted  primarily  from  relative  changes in
receivable levels with joint ventures in 1997, 1998 and 1999.

         INVESTING  ACTIVITIES.  The  Company's  capital  expenditures  were $25
million in 1999,  down from $115 million in 1998 and $66 million in 1997.  About
one-half of capital expenditures during the two-year period 1997-1998 related to
capacity  expansion  projects  associated  with long-term  customer  agreements.
Capital  expenditures in 1999 are primarily  related to the expansion of forging
capacity   at   the   Toronto,   Ohio   facility,   the   installation   of  the
business-enterprise  system  in  Europe  and  various  environmental  and  other
projects.

         Approximately  10% of the Company's capital spending in 1999 related to
the major  business-enterprise  information  systems and information  technology
project  implemented  at various  sites  throughout  the Company.  Approximately
one-fourth of the two-year period  1997-1998  capital  spending  related to this
project.  The new system was implemented in stages in the U.S. during 1998, with
initial implementation  substantially  completed with the rollout to the U.K. in
February 1999. Certain costs associated with the business-enterprise information
systems project, including training and reengineering, are expensed as incurred.

         Capital spending for 2000 is currently expected to be about $15 million
covering  principally capital  maintenance and health,  safety and environmental
projects,  which is less than the expected depreciation and amortization expense
of approximately $44 million.

         Cash used for business  acquisitions and joint ventures in 1998 related
primarily to the Loterios and Wyman-Gordon  transactions more fully described in
Notes  3  and  4  to  the  Consolidated  Financial  Statements.  In  1997,  such
investments  consisted  primarily of cash  contributions  in connection with the
formation of ValTimet and  investments  in companies  developing new markets and
uses for titanium.

         In October 1998, the Company  purchased for cash $80 million of Special
Metals  Corporation  6.625%  convertible  preferred  stock  (the "SMC  Preferred
Stock") in conjunction  with, and concurrent with, SMC's acquisition of the Inco
Alloys  International  high  performance  nickel  alloys  business  unit of Inco
Limited.  TIMET is  accruing  dividends  on the SMC  Preferred  Stock,  although
dividends  cannot  currently  be paid by SMC due to  limitations  imposed  by an
amendment of SMC's bank credit agreement.  The Company  understands that SMC has
sued Inco Limited  alleging  that it made various  misrepresentations  to SMC in
connection with the acquisition.  The Company is evaluating the position it will
take with respect to SMC's claims.

         FINANCING  ACTIVITIES.  Net  borrowings  of $13 million in 1999 and $97
million in 1998 were  primarily  to fund  capital  expenditures  and in 1998 the
Loterios  acquisition.  Net  debt  repayments  of $6  million  in  1997  related
primarily  to  reductions  in European  working  capital  borrowings,  including
amounts due to CEZUS, the Company's minority partner in TIMET Savoie.

         In November 1999, the Company's  Board of Directors  ("Board") voted to
suspend the regular  quarterly  dividend on its common  stock in view of,  among
other  things,  the  continuing  weakness in overall  market demand for titanium
metal products. The Company's new U.S. credit agreement entered into in February
2000 now prohibits the payment of dividends on the Company's common stock.

<PAGE>

         The Company's Convertible Preferred Securities do not require principal
amortization, and TIMET has the right to defer dividend payments for one or more
periods of up to 20 consecutive quarters for each period. The Company's new U.S.
credit  agreement  prohibits  the payment of  Convertible  Preferred  Securities
dividends if "excess availability",  as determined under the agreement,  is less
than $25 million.  Upon closing of the new U.S.  credit facility on February 25,
2000, the Company had approximately $80 million of borrowing  availability under
this  agreement.  The  Company's  Board will continue to evaluate the payment of
dividends on the Convertible Preferred Securities on a quarter-by-quarter  basis
based upon, among other things,  the Company's actual and forecasted  results of
operations,   financial   condition,   cash  requirements  for  its  businesses,
contractual requirements and other factors deemed relevant.

         The Company periodically evaluates its liquidity requirements,  capital
needs  and  availability  of  resources  in view of,  among  other  things,  its
alternative uses of capital, its debt service requirements, the cost of debt and
equity capital,  and estimated  future operating cash flows. As a result of this
process,  the Company has in the past and, in light of its current outlook,  may
in the future seek to raise additional capital,  modify its common and preferred
dividend  policies,   restructure  ownership  interests,   incur,  refinance  or
restructure  indebtedness,  repurchase  shares of capital stock, sell assets, or
take a  combination  of such  steps or other  steps to  increase  or manage  its
liquidity and capital resources.

         In the normal course of business, the Company investigates,  evaluates,
discusses and engages in acquisition,  joint venture, strategic relationship and
other business  combination  opportunities in the titanium,  specialty metal and
related  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.

ENVIRONMENTAL MATTERS.

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


<PAGE>


ITEM 7A:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         GENERAL.  The Company is exposed to market risk from changes in foreign
currency exchange rates and interest rates. The Company typically does not enter
into  interest  rate swaps or other  types of  contracts  in order to manage its
interest  rate market risk and typically  does not enter into  currency  forward
contracts  to  manage  its  foreign   exchange   market  risk   associated  with
receivables,  payables and indebtedness denominated in a currency other than the
functional currency of the particular entity. The Company was not a party to any
type of forward or derivative option contract at December 31, 1998 or 1999.

         INTEREST  RATES.  The Company is exposed to market risk from changes in
interest rates related to indebtedness.  At December 31, 1999, substantially all
of the Company's  indebtedness was denominated in U.S. dollars and bore interest
at variable rates, primarily related to spreads over LIBOR, as summarized below.

<TABLE>
<CAPTION>
                                                   Contractual maturity date (1)
                                              --------------------------------------     Interest
                                                2000           2001           2002       rate (2)
                                              --------       --------       --------    ----------
                                                          (In millions)
Variable rate debt:
<S>                                           <C>            <C>            <C>          <C>
   U. S. dollars                              $   2.9        $   -           $101.9        7.06%
   British pounds                                 -              -              5.0        6.25%
   Italian lira                                   5.1            .6              -         4.26%
   French francs                                  2.0            -               -         3.06%

<FN>
(1)      Non-U. S. dollar denominated amounts are translated at year-end rates of exchange.
(2)      Weighted average.
</FN>
</TABLE>

At  December  31,  1998,   substantially   all  of  the  Company's   outstanding
indebtedness consisted of $80 million of U.S.  dollar-denominated  variable rate
debt.

         FOREIGN CURRENCY  EXCHANGE RATES. The Company is exposed to market risk
arising  from  changes in  foreign  currency  exchange  rates as a result of its
international operations. See Item 7 -- "Management's Discussion and Analysis of
Financial  Condition  and  Results of  Operations  --Results  of  Operations  --
European Operations," which information is incorporated herein by reference.

         OTHER.  The Company holds $80 million of preferred  securities that are
not publicly  traded,  are accounted  for by the cost method and are  considered
"held-to-maturity"  securities.  See  Item  7  -  "Management's  Discussion  and
Analysis of  Financial  Condition  and  Results of  Operations  - Liquidity  and
Capital  Resources  -  Investing  Activities"  and  Note 5 to  the  Consolidated
Financial Statements.

ITEM 8:     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The  information  required  by this  Item is  contained  in a  separate
section of this Annual Report. See "Index of Financial Statements and Schedules"
on page F.

ITEM 9:     CHANGES IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON ACCOUNTING AND
FINANCIAL DISCLOSURE

         Not applicable.


<PAGE>


ITEM 10:    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The following sets forth certain  information  with regard to executive
officers of the Company.  The information required with respect to Directors and
by Item 405 of Regulation S-K is incorporated by reference to TIMET's definitive
proxy  statement to be filed with the  Securities and Exchange  Commission  (the
"Commission")  pursuant to  Regulation  14A within 120 days after the end of the
fiscal year covered by this report (the "TIMET Proxy Statement").

<TABLE>
<CAPTION>

      NAME                             AGE                          POSITION(S)
 ------------------------------        ---         --------------------------------------------------------
<S>                                   <C>         <C>
J. Landis Martin                       54          Chairman, President and Chief Executive Officer
Charles H. Entrekin, Jr.               51          Executive Vice President--Commercial
Christian Leonhard                     54          Executive Vice President--Operations
Robert E. Musgraves                    45          Executive Vice President and General Counsel
Mark A. Wallace                        42          Executive Vice President and Chief Financial Officer
</TABLE>

         J. LANDIS MARTIN  has been Chairman and a director of the Company since
1987,  has served as Chief  Executive  Officer of the Company since 1995, and as
President of the Company from 1995 to 1996 and since  January  2000.  Mr. Martin
has been the Chief  Executive  Officer and a director of Tremont since 1988, and
has served as Chairman of Tremont since 1990. Mr. Martin has also been President
of Tremont since 1987 (except for a brief period in 1990). He has also served as
President and Chief Executive Officer of NL Industries,  Inc., a manufacturer of
titanium  dioxide  pigments,  since  1987 and as a  director  of NL since  1986.
Tremont and NL may be deemed to be affiliates of the Company. Mr. Martin is also
a director of Haliburton  Company, a provider of energy services and engineering
and construction services, Apartment Investment & Management Corporation, a real
estate  investment  trust,  and  Crown  Castle  International   Corporation,   a
communications company.

        CHARLES H. ENTREKIN, JR.  has been  Executive Vice  President-Commercial
since January 2000.  Prior to that,  he served as  Vice President since 1997 and
Vice President;  President-North  American  Operations  since January 1999. From
1997 to January 1999,  he  served  as  President-THT  Operations.  Prior to that
time,  Dr. Entrekin served as  Vice  President-Commercial for THT since 1993 and
as its Vice President-Technology from 1985 to 1993.

         CHRISTIAN LEONHARD has been Executive Vice  President-Operations  since
January  2000.  Prior to that, he served as Vice  President;  President-European
Mill Products Operations since 1997. Prior to that time, he was in charge of the
Company's operations and sales activities in France since 1988.

         ROBERT E. MUSGRAVES  has been  Executive  Vice  President  and General
Counsel  since  January  2000.  Prior to that,  he served as Vice  President and
General  Counsel of the Company  since 1990.  He has also served as Secretary of
the Company since 1991.  Since 1993, Mr.  Musgraves has been General Counsel and
Secretary  of  Tremont,  and since  1994 has also  served as Vice  President  of
Tremont.

         MARK A. WALLACE has been Executive  Vice President and Chief  Financial
Officer since January 2000. Prior to that, he served as Vice President-Strategic
Change  and  Information  Technology  since  1996.  Mr.  Wallace  served as Vice
President-Finance and Treasurer of the Company from 1992 to 1996. He also served
as Vice  President  and  Controller  of  Tremont  from 1992  until  1997 and was
appointed  Vice  President  and Chief  Financial  Officer of Tremont in February
2000.


<PAGE>


ITEM 11:  EXECUTIVE COMPENSATION

         The  information  required by this Item is incorporated by reference to
the TIMET Proxy Statement.

ITEM 12:  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The  information  required by this Item is incorporated by reference to
the TIMET Proxy Statement.

ITEM 13:  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required by this Item is incorporated by reference to
the TIMET Proxy Statement.  See also Note  15  to  the  Consolidated  Financial
Statements.

                                     PART IV

ITEM 14:  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

  (A) AND (D)   FINANCIAL STATEMENTS AND SCHEDULES

                  The consolidated  financial statements and schedules listed by
the Registrant on the accompanying  Index of Financial  Statements and Schedules
(see page F) are filed as part of this Annual Report.

  (B)                REPORTS ON FORM 8-K

                   Reports on Form 8-K for the quarter  ended  December 31, 1999
and the months of January and February 2000:

<TABLE>
<CAPTION>
                           Filing Date                                Items Reported
                 --------------------------------              -----------------------------
                       <S>                             <C>               <C>   <C>
                        October 1, 1999                 -                 5 and 7.
                        October 27, 1999                -                 5 and 7.
                        November 2, 1999                -                 5 and 7.
                        December 22, 1999               -                 5 and 7.
                        January 18, 2000                -                 5 and 7.
                        January 28, 2000                -                 5 and 7.
                        February 28, 2000               -                 5 and 7.
</TABLE>

  (C)                EXHIBITS

                    Included  as  exhibits  are the items  listed in the Exhibit
Index.  TIMET  will  furnish a copy of any of the  exhibits  listed  below  upon
payment  of $4.00 per  exhibit  to cover the  costs to TIMET of  furnishing  the
exhibits.  Instruments  defining the rights of holders of long-term  debt issues
which do not exceed 10% of  consolidated  total  assets will be furnished to the
Commission upon request.


<PAGE>
<TABLE>
<CAPTION>

ITEM NO.                                                    EXHIBIT INDEX



<S>              <C>
 3.1              Amended and Restated Certificate of Incorporation of Titanium
                  Metals Corporation, incorporated by reference to Exhibit 3.1
                  to Titanium Metals Corporation's Registration Statement on
                  Form S-1 (No. 333-2940).

3.2               Bylaws of Titanium Metals Corporation as Amended and Restated,
                  dated February 23, 1999, incorporated by reference to Exhibit
                  3.2 to Titanium  Metals  Corporation's  Annual Report on Form
                  10-K (No.  1-14368) for the year ended December 31, 1998.

4.1               Certificate of Trust of TIMET Capital Trust I, dated November
                  13, 1996,  incorporated  by reference to Exhibit 4.1 to
                  Titanium Metals Corporation's Current Report on Form 8-K filed
                  with the Commission on December 5, 1996.

4.2               Amended and  Restated  Declaration  of Trust of TIMET  Capital
                  Trust I, dated as of November 20, 1996,  among Titanium Metals
                  Corporation, as Sponsor, The Chase Manhattan Bank, as Property
                  Trustee, Chase Manhattan Bank (Delaware),  as Delaware Trustee
                  and Joseph S.  Compofelice,  Robert E.  Musgraves  and Mark A.
                  Wallace,  as Regular  Trustees,  incorporated  by reference to
                  Exhibit  4.2 to the  Registrant's  Current  Report on Form 8-K
                  filed with the Commission on December 5, 1996.

4.3               Indenture for the 6 5/8% Convertible  Subordinated Debentures,
                  dated  as  of  November  20,  1996,   among  Titanium   Metals
                  Corporation   and  The  Chase   Manhattan  Bank,  as  Trustee,
                  incorporated  by reference to Exhibit 4.3 to the  Registrant's
                  Current  Report  on Form  8-K  filed  with the  Commission  on
                  December 5, 1996.

4.4               Form of 6 5/8%  Convertible  Preferred  Securities  (included
                  in Exhibit 4.1 above),  incorporated  by  reference to
                  Exhibit 4.5 to the Registrant's Current Report on Form 8-K
                  filed with the Commission on December 5, 1996.

4.5               Form of 6 5/8%  Convertible  Subordinated  Debentures
                  (included in Exhibit 4.2 above),  incorporated by reference to
                  Exhibit 4.5 to the Registrant's Current Report on Form 8-K
                  filed with the Commission on December 5, 1996.

4.6               Form of 6 5/8% Trust Common Securities  (included in Exhibit
                  4.2 above),  incorporated by reference to Exhibit 4.5 to
                  the Registrant's Current Report on Form 8-K filed with the
                  Commission on December 5, 1996.

4.7               Convertible Preferred Securities Guarantee, dated as of
                  November 20, 1996, between Titanium Metals Corporation,  as
                  Guarantor,  and The Chase  Manhattan  Bank,  as Guarantee
                  Trustee,  incorporated  by reference to Exhibit 4.6 to the
                  Registrant's Current Report on Form 8-K filed with the
                  Commission on December 5, 1996.

9.1               Shareholders' Agreement,  dated February 15, 1996, among
                  Titanium Metals Corporation,  Tremont Corporation,  IMI plc,
                  IMI Kynoch Ltd., and IMI Americas,  Inc.,  incorporated by
                  reference to Exhibit 2.2 to Tremont  Corporation's Current
                  Report on Form 8-K (No. 1-10126) filed with the Commission on
                  March 1, 1996.

9.2               Amendment  to the  Shareholders'  Agreement,  dated  March 29,
                  1996,  among  Titanium  Metals  Corporation,  Tremont
                  Corporation,  IMI plc, IMI Kynoch Ltd., and IMI Americas Inc.,
                  incorporated by reference to Exhibit 10.30 to Tremont
                  Corporation's Annual Report on Form 10-K (No. 1-10126) for the
                  year ended December 31, 1995.


<PAGE>

10.1              Sponge Purchase  Agreement,  dated  May 30,  1990,  between
                  Titanium Metals  Corporation and Union Titanium Sponge
                  Corporation and Amendments No. 1 and 2,  incorporated  by
                  reference to Exhibit 10.25 of Tremont Corporation's Annual
                  Report on Form 10-K (No. 1-10126) for the year ended December
                  31, 1991.

10.2              Amendment  No.  3 to  the  Sponge  Purchase  Agreement,  dated
                  December 3, 1993,  between  Titanium  Metals  Corporation  and
                  Union Titanium Sponge  Corporation,  incorporated by reference
                  to Exhibit  10.33 of Tremont  Corporation's  Annual  Report on
                  Form 10-K (No. 1-10126) for the year ended December 31, 1993.

10.3              Amendment No. 4 to the Sponge Purchase Agreement, dated May 2,
                  1996,  between Titanium Metals  Corporation and Union Titanium
                  Sponge Corporation,  incorporated by reference to Exhibit 10.1
                  to Tremont  Corporation's  Quarterly  Report on Form 10-Q (No.
                  1-10126) for the quarter ended March 31, 1996.

10.4              Lease  Agreement,  dated  January  1,  1996,  between  Holford
                  Estates  Ltd. and IMI  Titanium  Ltd.  related to the building
                  known  as  Titanium   Number  2  Plant  at  Witton,   England,
                  incorporated   by  reference  to  Exhibit   10.23  to  Tremont
                  Corporation's Annual Report on Form 10-K (No. 1-10126) for the
                  year ended December 31, 1995.

10.5              Intercorporate  Services  Agreement  between  Titanium  Metals
                  Corporation and Tremont  Corporation,  effective as of January
                  1,  1999,  incorporated  by  reference  to  Exhibit  10.6 to a
                  Quarterly  Report on Form 10-Q for the quarter ended March 31,
                  1999 filed by Tremont Corporation (No. 1-10126).

10.6*             1996 Long Term Performance Incentive Plan of Titanium Metals
                  Corporation,  incorporated by reference to Exhibit 10.19
                  to Titanium Metals Corporation's Amendment No. 1 to
                  Registration Statement on Form S-1 (No. 333-18829).

10.7*             Titanium  Metals  Corporation  Amended and Restated  1996
                  Non-Employee  Director  Compensation  Plan, as amended and
                  restated effective February 23, 1999.

10.8*             Senior Executive Cash Incentive Plan, incorporated by
                  reference to Appendix B to Titanium Metals Corporation's proxy
                  statement included as part of a statement on Schedule 14A
                  dated April 17, 1997.

10.9*             Executive Severance Policy.

10.10             Purchase Agreement,  dated November 20, 1996, between Titanium
                  Metals  Corporation,  TIMET Capital Trust I, Salomon  Brothers
                  Inc, Merrill Lynch,  Pierce,  Fenner & Smith  Incorporated and
                  Morgan  Stanley & Co.  Incorporated,  as  Initial  Purchasers,
                  incorporated by reference to Exhibit 99.1 to the  Registrant's
                  Current  Report  on Form  8-K  filed  with the  Commission  on
                  December 5, 1996.

10.11             Registration Agreement, dated November 20, 1996, between TIMET
                  Capital Trust I and Salomon Brothers Inc, as Representative of
                  the Initial  Purchasers,  incorporated by reference to Exhibit
                  99.1 to the Registrant's Current Report on Form 8-K filed with
                  the Commission on December 5, 1996.

10.12             Loan and Security  Agreement by and among  Congress  Financial
                  Corporation   (Southwest)   as  Lender  and  Titanium   Metals
                  Corporation   and  Titanium  Hearth   Technologies,   Inc.  as
                  borrowers, dated February 25, 2000.

10.13             Investment  Agreement  dated  July 9, 1998,  between  Titanium
                  Metals  Corporation,  TIMET  Finance  Management  Company  and
                  Special  Metals  Corporation,  incorporated  by  reference  to
                  Exhibit 10.1 to the  Registrant's  Current  Report on Form 8-K
                  dated July 9, 1998.

10.14             Intercorporate  Services  Agreement  between Titanium Metals
                  Corporation and NL Industries, Inc. effective as of January 1,
                  1999, incorporated by reference to Exhibit 10.3 to a Quarterly
                  Report on Form 10-Q for the quarter ended March 31,
                  1999 filed by NL Industries, Inc. (No. 1-640).
<PAGE>

10.15             Form of Loan and  Pledge  Agreement  by and  between  Titanium
                  Metals  Corporation and individual  TIMET executives under the
                  Corporation's   Executive   Stock   Ownership   Loan  Program,
                  incorporated by reference to Exhibit 10.3 to the  Registrant's
                  Quarterly  Report on Form 10-Q for the quarter ended September
                  30, 1998.

10.16             Amendment to  Investment  Agreement,  dated  October 28, 1998,
                  among Titanium Metals  Corporation,  TIMET Finance  Management
                  Company  and  Special  Metals  Corporation,   incorporated  by
                  reference to Exhibit 10.4 to the Registrant's Quarterly Report
                  on Form 10-Q for the quarter ended September 30, 1998.

10.17             Registration Rights Agreement, dated October 28, 1998, between
                  TIMET   Finance   Management   Company  and   Special   Metals
                  Corporation,  incorporated by reference to Exhibit 10.5 to the
                  Registrant's  Quarterly  Report on Form  10-Q for the  quarter
                  ended September 30, 1998.

10.18             Certificate of Designations for the Special Metals Corporation
                  Series A Preferred Stock,  filed on October 28, 1998, with the
                  Secretary of State of Delaware,  incorporated  by reference to
                  Exhibit 4.5 of a Current  Report on Form 8-K dated October 28,
                  1998, filed by Special Metals Corporation (No. 000-22029).

10.19*            Severance Agreement between Titanium Metals Corporation and
                  Andrew R. Dixey dated February 25, 2000.

10.20*            Executive Severance Agreement, dated as of September 27, 1996,
                  between  Titanium  Hearth  Technologies,  Inc. and
                  William C. Acton.

10.21*            Severance Agreement, dated February 19, 1999, between Titanium
                  Metals Corporation and William C. Acton.

10.22*            Executive  Agreement  dated as of September  27, 1996, between
                  Titanium Hearth Technologies, Inc. and Charles H. Entrekin,
                  Jr.

99.1              Complaint and Jury Demand filed by Titanium Metals Corporation
                  against The Boeing Company in District Court, City and County
                  of Denver,  State of Colorado, on March 21, 2000, Case
                  No. 00CV1402, including Exhibit A, Purchase and Sale Agreement
                  (for titanium  products) dated as of November 5, 1997 by and
                  between The Boeing Company, acting through its division,
                  Boeing Commercial Airplane Group, and Titanium Metals
                  Corporation, incorporated by reference to Exhibit 99.2 to
                  the Registrant's Current Report on Form 8-K dated
                  March 22, 2000.

21.1              Subsidiaries of the Registrant

23.1              Consent of PricewaterhouseCoopers LLP

27.1              Financial Data Schedule for the year ended December 31, 1999

<FN>
* Management contract, compensatory plan or arrangement.
</FN>
</TABLE>


<PAGE>


                                   SIGNATURES

         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, March 22, 2000
                                               (Chairman of the Board, President
                                                and Chief Executive Officer)

        Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated:

/S/ J. LANDIS MARTIN                        /S/ STEVEN L. WATSON
-------------------------------------       --------------------------------
J. Landis Martin, March 22, 2000            Steven L. Watson, March 22, 2000
(Chairman of the Board, President          (Director)
and Chief Executive Officer)

/S/ EDWARD C. HUTCHESON, JR.                /S/ JOSEPH S. COMPOFELICE
-------------------------------------      ---------------------------------
Edward C. Hutcheson, Jr., March 22, 2000   Joseph S. Compofelice, March 22, 2000
(Director)                                (Director)


/S/ THOMAS P. STAFFORD                      /S/ MARK A. WALLACE
-------------------------------------      --------------------------------
Thomas P. Stafford, March 22, 2000          Mark A. Wallace, March 22, 2000
(Director)                                 (Executive Vice President and
                                            Chief Financial Officer)

/S/ GLENN R. SIMMONS                        /S/ DAVID P. BURLAGE
-------------------------------------      ---------------------------------
Glenn R. Simmons, March 22, 2000            David P. Burlage, March 22, 2000
(Director)                                 (Corporate Controller)
                                           (Principal Accounting Officer)

<PAGE>
<TABLE>
<CAPTION>

                                            TITANIUM METALS CORPORATION

                                            ANNUAL REPORT ON FORM 10-K
                                             ITEMS 8, 14(a) and 14(d)

                                    INDEX OF FINANCIAL STATEMENTS AND SCHEDULES



FINANCIAL STATEMENTS                                                                                     PAGE
<S>                                                                                                       <C>
  Report of Independent Accountants                                                                        F-1

  Consolidated Balance Sheets - December 31, 1998 and 1999                                              F-2/F-3

  Consolidated Statements of Operations - Years ended                                                      F-4
     December 31, 1997, 1998 and 1999

  Consolidated Statements of Comprehensive Income - Years ended

     December 31, 1997, 1998 and 1999                                                                      F-5

  Consolidated Statements of Cash Flows - Years ended

     December 31, 1997, 1998 and 1999                                                                    F-6/F-7

  Consolidated Statements of Stockholders' Equity - Years ended

     December 31, 1997, 1998 and 1999                                                                     F-8

  Notes to Consolidated Financial Statements                                                            F-9/F-31

FINANCIAL STATEMENT SCHEDULES

  Report of Independent Accountants                                                                        S-1

  Schedule II - Valuation and qualifying accounts                                                          S-2

  Schedules I, III and IV are omitted because they are not applicable.
</TABLE>

                                       F
<PAGE>





                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Board of Directors of Titanium Metals Corporation:

         In our opinion,  the accompanying  consolidated  balance sheets and the
related   consolidated   statements   of   operations,   comprehensive   income,
stockholders'  equity and cash flows present fairly,  in all material  respects,
the financial  position of Titanium Metals  Corporation  and  Subsidiaries as of
December  31, 1998 and 1999 and the results of their  operations  and their cash
flows for each of the three  years in the  period  ended  December  31,  1999 in
conformity with accounting  principles  generally accepted in the United States.
These financial  statements are the responsibility of the Company's  management;
our responsibility is to express an opinion on these financial  statements based
on our audits.  We conducted our audits of these  statements in accordance  with
auditing standards  generally accepted in the United States,  which require that
we plan and perform the audit to obtain  reasonable  assurance about whether the
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   assessing  the  accounting  principles  used  and
significant  estimates made by management,  and evaluating the overall financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for the opinion expressed above.

PricewaterhouseCoopers LLP

Denver, Colorado
January 28, 2000, except for the fourth and fifth paragraphs of Note 10, as
  to which the date is February 25, 2000, and the second paragraph of Note 16,
  as to which the date is March 21, 2000.











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

                                            TITANIUM METALS CORPORATION

                                            CONSOLIDATED BALANCE SHEETS

                                            December 31, 1998 and 1999
                                       (In thousands, except per share data)

ASSETS                                                                                         1998               1999
                                                                                           --------------    ---------------

Current assets:
<S>                                                                                             <C>                <C>
   Cash and cash equivalents                                                                    $ 15,464           $ 20,671
   Accounts and other receivables, less
     Allowance of $1,932 And $3,330                                                              126,098            106,204
   Receivable from related parties                                                                 8,119              4,071
   Refundable income taxes                                                                         6,819             10,651
   Inventories                                                                                   225,880            191,535
   Prepaid expenses and other                                                                     10,650              7,177
   Deferred income taxes                                                                           1,900              2,250
                                                                                           --------------    ---------------
          Total current assets                                                                   394,930            342,559
                                                                                           --------------    ---------------

Other assets:

   Investment in joint ventures                                                                   32,633             26,938
   Preferred securities                                                                           80,000             80,000
   Accrued dividends on preferred securities                                                         890              6,530
   Goodwill                                                                                       59,547             54,789
   Other intangible assets                                                                        19,894             16,326
   Deferred income taxes                                                                               -              9,600
   Other                                                                                          14,129             12,979
                                                                                           --------------    ---------------
          Total other assets                                                                     207,093            207,162
                                                                                           --------------    ---------------

Property and equipment:

   Land                                                                                            5,974              6,230
   Buildings                                                                                      25,610             24,647
   Information technology systems                                                                 56,089             55,226
   Manufacturing and other                                                                       278,669            331,591
   Construction in progress                                                                       52,651              8,122
                                                                                           --------------    ---------------
                                                                                                 418,993            425,816
   Less accumulated depreciation                                                                  67,770             92,432
                                                                                           --------------    ---------------
     Net property and equipment                                                                  351,223            333,384
                                                                                           --------------    ---------------

                                                                                               $ 953,246          $ 883,105
                                                                                           ==============    ===============

</TABLE>

                                                    F-2

<PAGE>
<TABLE>
<CAPTION>

                                            TITANIUM METALS CORPORATION

                                      CONSOLIDATED BALANCE SHEETS (CONTINUED)

                                            December 31, 1998 and 1999
                                       (In thousands, except per share data)

LIabilities, Minority Interest and Stockholders' Equity                                        1998               1999
                                                                                           --------------    ---------------
Current liabilities:
<S>                                                                                              <C>                <C>
   Notes payable                                                                                 $ 5,134            $ 9,635
   Current maturities of long-term debt and
     Capital lease obligations                                                                       771             85,679
   Accounts payable                                                                               69,302             48,679
   Accrued liabilities                                                                            50,628             42,879
   Payable to related parties                                                                      3,223              1,984
   Income taxes                                                                                    5,391                516
   Deferred income taxes                                                                           2,500              5,049

                                                                                           --------------    ---------------
          Total current liabilities                                                              136,949            194,421
                                                                                           --------------    ---------------

Noncurrent liabilities:

   Long-term debt                                                                                 99,950             22,425
   Capital lease obligations                                                                      10,069              9,776
   Payable to related parties                                                                      1,395              1,332
   Accrued OPEB Cost                                                                              24,065             19,961
   Accrued pension cost                                                                            8,754              5,634
   Deferred income taxes                                                                          14,200             12,950
                                                                                           --------------    ---------------
          Total noncurrent liabilities                                                           158,433             72,078
                                                                                           --------------    ---------------

Minority  interest  -   Company-obligated   mandatorily   redeemable   preferred
   securities of subsidiary trust holding solely
   subordinated debt securities ("convertible preferred securities")                             201,250            201,250
other minority interest                                                                            8,237              7,275

Stockholders' equity:

     Preferred stock $.01 par value; 1,000 shares authorized,

        None outstanding                                                                               -                  -
     Common stock, $.01 par value; 99,000 shares authorized,
        31,459 and 31,461 shares issued, respectively                                                315                315
     Additional paid-in capital                                                                  347,972            347,984
     Retained earnings                                                                            99,981             64,827
     Accumulated other comprehensive income (loss)                                                 1,317            (3,837)
     Treasury stock, at cost  (90 Shares)                                                         (1,208)            (1,208)
                                                                                           --------------    ---------------
          Total stockholders' equity                                                             448,377            408,081
                                                                                           --------------    ---------------

                                                                                               $ 953,246          $ 883,105
                                                                                           ==============    ===============
</TABLE>

Commitments and contingencies (Note 16)
          See accompanying notes to consolidated financial statements.
                                      F-3

<PAGE>
<TABLE>
<CAPTION>
                                            TITANIUM METALS CORPORATION

                                       CONSOLIDATED STATEMENTS OF OPERATIONS

                                   Years ended December 31, 1997,  1998 and 1999
                                       (In thousands, except per share data)

                                                                                 1997              1998               1999
                                                                            ---------------   ---------------    ---------------
Revenues and other income:
<S>                                                                            <C>                <C>                <C>
     Net sales                                                                 $ 733,577          $ 707,677          $ 480,029
     Equity in earnings (losses) of joint ventures                                (1,013)               351             (1,709)
     Other, net                                                                    4,530              6,859              4,952
                                                                            ---------------   ---------------    ---------------
                                                                                 737,094            714,887            483,272
                                                                            ---------------   ---------------    ---------------

Costs and expenses:

     Cost of sales                                                               554,546            542,285            454,506
     Selling, general, administrative and development                             45,319             59,837             48,577
     Special charges                                                                   -             24,000              6,834
     Interest                                                                      2,066              2,916              7,093
                                                                            ---------------   ---------------    ---------------
                                                                                 601,931            629,038            517,010
                                                                            ---------------   ---------------    ---------------

     Income (loss) before income taxes and minority interest                     135,163             85,849            (33,738)

Income tax expense (benefit)                                                      41,004             29,197            (12,021)
Minority interest - convertible preferred securities                               8,840              8,840              8,667
Other minority interest                                                            2,309              2,060              1,006
                                                                            ---------------   ---------------    ---------------

     Net income (loss)                                                         $  83,010          $  45,752          $ (31,390)
                                                                            ===============   ===============    ===============

Diluted net income (loss)                                                      $  91,850          $  54,592          $ (22,723)
                                                                            ===============   ===============    ===============

Earnings (loss) per share:

     Basic                                                                     $    2.64          $    1.46          $   (1.00)
     Diluted                                                                        2.49             *                  *

Weighted average shares outstanding:

     Basic                                                                        31,457             31,435             31,371
     Diluted                                                                      36,955             36,846             36,782





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

                                            TITANIUM METALS CORPORATION

                                  CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                                    Years ended December 31, 1997, 1998 and 1999
                                                  (In thousands)


                                                                           1997               1998              1999
                                                                      ---------------    ---------------    --------------
<S>                                                                        <C>                <C>               <C>
Net income (loss)                                                          $  83,010          $  45,752         $  (31,390)

Other comprehensive income (loss), net of tax:

   Currency translation adjustment                                            (1,727)             1,692             (5,637)
   Pension liabilities adjustment                                                858             (4,283)               483
                                                                      ---------------    ---------------    --------------

   Comprehensive income (loss)                                             $  82,141          $  43,161         $  (36,544)
                                                                      ===============    ===============    ==============
</TABLE>

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

                                            TITANIUM METALS CORPORATION

                                       CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   Years ended December 31, 1997, 1998 and 1999
                                                  (In thousands)

                                                                          1997               1998              1999
                                                                      --------------    ---------------    --------------
Cash flows from operating activities:
<S>                                                                     <C>               <C>                <C>
   Net income (loss)                                                    $  83,010         $  45,752          $ (31,390)
   Depreciation and amortization                                           28,384            32,514             42,693
   Special charges - non cash portion                                           -            15,425              3,936
   Earnings of joint ventures, net of distributions                         1,013               170              3,730
   Deferred income taxes                                                    6,578            13,172               (464)
   Other minority interest                                                  2,309             2,060              1,006
   Other, net                                                                 (36)             (433)             4,447
   Change in assets and liabilities, net of acquisitions:

      Receivables                                                         (41,781)           37,454             17,406
      Inventories                                                             294           (62,990)            23,598
      Prepaid expenses                                                      1,600             2,539              3,137
      Accounts payable and accrued liabilities                              1,231            (9,497)           (24,151)
      Accrued restructuring charges                                             -             6,727             (5,042)
      Income taxes                                                          5,526           (12,213)           (16,220)
      Accounts with related parties, net                                  (13,292)            9,650              2,409
      Accrued dividends on preferred securities                                 -              (890)            (5,640)
      Other, net                                                           (2,266)           (3,323)                88
                                                                      --------------    ---------------    --------------

      Net cash provided by operating activities                            72,570            76,117             19,543
                                                                      --------------    ---------------    --------------

Cash flows from investing activities:

   Capital expenditures                                                   (66,295)         (115,155)           (24,772)
   Business acquisitions and joint ventures                               (13,496)          (27,413)                 -
   Purchase of preferred securities                                             -           (80,000)                 -
   Disposition of fixed assets                                                  -                 -              2,900
   Other, net                                                                   -              (647)               209
                                                                      --------------    ---------------    --------------

      Net cash used by investing activities                               (79,791)         (223,215)           (21,663)
                                                                      --------------    ---------------    --------------

Cash flows from financing activities:
   Indebtedness:

     Borrowings                                                                 -           153,765            111,900
     Repayments                                                            (4,833)          (56,670)           (99,284)
     Deferred financing costs                                              (2,230)                -                  -
   Repayment of related parties loans                                        (930)                -                  -
   Dividends paid                                                               -            (3,772)            (3,764)
   Treasury stock purchased                                                     -            (1,208)                 -
   Other, net                                                              (1,830)              117               (289)
                                                                      --------------    ---------------    --------------

     Net cash provided (used) by financing activities                      (9,823)           92,232              8,563
                                                                      --------------    ---------------    --------------
                                                                        $ (17,044)        $ (54,866)        $    6,443
                                                                      ==============    ===============    ==============
</TABLE>


                                                    F-6

<PAGE>
<TABLE>
<CAPTION>

                                        TITANIUM METALS CORPORATION

                                 CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                                   Years ended December 31, 1997, 1998 and 1999
                                                  (In thousands)

                                                                         1997               1998              1999
                                                                     --------------    ---------------    --------------
Cash and cash equivalents:
   Net increase (decrease) from:
<S>                                                                     <C>               <C>               <C>
     Operating, investing and financing activities                      $ (17,044)        $ (54,866)        $    6,443
     Cash acquired                                                              -             1,187                  -
     Currency translation                                                    (525)              186             (1,236)
                                                                     --------------    ---------------    --------------
                                                                          (17,569)          (53,493)             5,207
   Balance at beginning of year                                            86,526            68,957             15,464
                                                                     --------------    ---------------    --------------

   Balance at end of year                                               $  68,957         $  15,464          $  20,671
                                                                     ==============    ===============    ==============

Supplemental disclosures:
   Cash paid for:

     Interest, net of amounts capitalized                              $    2,159         $   2,215         $    6,669
     Convertible preferred securities dividends                            13,332            13,332             13,332
     Income taxes, net                                                     22,483            23,737                148

   Business acquisitions and joint ventures:

     Cash acquired                                                     $        -          $  1,187         $        -
     Receivables                                                              736             6,574                  -
     Inventories                                                              769            15,352                  -
     Property, equipment and other                                          1,998            21,765                  -
     Investments in joint ventures                                         24,307             8,460                  -
     Goodwill and other intangibles                                           577             8,566                  -
     Liabilities assumed                                                   (3,604)          (18,117)                 -
                                                                     --------------    ---------------    --------------
                                                                           24,783            43,787                  -
     Less noncash consideration, principally

       Property and equipment                                             (11,287)          (16,374)                 -
                                                                     --------------    ---------------    --------------

         Cash paid                                                      $  13,496          $ 27,413       $
                                                                                                                     -
                                                                     ==============    ===============    ==============
</TABLE>

 See accompanying notes to consolidated financial statements.
                                                        F-7

<PAGE>
<TABLE>
<CAPTION>

                                            TITANIUM METALS CORPORATION

                                  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                   Years ended December 31, 1997, 1998 and 1999
                                                  (In thousands)

                                                                                            Accumulated Other
                                                                Additional   Retained   Comprehensive Income (Loss)
                                                                                        ---------------------------
                                           Common     Common     Paid-in     Earnings   Currency    Pension     Treasury
                                           Shares      Stock     Capital    (Deficit)  Translation  Liabilities  Stock     Total
                                          --------    -------  -----------  ---------  ------------ ----------- ---------  ---------
<S>                                      <C>         <C>       <C>         <C>        <C>          <C>         <C>       <C>
Balance at December 31, 1996                31,455    $  315    $ 346,133   $(25,009)  $   5,635    $   (858)   $         $ 326,216
                                                                                                                      -
   Comprehensive income                          -         -            -     83,010      (1,727)        858          -      82,141
   Other, net                                    3         -          590          -           -           -          -         590
                                          ---------  --------  -----------  ---------  -----------  ---------   --------  ----------

Balance at December 31, 1997                31,458       315      346,723     58,001       3,908           -          -     408,947
   Comprehensive income                          -         -            -     45,752       1,692      (4,283)         -      43,161
   Dividends paid ($.12 per share)               -         -            -     (3,772)          -           -          -      (3,772)
   Treasury stock purchases                    (90)        -            -          -           -           -     (1,208)     (1,208)
   Other, net                                    1         -        1,249          -           -           -          -       1,249
                                          ---------  --------  -----------  ---------  ----------  ----------   --------  ----------

Balance at December 31, 1998                31,369       315      347,972     99,981       5,600      (4,283)    (1,208)    448,377
   Comprehensive income (loss)                   -         -            -    (31,390)     (5,637)         483         -     (36,544)
   Dividends paid ($.12 per share)               -         -            -     (3,764)          -           -          -      (3,764)
   Other, net                                    2         -           12          -           -           -          -          12
                                          ---------  --------   ----------  ---------  ----------  -----------  --------  ----------

Balance at December 31, 1999                31,371    $  315    $ 347,984   $ 64,827    $    (37)   $ (3,800)   $(1,208)   $ 408,081
                                          =========  ========  ===========  =========  ==========  ===========  ========  ==========

</TABLE>





                                                        F-8

<PAGE>

                           TITANIUM METALS CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Summary of significant accounting policies:

         PRINCIPLES OF CONSOLIDATION.  The accompanying  consolidated  financial
statements include the accounts of Titanium Metals Corporation ("TIMET") and its
majority-owned   subsidiaries   (collectively,   the  "Company").  All  material
intercompany  accounts and balances  have been  eliminated.  Certain  prior year
amounts have been reclassified to conform to the current year presentation.

         USE OF ESTIMATES. The preparation of financial statements in conformity
with  generally  accepted  accounting  principles  requires  management  to make
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 reporting  period.  Ultimate  actual results may, in some  instances,
differ from previously estimated amounts.

         TRANSLATION   OF  FOREIGN   CURRENCIES.   Assets  and   liabilities  of
subsidiaries  whose  functional  currency  is deemed  to be other  than the U.S.
dollar are  translated  at year end rates of exchange  and revenues and expenses
are translated at average exchange rates prevailing  during the year.  Resulting
translation  adjustments are accumulated in the currency translation adjustments
component of other  comprehensive  income  (loss),  net of related income taxes.
Currency  transaction gains and losses are recognized in income  currently,  and
were  nominal in 1997,  a net gain of $.4 million in 1998 and a net loss of $1.2
million in 1999.

         NET SALES.  Sales are generally  recognized  when products are shipped.
Sales may  occasionally be recognized  before shipment when, among other things,
the title has passed,  the customer has assumed  substantial  risks of ownership
and the Company has substantially met its performance obligations.

         INVENTORIES  AND COST OF SALES.  Inventories are stated at the lower of
cost or market.  Approximately  one-half  of  inventories  are costed  using the
last-in,  first-out ("LIFO") method with the remainder primarily costed using an
average method.

         CASH AND CASH  EQUIVALENTS.  Cash  equivalents  include  highly  liquid
investments with original maturities of three months or less.

         OTHER  INVESTMENTS.  Investments in 20% to 50%-owned joint ventures are
accounted for by the equity method. Differences between the Company's investment
in joint ventures and its  proportionate  share of the joint ventures'  reported
equity are amortized over not more than 15 years.

         Nonmarketable preferred securities are accounted for by the cost method
and are considered to be "held-to-maturity" securities.

         INTANGIBLE ASSETS AND AMORTIZATION.  Goodwill,  representing the excess
of cost over the fair  value of  individual  net  assets  acquired  in  business
combinations  accounted  for  by  the  purchase  method,  is  amortized  by  the
straight-line method over 15 years and is stated net of accumulated amortization
of $10.5 million and $15.2 million at December 31, 1998 and 1999,  respectively.
Patents and other  intangible  assets,  except  intangible  pension assets,  are
amortized by the straight-line method over the periods expected to be benefited,
generally nine years.

                                      F-9
<PAGE>

         PROPERTY, EQUIPMENT AND DEPRECIATION. Property and equipment are stated
at  cost.   Maintenance,   repairs  and  minor  renewals  are  expensed;   major
improvements are capitalized. Interest costs related to major, long-term capital
projects  are  capitalized  as a component of  construction  costs and were $1.0
million  in  1997,  $2.6  million  in 1998 and $1.3  million  in 1999.  Software
development costs are capitalized; training, reengineering and similar costs are
expensed as incurred.

         Depreciation is computed  principally on the straight-line  method over
the estimated useful lives of 15 to 40 years for buildings and three to 25 years
for machinery and  equipment.  Software  costs are amortized over the software's
estimated useful life, generally three to five years.

         LONG-LIVED  ASSETS.  When events or changes in  circumstances  indicate
that long-lived  assets,  including  goodwill or other intangible assets, may be
impaired,  an evaluation is performed to determine if an impairment exists. Such
events or circumstances  include,  among other things,  significant  current and
prior periods or current and projected  periods with operating losses related to
the applicable business unit. All relevant factors are considered in determining
whether  impairment  exists.  If an  impairment  is  determined  to  exist,  the
underlying  long-lived  assets and the  associated  goodwill are written down to
reflect the estimated  future  discounted cash flows expected to be generated by
the underlying business.

         STOCK-BASED  COMPENSATION.  The  Company  has  elected  the  disclosure
alternative  prescribed by Statement of Financial  Accounting Standards ("SFAS")
No.  123,  "Accounting  for  Stock-Based  Compensation,"  and to account for the
Company's  stock-based  employee  compensation  in  accordance  with  Accounting
Principles  Board  Opinion  ("APB")  No.  25,  "Accounting  for Stock  Issued to
Employees" and its various  interpretations.  Under APB No. 25, no  compensation
cost is  generally  recognized  for fixed stock  options for which the  exercise
price is not less than the market  price of the  Company's  common  stock on the
grant date. See Note 12.

         EMPLOYEE BENEFIT PLANS.  Accounting and funding policies for retirement
plans and postretirement  benefits other than pensions ("OPEB") are described in
Note 14. The Company retroactively adopted SFAS No. 132, "Employers' Disclosures
About Pensions and Other Postretirement Benefits" in 1998.

     RESEARCH AND  DEVELOPMENT.  Research and development  expense  approximated
$3.6 million in 1997, $3.4 million in 1998 and $2.5 million in 1999.

         ADVERTISING COSTS.  Advertising  costs, which are not significant,  are
expensed as incurred.

         INCOME TAXES. Deferred income tax assets and liabilities are recognized
for the expected future tax  consequences of temporary  differences  between the
income tax and financial  reporting  carrying amounts of assets and liabilities,
including  investments in subsidiaries not included in TIMET's consolidated U.S.
tax group. See Note 13.

     COMPREHENSIVE  INCOME.  The  Company  retroactively  adopted  SFAS No. 130,
"Reporting Comprehensive Income" in 1998.

         FAIR VALUE OF FINANCIAL INSTRUMENTS. The Company currently expects that
it will be able to realize the carrying value of its investment in nonmarketable
preferred  securities,  purchased  in October  1998,  and as such  believes  the
carrying value of the securities approximate fair value.

         The Company's bank debt reprices with changes in market  interest rates
and,  accordingly,  the carrying  amount of such debt is believed to approximate
market value.  The fair value of the Convertible  Preferred  Securities based on
quoted market prices  approximated  $102 million and $46 million at December 31,
1998 and 1999, respectively (net carrying value at both dates - $201 million).

                                      F-10
<PAGE>

         NEW ACCOUNTING  PRINCIPLES NOT YET ADOPTED. The Company will adopt SFAS
No. 133,  "Accounting  for Derivative  Instruments  and Hedging  Activities," no
later  than the first  quarter  of 2001.  SFAS No.  133  establishes  accounting
standards for derivative  instruments,  including certain derivative instruments
embedded in other contracts, and for hedging activities. Under SFAS No. 133, all
derivatives  will be recognized as either assets or liabilities  and measured at
fair value.  The accounting for changes in fair value of derivatives will depend
upon the intended use of the derivative.  The Company is currently studying this
newly issued  accounting  rule, and the impact of adopting SFAS No. 133, if any,
will be  dependent  upon the  extent  to which  the  Company  is then a party to
derivative contracts or engaged in hedging activities.

Note 2 - Segment information:

         In 1998,  the Company  retroactively  adopted SFAS No. 131  "Disclosure
about  Segments  of an  Enterprise  and Related  Information".  The Company is a
vertically  integrated  producer of titanium sponge,  melted products (ingot and
slab)  and a  variety  of mill  products  for  aerospace,  industrial  and other
applications. The Company's production facilities are located principally in the
United States,  United Kingdom and France,  and its products are sold throughout
the world. These worldwide integrated activities compose the Company's principal
segment, "Titanium melted and mill products".

         In 1997 and  1998,  the  "Other"  segment  consisted  primarily  of the
Company's titanium castings  operations,  which were combined in a joint venture
during 1998 and  subsequently  sold in January  2000 (see Note 4). In 1999,  the
"Other" segment consists of the Company's nonintegrated joint ventures.

         Operating  income,  inventory and  receivables  are the key  management
measures  used to evaluate  segment  performance.  Segment  operating  income is
defined as income before income taxes,  minority  interest and interest expense,
exclusive  of certain  general  corporate  income and expense  items  (including
dividends and interest  income).  Operating  income of the "Titanium  melted and
mill  products"  segment  includes  special  charges of $19.5  million  and $4.7
million in 1998 and 1999,  respectively.  In 1999,  the  operating  loss of this
segment also included  $4.3 million of charges for  slow-moving  inventory  (see
Note 7).  Operating  income of the "Other" segment  includes  special charges of
$4.5  million  and $2.1  million  in 1998 and 1999,  respectively.  The  special
charges are more fully described in Note 6.

                                      F-11
<PAGE>
<TABLE>
<CAPTION>

                                                                             Years Ended December 31,
                                                                ----------------------------------------------------
                                                                    1997               1998               1999
                                                                ---------------   ---------------    ---------------
                                                                                  (In thousands)

OPERATING SEGMENTS:
   Net sales:
<S>                                                                <C>                 <C>               <C>
     Titanium melted and mill products                             $ 700,427           $ 686,677         $  479,466
     Other                                                            36,217              23,936              2,233
     Eliminations                                                     (3,067)             (2,936)            (1,670)
                                                               ----------------   ---------------    ----------------
                                                                   $ 733,577           $ 707,677         $  480,029
                                                               ================   ===============    ================

   Mill product shipments:
     Volume (metric tons)                                            15,100              14,800              11,400
     Average price ($ per kilogram)                               $   35.00           $   35.25          $    33.00

   Operating income (loss):
     Titanium melted and mill products                            $  139,252          $   87,411         $  (27,685)
     Other                                                            (6,290)             (4,706)            (3,748)
                                                               ----------------   ---------------    ----------------
                                                                     132,962              82,705            (31,433)
   Dividends and interest income                                       1,407               6,303              6,034
   General corporate income (expense), net                             2,860                (243)            (1,246)
   Interest expense                                                   (2,066)             (2,916)            (7,093)
                                                               ----------------   ---------------    ----------------
        Income (loss) before income taxes
          And minority interest                                   $  135,163          $   85,849         $  (33,738)
                                                               ================   ===============    ================


   Depreciation and amortization:
     Titanium melted and mill products                            $   26,463           $   31,599        $   42,693
     Other                                                             1,921                  915                 -
                                                               ================    ==============    ================
                                                                  $   28,384           $   32,514        $   42,693
                                                               ================    ==============    ================

   Capital expenditures:
     Titanium melted and mill products                            $   62,869            $ 115,103        $   24,770
     Other                                                             3,426                   52                 2
                                                               ================    ==============    ================
                                                                  $   66,295            $ 115,155        $   24,772
                                                               ================    ==============    ================


</TABLE>

                                      F-12

<PAGE>
<TABLE>
<CAPTION>
                                                                             Years Ended December 31,

                                                               ------------------------------------------------------
                                                                    1997               1998               1999
                                                               ----------------    --------------    ----------------
                                                                                  (In thousands)
   Inventories:
<S>                                                                <C>                 <C>                <C>
     Titanium melted and mill products                             $ 146,782           $ 225,073          $ 190,390
     Other                                                             7,165                 871              1,209
     Eliminations                                                       (129)                (64)               (64)
                                                               ----------------    --------------    ----------------
                                                                   $ 153,818           $ 225,880          $ 191,535
                                                               ================    ==============    ================

   Accounts receivable:
     Titanium melted and mill products                             $ 149,293           $ 124,010          $ 105,202
     Other                                                             6,385               2,088              1,002
                                                               ----------------    --------------    ----------------
                                                                   $ 155,678           $ 126,098          $ 106,204
                                                               ================    ==============    ================

   Investment in joint ventures:
     Titanium melted and mill products                            $   20,114          $   22,044          $  21,143
     Other                                                             3,156              10,589              5,795
                                                               ----------------    --------------    ----------------
                                                                  $   23,270          $   32,633          $  26,938
                                                               ================    ==============    ================

   Equity in earnings (losses) of joint ventures:
     Titanium melted and mill products                            $     (517)        $     1,869         $      549
     Other                                                              (496)             (1,518)            (2,258)
                                                               ----------------    --------------    ----------------
                                                                  $   (1,013)        $       351         $   (1,709)
                                                               ================    ==============    ================

Geographic segments:
   Net sales - point of origin:
     United states                                                 $ 534,440          $ 465,519           $ 365,652
     United kingdom                                                  223,573            217,709             160,765
     Other europe                                                     96,659            109,347              89,433
     Eliminations                                                   (121,095)           (84,898)           (135,821)
                                                               ----------------   ---------------    ----------------
                                                                   $ 733,577          $ 707,677           $ 480,029
                                                               ================   ===============    ================
   Net sales - point of destination:
     United states                                                 $ 401,217          $ 354,001           $ 239,797
     Europe                                                          276,419            290,988             203,858
     Other                                                            55,941             62,688              36,374
                                                               ----------------   ---------------    ----------------
                                                                   $ 733,577          $ 707,677           $ 480,029
                                                               ================   ===============    ================
   Operating income (loss):
     United states                                                 $  76,434         $   45,760           $ (31,636)
     Europe                                                           56,528             36,945                 203
                                                               ----------------   ---------------    ----------------
                                                                   $ 132,962         $   82,705           $ (31,433)
                                                               ================   ===============    ================

   Long-lived assets - property and equipment, net:
     United states                                                 $ 188,564          $ 264,856           $ 246,744
     United kingdom                                                   69,470             78,731              81,607
     Other europe                                                      4,392              7,636               5,033
                                                               ----------------   ---------------    ----------------
                                                                   $ 262,426          $ 351,223           $ 333,384
                                                               ================   ===============    ================
</TABLE>

     Export sales from U.S. based  operations  approximated $97 million in 1997,
$81 million in 1998 and $65 million in 1999.

                                      F-13
<PAGE>

         Geographic  segment  operating  income  of the  U.S.  includes  special
charges  in 1998 and  1999 of $14.5  million  and  $3.2  million,  respectively.
Operating income of the Europe segment in 1998 and 1999 includes special charges
of $9.5 million and $3.6  million,  respectively.  The 1999  geographic  segment
operating  income  also  includes a charge  for  slow-moving  inventory  of $2.4
million and $1.9 million in U.S. and Europe, respectively.

Note 3 - Business combinations:

         In January 1997,  the Company  purchased  LASAB Laser  Applikations-und
Bearbeitungs  GmbH,  which is in the titanium and stainless  steel  laser-welded
tube and pipe and laser cutting business.

         In April 1998, the Company  acquired  Loterios  S.p.A.,  a producer and
distributor,  based in Italy,  of titanium  pipe and  fittings  primarily to the
offshore oil and gas drilling and production  markets.  The cost of the Loterios
acquisition, accounted for by the purchase method, was approximately $19 million
in  cash.  Additional  consideration  of  up  to  approximately  $7  million  is
contingent upon Loterios'  achieving  certain operating targets through 2000. No
additional  consideration has been earned to date based upon Loterios' operating
results.  The  results  of  Loterios'  operations  have  been  reflected  in the
consolidated  financial  statements from the date of  acquisition.  Net sales in
1998 subsequent to the acquisition  approximated $23 million;  net sales in 1999
approximated $20 million.

Note 4 - Joint ventures:

<TABLE>
<CAPTION>
                                                        December 31,
                                               --------------------------------
                                                     1998              1999
                                               --------------    --------------
                                                       (In thousands)

Joint ventures:
<S>                                                <C>               <C>
   Valtimet                                       $ 21,658          $ 20,863
   Wyman-gordon titanium castings                    6,158             5,795
   Other                                             4,817               280
                                               --------------    --------------

                                                  $ 32,633          $ 26,938
                                               ==============    ==============
</TABLE>

         In  July  1997,  TIMET  combined  its  Tennessee-based   welded  tubing
operations with those of Valinox Welded, a French manufacturer of welded tubing,
principally  stainless steel and titanium,  with operations in France and China.
The joint  venture,  "ValTimet",  is 46% owned by TIMET and 54% owned by Valinox
Welded. The Company's initial  investment in ValTimet  aggregated $19.8 million,
consisting of $11.3 million of noncash consideration contributed at net carrying
value  (principally  property and  equipment)  plus cash of $8.5 million to fund
working  capital.  During the six months  ended  December 31, 1997 and the years
ended  December 31, 1998 and 1999,  ValTimet  reported  sales of $56.6  million,
$119.3 million and $71.2 million and net income of $.1 million, $4.1 million and
$.5  million,  respectively.  At December 31, 1998 and 1999,  ValTimet  reported
total assets of $69.1  million and $57.8 million and equity of $31.8 million and
$29.9 million, respectively.

         In  August   1998,   the  Company   completed  a  series  of  strategic
transactions with Wyman-Gordon  Company.  The principal components were: (i) the
Company exchanged certain of its titanium castings assets and $5 million in cash
for Wyman-Gordon's Millbury,  Massachusetts vacuum arc remelting facility, which
produced  titanium  ingot;  (ii)  Wyman-Gordon  and the Company  combined  their
respective  titanium  castings  business into a new joint venture,  Wyman-Gordon
Titanium  Castings LLC, 80% owned by  Wyman-Gordon  and 20% by the Company;  and
(iii) the Company and Wyman-Gordon entered into a contract pursuant to which the
Company  will be the  principal  supplier of titanium  material to  Wyman-Gordon
through  2007.  The Company  accounts  for its  interest in the  castings  joint
venture  by  the  equity  method.   The  Company   accounted  for  the  castings
business/melting  facility transaction at fair value, which approximated the $18
million net carrying value of the assets exchanged, and, accordingly, recognized
nil gain

                                      F-14
<PAGE>

on the  transaction.  For the five months  ended  December 31, 1998 and the year
ended December 31, 1999,  Wyman-Gordon Titanium Castings reported sales of $16.6
million and $37.7 million,  respectively, and net income (loss) of ($.4) million
and less  than  $.1  million,  respectively.  At  December  31,  1998 and  1999,
Wyman-Gordon  Titanium  Castings  reported total assets of $29.2 million and $20
million,   respectively,   and  equity  of  $25.3  million  and  $19.4  million,
respectively. In the first quarter of 2000, the Company sold its interest in the
castings joint venture to Wyman-Gordon for approximately $7 million and recorded
a pretax gain of approximately $1.2 million.

         TIMET's  strategy for  developing new markets and uses for titanium has
included  providing funds to third parties to potentially prove out a new use or
uses of titanium.  Other joint ventures consist principally of such investments.
During the fourth  quarter 1999,  the Company  recorded a $2.3 million charge to
earnings for the  write-down  associated  with an  impairment  of the  Company's
investment in certain start-up joint ventures.

Note 5 - Preferred securities:

          In  October  1998,  the  Company  purchased  for cash $80  million  of
non-voting  preferred  securities of Special Metals Corporation  ("SMC"), a U.S.
manufacturer  of  wrought  nickel-based   superalloys  and  special  alloy  long
products.  The investment was made in conjunction with, and concurrent with, the
acquisition  by SMC of the Inco  Alloys  International  unit of Inco,  Ltd.  The
preferred  securities  accrue  dividends  at the  annual  rate  of  6.625%,  are
mandatorily  redeemable in April 2006 and are convertible  into SMC common stock
at $16.50 per share.  The Company is  accruing  dividends  on the SMC  preferred
securities,   although  dividends  cannot  currently  be  paid  by  SMC  due  to
limitations imposed by an amendment of SMC's bank credit agreement.

Note 6 - Special charges:

         In 1998 and 1999, the Company  implemented  plans of action designed to
address current market and operating  conditions,  which resulted in recognizing
$24 million of restructuring charges in 1998 and $4.5 million of such charges in
1999.  The plans  included the permanent  closure or disposition of four plants,
permanent  or  temporary  closure of three other  plants and  termination  of an
aggregate of 700 people,  or approximately  23% of TIMET's  worldwide  workforce
prior to the restructurings.  Additionally, in 1999, the Company recorded a $2.3
million  charge to earnings  associated  with the  write-downs  of the Company's
investment in certain  start-up joint  ventures.  The components of the 1998 and
1999 restructuring charges are summarized below.

<TABLE>
<CAPTION>

                                                       1998                               1999
                                          --------------------------------    ------------------------------
                                                      SEGMENT                            SEGMENT
                                          --------------------------------    ------------------------------
                                               MELTED AND                         MELTED AND
                                             MILL PRODUCTS        OTHER         MILL PRODUCTS       OTHER
                                          -----------------    -----------    ----------------    ----------
                                                                    (In millions)
<S>                                            <C>              <C>                <C>            <C>
Property and equipment                         $   7.1          $   2.6            $   .3         $   -
Disposition of german subsidiary                   -                -                 2.0             -
Pension and opeb costs, net                        5.7              -                 (.1)            -
Personnel severance and benefits                   5.3               .5               2.5             -
Other exit costs, principally
  Related to leased facilities                     1.4              1.4               -               (.2)
                                          -----------------    -----------    ----------------    ----------

                                               $  19.5          $   4.5           $   4.7          $  (.2)
                                          =================    ===========    ================    ==========
</TABLE>
                                      F-15
<PAGE>

         Substantially  all of the property and equipment  loss relates to items
sold, scrapped or abandoned. Depreciation of equipment temporarily idled but not
impaired was not suspended. The disposition of the German subsidiary is expected
to be completed in the first quarter of 2000.  The pension and OPEB costs relate
to actuarial  valuations of accelerated defined benefits of employees terminated
and curtailment of OPEB liabilities.

         At  December  31,  1999,  substantially  all of the  planned  1998-1999
aggregate personnel  reductions had been accomplished,  with the remainder to be
accomplished  in the first  quarter  of 2000.  Of the  aggregate  $10.9  million
personnel and other exit costs  accrued,  $1.9 million was paid in 1998 and $7.5
million was paid in 1999.  Substantially  all of the  remaining  $1.5 million of
accrued costs is expected to be paid during the first half of 2000.

         The  Company  is  implementing   additional  personnel  reductions  and
production rationalization which will result in additional restructuring charges
in  2000.  Such  charges  are  currently  estimated  to be up  to  $10  million,
principally  related to personnel  severance and benefits for the  approximately
250 employees to be terminated.

Note 7 - Inventories:

<TABLE>
<CAPTION>
                                                         December 31,
                                              ----------------------------------
                                                    1998                1999
                                              --------------     ---------------
                                                       (In thousands)
<S>                                               <C>                <C>
Raw materials                                   $  62,820           $  45,004
Work-in-process                                   110,096              69,809
Finished products                                  70,353              83,893
Supplies                                           10,611              18,329
                                              --------------     ---------------
                                                  253,880             217,035
Less adjustment of certain
 inventories to LIFO basis                         28,000              25,500
                                              --------------     ---------------

                                                $ 225,880           $ 191,535
                                              ==============     ===============
</TABLE>

         During  1999,  the Company  recorded a $4.3  million  charge to cost of
sales for slow-moving inventory.

Note 8 - Intangible and other noncurrent assets:
<TABLE>
<CAPTION>
                                                           December 31,
                                                --------------------------------
                                                      1998              1999
                                                --------------    --------------
                                                         (In thousands)
Intangible assets:
<S>                                                <C>               <C>
   Patents                                         $ 14,381          $ 13,934
   Covenants not to compete                           8,759             8,881
   Intangible pension assets                          2,783             3,190
                                                --------------    --------------
                                                     25,923            26,005
   Less accumulated amortization                      6,029             9,679
                                                --------------    --------------
                                                   $ 19,894          $ 16,326
                                                ==============    ==============

Other noncurrent assets:
   Deferred financing costs                        $  9,911          $  9,417
   Notes receivable from officers                       580               489
   Other                                              3,638             3,073
                                                --------------    --------------
                                                   $ 14,129          $ 12,979
                                                ==============    ==============
</TABLE>
                                      F-16
<PAGE>

Note 9 - Accrued liabilities:

<TABLE>
<CAPTION>                                                   December 31,
                                                 -------------------------------
                                                      1998              1999
                                                 --------------    -------------
                                                           (In thousands)
<S>                                                   <C>              <C>

OPEB cost                                             $ 2,371          $ 3,269
Pension cost                                            1,482            1,287
Other employee benefits                                20,881           14,375
Deferred income                                             -            9,295
Environmental costs                                     2,273            1,238
Restructuring costs                                     6,727            1,490
Taxes, other than income                                1,292            1,209
Accrued dividends - convertible preferred securities    1,111            1,111
Other                                                  14,491            9,605
                                                 --------------    -------------

                                                     $ 50,628         $ 42,879
                                                 ==============    =============

</TABLE>

         During 1999,  the Company had  customer  orders for  approximately  $16
million of titanium  ingot for which the  customer  had not yet  determined  the
final mill  product  specifications.  At the  customer's  request,  the  Company
manufactured the ingots and is storing the material at the Company's facilities.
It is anticipated that most of this ingot will be shipped or converted into mill
products and  delivered  during  2000.  As agreed with the  customer,  they were
billed  for and took  title to the ingots in 1999.  The  ingots  continue  to be
stored at the  Company's  facilities  and the  Company is  obligated  to perform
additional processing of this metal at the customer's request.  Accordingly, the
revenue and cost of sales on this product was not recognized in 1999. The income
has  been  deferred  until  the  related  sale is  recorded.  See Note 1 for the
Company's revenue recognition policy.

                                      F-17
<PAGE>


Note 10 - Notes payable, long-term debt and capital lease obligations:
<TABLE>
<CAPTION>
                                                               December 31,
                                                --------------------------------
                                                     1998              1999
                                                --------------    --------------
                                                         (In thousands)
<S>                                                  <C>              <C>
Notes payable - european credit agreements        $   5,134        $    9,635
                                                ==============    ==============

Long-term debt:

   Bank credit agreement - U.S.                    $ 80,000         $  85,000
   Bank credit agreement - U.K.                      18,781            21,867
   Other                                              1,740               922
                                                --------------    --------------
                                                    100,521           107,789
   Less current maturities                              571            85,364
                                                --------------    --------------
                                                   $ 99,950         $  22,425
                                                ==============    ==============

Capital lease obligations                          $ 10,269         $  10,091
Less current maturities                                 200               315
                                                --------------    --------------
                                                   $ 10,069         $   9,776
                                                ==============    ==============
</TABLE>

         EUROPEAN  CREDIT  AGREEMENTS.  At December 31, 1999,  aggregate  unused
borrowing  availability  under  short-term bank credit  agreements in France and
Italy approximated $5 million.  The weighted average interest rate on borrowings
outstanding  under these  credit  agreements  at December  31, 1998 and 1999 was
6.88% and 4.58%, respectively.

         LONG-TERM  BANK CREDIT  AGREEMENTS.  At December 31, 1999,  TIMET had a
$200 million  revolving bank credit facility  expiring in July 2002.  Borrowings
accrued  interest  at LIBOR plus 1.50%  (7.50% at  December  31,  1999) and were
collateralized  by  substantially  all of TIMET's assets.  The credit  agreement
generally  limited  dividends  on  TIMET's  common  stock to 25% of net  income,
limited additional  indebtedness and transactions with affiliates,  required the
maintenance of certain financial ratios and contained other covenants  customary
in  transactions  of this type. At December 31, 1999, the Company had received a
waiver of  compliance  through  February 2000 with certain  financial  covenants
contained in its U.S. bank credit facility.

         At December 31, 1999,  TIMET UK had an (pound)18  million ($29 million)
overdraft/revolving  bank credit facility maturing in April 2001. Borrowings may
be in any major  currency  and at December  31, 1999 were in British  pounds and
U.S. dollars.  These borrowings are collateralized by TIMET UK's inventories and
receivables,  and accrued  interest at a base rate plus 0.75% (6.75% at December
31, 1999).

         In February 2000, the Company completed a new $125 million,  three-year
U.S.-based  revolving credit  agreement  replacing its previous U.S. bank credit
facility.  Borrowings under the new facility are limited to a formula-determined
borrowing  base derived  from the value of accounts  receivable,  inventory  and
equipment.  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  limits  additional  indebtedness,
prohibits the payment of common stock  dividends,  and contains other  covenants
customary  in  lending  transactions  of this  type.  In  addition,  the  credit
agreement  prohibits the payment of dividends on TIMET's  Convertible  Preferred
Securities if "excess availability," as determined under the agreement,  is less
than $25 million.  Borrowings  outstanding  under this new U.S. facility will be
classified as a current liability.

                                      F-18
<PAGE>

         The Company's  subsidiary,  TIMET UK, also  increased  its U.K.  credit
agreement  from  (pound)18  million  ($29  million) to  (pound)30  million  ($48
million)  with its existing  U.K.  lender.  Borrowings  under the U.K.  facility
accrue  interest  at rates  that vary from LIBOR plus 1% to LIBOR plus 1.25% and
borrowings are  collateralized by TIMET UK's accounts  receivable,  inventories,
buildings  and  equipment  and shares in  certain  European  subsidiaries.  This
facility also contains covenants customary in lending transactions of this type.
Borrowings  under these U.S. and U.K. credit  agreements at closing were used to
repay the $58 million in then-outstanding borrowings under the prior U.S. credit
agreement,  which  was  terminated.  As a result  of  entering  into  these  new
agreements,  the Company recorded a $1.3 million charge to earnings in the first
quarter of 2000  related to the deferred  financing  costs  associated  with the
previous U.S. credit facility.

         At December  31,  1999,  the Company had  approximately  $16 million of
unused borrowing  availability  under its U.S. and U.K. bank credit  agreements.
Upon closing of the new credit  facilities  on February  25, 2000,  as discussed
above, the Company had approximately $96 million of borrowing availability under
these agreements.

         CAPITAL LEASE  OBLIGATIONS.  Certain of the Company's  U.K.  production
facilities  are under  long-term  leases.  The Company's  French  subsidiary has
entered into long-term leases with Compagnie Europeenne du Zirconium-CEZUS, S.A.

("CEZUS") (the 30% minority shareholder)  covering machinery and equipment.  The
terms of these  capital  leases  range from 10-30  years.  The U.K.  rentals are
subject to  adjustment  every five years  based on changes in certain  published
price indexes.  TIMET has guaranteed  TIMET UK's  obligations  under its leases.
Assets held under  capital  leases  included in  buildings  and in  equipment at
December 31, 1999 were $9.4 million and $1.3 million, respectively, with related
aggregate accumulated depreciation of $1.7 million.

         Aggregate maturities of long-term debt and capital lease obligations:
<TABLE>
<CAPTION>
                                                Capital            Long-term
                                                 Leases               Debt
                                            ----------------    ----------------
                                                         (In thousands)

Years ending December 31,
<S>                                              <C>                 <C>
     2000                                       $  1,190             $  85,364
     2001                                          1,124                   558
     2002                                          1,118                21,867
     2003                                          1,118                     -
     2004                                          1,110                     -
     2005 and thereafter                          20,305                     -
     Less amounts representing interest           15,874)                    -
                                            ----------------    ----------------

                                                $ 10,091             $ 107,789
                                            ================    ================
</TABLE>


                                      F-19
<PAGE>

Note 11 - Minority interest:

         CONVERTIBLE PREFERRED SECURITIES. In November 1996, TIMET Capital Trust
I (the  "Trust"),  a  wholly-owned  subsidiary of TIMET,  issued $201 million of
6.625%  Company-obligated  mandatorily  redeemable  preferred  securities and $6
million  of  common  securities.  TIMET  holds  all  of the  outstanding  common
securities  of the Trust.  The Trust used the  proceeds  from such  issuance  to
purchase  from the  Company  $207  million  principal  amount of TIMET's  6.625%
convertible   junior   subordinated   debentures  due  2026  (the  "Subordinated
Debentures").   TIMET's  guarantee  of  payment  of  the  Convertible  Preferred
Securities (in accordance with the terms thereof) and its obligations  under the
Trust documents constitute, in the aggregate, a full and unconditional guarantee
by the  Company  of the  Trust's  obligations  under the  Convertible  Preferred
Securities.  The sole assets of the Trust are the Subordinated  Debentures.  The
Convertible   Preferred  Securities  represent  undivided  beneficial  ownership
interests in the Trust, are entitled to cumulative preferred  distributions from
the Trust of 6.625% per annum, compounded quarterly, and are convertible, at the
option of the holder,  into TIMET  common  stock at the rate of 1.339  shares of
common stock per Convertible  Preferred  Security (an equivalent price of $37.34
per share), for an aggregate of approximately 5.4 million common shares if fully
converted.

         The  Convertible  Preferred  Securities  mature  December  2026 and are
redeemable  at the  Company's  option,  currently  at  approximately  104.6%  of
principal  amount  declining to 100% from December  2006. The Company's new U.S.
credit  agreement  prohibits  the payment of  dividends on these  securities  if
"excess  availability,"  as  determined  under the  agreement,  is less than $25
million.  The Company also has the right to defer dividend payments for up to 20
consecutive quarters ("Extension Period") on one or more occasions. In the event
the Company exercises this right, it would be unable during any Extension Period
to, among other things, pay dividends on or reacquire its capital stock.

         Dividends on the Convertible  Preferred  Securities are reported in the
Consolidated  Statements of Operations  as minority  interest,  net of allocable
income tax benefit.

         OTHER. Other minority interest relates principally to TIMET Savoie. The
Company has the right to purchase from CEZUS the remaining 30% interest in TIMET
Savoie for 30% of TIMET  Savoie's  equity  determined  under  French  accounting
principles  ($7.5  million  and $7.3  million  at  December  31,  1998 and 1999,
respectively),  which  amount is recorded as  minority  interest.  CEZUS has the
right to sell its  interest  in TIMET  Savoie  to the  Company  for 30% of TIMET
Savoie's  registered capital ($2.9 million and $2.5 million at December 31, 1998
and 1999, respectively).

Note 12 - Stockholders' equity:

         PREFERRED STOCK. The Company is authorized to issue 1 million shares of
preferred  stock.  The rights of  preferred  stock as to,  among  other  things,
dividends,   liquidation,   redemption,   conversions,  and  voting  rights  are
determined by the Board of Directors.

     COMMON STOCK. The Company's new U.S. credit agreement prohibits the payment
of common stock dividends (see Note 10).

         COMMON  STOCK  OPTIONS.  The  TIMET  Incentive  Plan  provides  for the
discretionary   grant  of  restricted   common  stock,   stock  options,   stock
appreciation  rights and other incentive  compensation to officers and other key
employees of the Company.  Options generally vest over five years and expire ten
years from date of grant.

         Additionally,  a plan for TIMET's  nonemployee  directors  provides for
eligible  directors to annually be granted  options to purchase  5,000 shares of
the Company's  common stock (1,500 prior to 1999) at a price equal to the market
price on the date of grant and to receive,  as partial payment of director fees,
annual  grants of 500 shares of common  stock.  Options  granted to  nonemployee
directors  vest in one year and expire  ten years from date of grant  (five year
expiration for grants prior to 1998).

                                      F-20
<PAGE>

         The weighted average remaining life of options  outstanding at December
31, 1999 was 7.9 years (1998 - 8.2 years).  At December 31, 1997,  1998 and 1999
options  to  purchase   approximately   2,500,   199,000  and  431,000   shares,
respectively,  were exercisable at average exercise prices of $23.00, $25.89 and
$25.85,  respectively.  Options to purchase 318,000 shares become exercisable in
2000. At December 31, 1999,  approximately  1.5 million shares and 30,350 shares
were  available  for  future  grant  under  the  TIMET  Incentive  Plan  and the
nonemployee director plan, respectively.

<TABLE>
<CAPTION>

         The following table  summarizes  information  about the Company's stock
options.

                                                                        Amount
                                                                        payable                              Weighted
                                                     Exercise            upon             Weighted         average fair
                                                     price per         exercise           average            value at
                                      Shares           share          (thousands)      exercise price       grant date
                                    -----------    --------------    --------------    ---------------    ---------------
<S>                                <C>           <C>         <C>    <C>                <C>                <C>
Outstanding at December 31,           536,275     $23.00-$31.25        $  13,679          $   25.51

Granted:
  At market                           230,075       25.94-29.50            6,414              27.88            $  12.72
  Above market                        134,000       31.00-34.00            4,355              32.50               11.99
Exercised                              (1,250)      23.00-29.50              (33)             26.25
Canceled                              (79,100)      23.00-34.00           (2,045)             25.86
                                    -----------    --------------    --------------    ---------------

Outstanding at December 31, 1997      820,000       23.00-34.00           22,370              27.28

Granted:
  At market                           320,900       26.13-29.31            9,392              29.27               14.08
  Above market                        142,000       32.31-35.31            4,802              33.81               12.79
Canceled                              (65,200)      23.00-35.31           (1,878)             28.80
                                    -----------    --------------    --------------    ---------------

Outstanding at December 31, 1998    1,217,700       23.00-35.31           34,686              28.48

Granted:
  At market                           433,000        7.38-7.97             3,445               7.96                3.98
  Above market                        206,000        8.97-9.97             1,951               9.47                3.59
Canceled                             (118,500)      7.97-35.31            (3,023)             25.51
                                    -----------    --------------    --------------    ---------------

Outstanding at December 31, 1999    1,738,200      $7.38-$35.31        $  37,059           $  21.32
                                    ===========    ==============    ==============    ===============
</TABLE>

         Weighted  average  fair values of options at grant date were  estimated
using the Black-Scholes model and assumptions listed below.

<TABLE>
<CAPTION>
Assumptions at date of grant:                     1997               1998              1999
                                              --------------    ---------------    --------------
<S>                                                 <C>               <C>                <C>
     Expected life (years)                          6                 6                  6
     Risk-free interest rate                      6.00%             5.56%              5.14%
     Volatility                                     35%               40%                45%
     Dividend yield                                  0%                0%                 0%
</TABLE>

         Had  stock-based   compensation  cost  been  determined  based  on  the
estimated fair values of options granted and recognized as compensation  expense
over the  vesting  period of the grants in  accordance  with SFAS No.  123,  the
Company's  net income and  earnings per share would have been reduced in 1997 by
$2.4 million and $.06 per share, respectively,  in 1998 by $3.5 million and $.11
per  share,  respectively,  and in 1999 by $3.1  million  and  $.10  per  share,
respectively.

                                      F-21
<PAGE>


Note 13 - Income taxes:

         Summarized  below are (i) the components of income (loss) before income
taxes and  minority  interest  ("pretax  income  (loss)"),  (ii) the  difference
between the income tax expense  (benefit)  attributable  to pretax income (loss)
and the amounts that would be expected using the U.S.  federal  statutory income
tax rate of 35%,  (iii) the  components  of the  income  tax  expense  (benefit)
attributable   to  pretax  income  (loss),   and  (iv)  the  components  of  the
comprehensive tax provision (benefit).

<TABLE>
<CAPTION>
                                                                                Years Ended December 31,
                                                                   ---------------------------------------------------
                                                                       1997              1998               1999
                                                                   --------------    --------------     --------------
                                                                                     (In thousands)
Pretax income (loss):
<S>                                                                   <C>                <C>               <C>
   U.S.                                                               $ 81,766           $ 51,090          $ (30,485)
   NON-U.S.                                                             53,397             34,759             (3,253)
                                                                   --------------    --------------     --------------

                                                                      $135,163           $ 85,849          $ (33,738)
                                                                   ==============    ==============     ==============

Expected income tax expense (benefit), at 35%                         $ 47,307            $30,047          $ (11,809)
Non-U.S. tax rates                                                        (464)                41                893
U.S. State income taxes, net                                               126                472             (1,705)
Dividends received deduction                                                 -               (218)            (1,382)
Export sales credit                                                       (361)              (979)                 -
Adjustment of deferred tax valuation allowance                          (5,785)                 -              1,869
Other, net                                                                 181               (166)               113
                                                                   --------------    --------------     --------------

                                                                      $ 41,004           $ 29,197          $ (12,021)
                                                                   ==============    ==============     ==============

Income tax expense (benefit):
   Current income taxes (benefit):

     U.S.                                                             $ 17,146           $  4,617          $ (11,225)

     Non-U.S.                                                           17,280             11,408               (332)
                                                                   --------------    --------------     --------------

                                                                        34,426             16,025            (11,557)
                                                                   --------------    --------------     --------------

   Deferred income taxes (benefit):

     U.S.                                                                5,998             12,374             (1,850)
     Non-U.S.                                                              580                798              1,386
                                                                   --------------    --------------     --------------
                                                                         6,578             13,172               (464)
                                                                   --------------    --------------     --------------

                                                                      $ 41,004           $ 29,197          $ (12,021)
                                                                   ==============    ==============     ==============

Comprehensive tax provision (benefit) allocable to:

   Pretax income (loss)                                               $ 41,004           $ 29,197          $ (12,021)
   Minority interest - convertible preferred securities                 (4,760)            (4,703)            (4,666)
   Stockholders' equity, including amounts allocated
     to other comprehensive income                                        (533)            (3,520)               (55)
                                                                   --------------    --------------     --------------

                                                                      $ 35,711           $ 20,974          $ (16,742)
                                                                   ==============    ==============     ==============
</TABLE>

                                      F-22
<PAGE>
<TABLE>
<CAPTION>

                                                                                 December 31,
                                                           ---------------------------------------------------------
                                                                     1998                           1999
                                                           --------------------------    ---------------------------
                                                            Assets       Liabilities      Assets       Liabilities
                                                           ----------    ------------    ----------    -------------
                                                                                (In millions)
Temporary differences relating to net assets:
<S>                                                        <C>           <C>              <C>           <C>
   Inventories                                             $    .1       $   (5.1)        $   .2        $  (5.5)
   Property and equipment, including software                  1.4          (30.5)           -            (30.7)
   Accrued opeb cost                                          11.0            -             11.3            -
   Accrued liabilities and other deductible differences       11.1            -             12.6           (1.0)
   Other taxable differences                                   -             (7.7)           4.7           (8.8)
Tax loss and credit carryforwards                              4.9            -             13.1            -
Valuation allowance                                            -              -             (1.9)           -
                                                           ----------    ------------    ----------    -------------
Gross deferred tax assets (liabilities)                       28.5          (43.3)          40.0          (46.0)
Netting                                                      (26.6)          26.6          (28.1)          28.1
                                                           ----------    ------------    ----------    -------------
Total deferred taxes                                           1.9          (16.7)          11.9          (17.9)
Less current deferred taxes                                    1.9           (2.5)           2.3           (5.0)
                                                           ----------    ------------    ----------    -------------
Net noncurrent deferred taxes                              $   -         $  (14.2)        $  9.6        $ (12.9)
                                                           ==========    ============    ==========    =============
</TABLE>

         The Company's valuation allowance decreased in the aggregate (including
amounts allocated to items other than pretax income) by $5.8 million in 1997 and
$.4 million in 1998. The increase in valuation  allowance during 1999 relates to
deferred  taxes related to certain  capital losses and certain  non-U.S.  losses
that do not currently meet the "more-likely-than-not" recognition criteria.

         At December 31, 1999,  the Company  had,  for U.S.  federal  income tax
purposes,  NOLs of approximately  $18.5 million, of which $6.8 million and $11.7
million expire in 2010 and 2019, respectively. At December 31, 1999, the Company
had an AMT credit  carryforward  of  approximately  $5.8  million,  which can be
utilized to offset regular income taxes payable in future years.  The AMT credit
carryforward has an indefinite carryforward period.

Note 14 - Employee benefit plans:

         VARIABLE  COMPENSATION PLANS.  Substantially all of the Company's total
worldwide  employees,  including a  significant  portion of its domestic  hourly
employees,  participate  in  compensation  programs  which  provide for variable
compensation based upon the financial performance of the Company and, in certain
circumstances,  the individual  performance  of the employee.  The cost of these
plans was $11 million in 1997, $6 million in 1998 and $1 million in 1999.

         DEFINED  CONTRIBUTION  PLANS. All of the Company's  domestic hourly and
salaried  employees (65% of total worldwide  employees at December 31, 1999) are
eligible to  participate  in  contributory  savings plans with partial  matching
employer  contributions.  Company  matching  contributions  are based on Company
profitability for approximately 80% of eligible employees.  Approximately 44% of
the Company's total employees at December 31, 1999 also participate in a defined
contribution  pension plan with  contributions  based upon a fixed percentage of
the employee's  eligible  earnings.  The cost of these pension and savings plans
approximated $3 million in each of 1997 and 1998 and $2 million in 1999.

         DEFINED BENEFIT PENSION PLANS. The Company  maintains  contributory and
noncontributory   defined  benefit  pension  plans  covering  substantially  all
European  employees and a minority of its domestic  workforce.  Defined  pension
benefits  are  generally  based on years of service  and  compensation,  and the
related expense is based upon independent  actuarial  valuations.  The Company's
funding policy for U.S. plans is to contribute  annually amounts  satisfying the
funding  requirements of the Employee Retirement Income Security Act of 1974, as
amended.  Non-U.S.  defined  benefit pension plans are funded in accordance with
applicable statutory  requirements.  The U.S. defined benefit pension plans were
closed to new participants prior to 1996 and, in some cases, benefit levels have
been frozen.

                                      F-23
<PAGE>

         The rates used in  determining  the actuarial  present value of benefit
obligations  at December 31, 1999 were:  (i) discount rates - 6% to 7.5% (1998 -
6% to 6.5%), and (ii) rates of increase in future compensation levels - 3% (1998
- 3%).  The  expected  long-term  rates of return on assets  used was 7.5% to 9%
(1998 - 7.5% to 9%). The benefit  obligations  are sensitive to changes in these
estimated rates and actual results may differ from the obligations  noted below.
At  December  31,  1999,  the  assets of the plans are  primarily  comprised  of
government  obligations,  corporate  stocks and bonds.  The funded status of the
Company's defined benefit pension plans is set forth below.

<TABLE>
<CAPTION>

                                                                                        Years Ended December 31,
                                                                                    ---------------------------------
                                                                                        1998               1999
                                                                                    --------------    ---------------
                                                                                             (In thousands)
Change in projected benefit obligations:
<S>                                                                                   <C>               <C>
     Balance at beginning of year                                                     $ 136,367         $ 152,292
     Service cost                                                                         5,462             4,053
     Interest cost                                                                        9,377             8,939
     Plan amendments                                                                          -               977
     Curtailment loss (gain)                                                              5,725              (103)
     Actuarial loss (gain)                                                                  553            (5,353)
     Benefits paid                                                                       (5,334)           (8,917)
     Change in currency exchange rates                                                      142            (3,200)
                                                                                    --------------    ---------------

          Balance at end of year                                                      $ 152,292         $ 148,688
                                                                                    ==============    ===============

Change in plan assets:

     Fair value at beginning of year                                                  $ 136,827         $ 133,100
     Actual return on plan assets                                                        (3,039)           28,516
     Contributions                                                                        4,606             6,345
     Benefits paid                                                                       (5,334)           (8,917)
     Change in currency exchange rates                                                       40            (2,408)
                                                                                    --------------    ---------------

          Fair value at end of year                                                   $ 133,100         $ 156,636
                                                                                    ==============    ===============

Funded status:

     Plan assets over (under) projected benefit obligations                           $ (19,192)        $   7,948
     Unrecognized:
          Actuarial loss (gain)                                                          16,154            (9,029)
          Prior service cost                                                              2,783             3,190
          Transition obligation                                                            (615)                -
                                                                                    --------------    ---------------

          Total prepaid (accrued) pension cost                                        $     (870)       $   2,109
                                                                                    ==============    ===============

Amounts recognized in balance sheet:

     Intangible pension asset                                                         $   2,783         $   3,190
     Current pension liability                                                           (1,482)           (1,287)
     Noncurrent pension liability                                                        (8,754)           (5,634)
     Accumulated other comprehensive income                                               6,583             5,840
                                                                                    --------------    ---------------

                                                                                      $     (870)       $   2,109
                                                                                    ==============    ===============
</TABLE>

                                      F-24
<PAGE>


                  Selected  information related to the Company's defined benefit
pension plans that have accumulated  benefit obligations in excess of fair value
of plan assets is presented below.

<TABLE>
<CAPTION>
                                                                                              December 31,
                                                                                    ---------------------------------
                                                                                        1998               1999
                                                                                    --------------    ---------------
                                                                                             (In thousands)
<S>                                                                                    <C>                <C>
Projected benefit obligation                                                           $ 63,123           $ 59,129
Accumulated benefit obligation                                                           62,831             59,129
Fair value of plan assets                                                                56,707             54,154
</TABLE>

         The  components  of the net  periodic  defined  benefit  pension  cost,
excluding curtailment, are set forth below.

<TABLE>
<CAPTION>
                                                                               Years Ended December 31,
                                                                  ----------------------------------------------------
                                                                       1997              1998               1999
                                                                  ---------------    --------------     --------------
                                                                                    (In thousands)
<S>                                                                   <C>              <C>                   <C>
Service cost benefits earned                                          $   3,906        $     5,462           $  4,053
Interest cost on projected benefit obligations                            9,201              9,519              8,939
Expected return on plan assets                                          (20,555)           (12,247)           (10,650)
Net amortization                                                          9,724             (2,030)               120
                                                                  ---------------    --------------     --------------

   Net pension expense                                                $   2,276        $       704           $  2,462
                                                                  ===============    ==============     ==============
</TABLE>

         POSTRETIREMENT  BENEFITS  OTHER THAN  PENSIONS.  The  Company  provides
certain postretirement health care and life insurance benefits to certain of its
domestic  retired  employees.  The  Company  funds  such  benefits  as they  are
incurred,  net of any  contributions  by the retirees.  Under plans currently in
effect,  a majority of TIMET's active  domestic  employees would become eligible
for these benefits if they reach normal  retirement age while working for TIMET.
These plans have been revised to discontinue  employer-paid health care coverage
for future retirees once they become Medicare-eligible.

         The components of the periodic OPEB cost and change in the  accumulated
OPEB obligations are set forth below. The plan is unfunded and  contributions to
the plan during the year equal benefits paid. The rates used in determining  the
actuarial present value of the accumulated OPEB obligations at December 31, 1999
were:  (i) discount  rate - 7.5% (1998 - 6.5%),  (ii) rate of increase in health
care costs for the following  period - 9.2% (1998 - 8.9%) (iii) ultimate  health
care trend rate  (achieved  in 2016) - 6.0% (1998 - 4.75%).  If the health  care
cost trend  rate was  increased  by one  percentage  point for each  year,  OPEB
expense  would  have  increased  approximately  $.2  million  in  1999,  and the
actuarial  present value of  accumulated  OPEB  obligations at December 31, 1999
would have increased approximately $2.7 million. A one percentage point decrease
would have a similar,  but opposite,  effect. The accrued OPEB cost is sensitive
to  changes in these  estimated  rates and actual  results  may differ  from the
obligations noted below.

                                      F-25
<PAGE>

<TABLE>
<CAPTION>
                                                                                               December 31,
                                                                                      -------------------------------
                                                                                          1998              1999
                                                                                      -------------     -------------
                                                                                              (In thousands)
Actuarial present value of accumulated OPEB obligations:
<S>                                                                                      <C>              <C>
   Balance at beginning of year                                                          $ 22,297         $  22,637
   Service cost                                                                               326               252
   Interest cost                                                                            1,553             1,577
   Actuarial loss                                                                           1,648             3,754
   Curtailment gain                                                                             -              (115)
   Benefits paid, net of participant contributions                                         (3,187)           (3,919)
                                                                                      -------------     -------------
   Balance at end of year                                                                  22,637            24,186
Unrecognized net actuarial gain (loss)                                                        900            (3,411)
Unrecognized prior service credits                                                          2,899             2,455
                                                                                      -------------     -------------
Total accrued OPEB cost                                                                    26,436            23,230
Less current portion                                                                        2,371             3,269
                                                                                      -------------     -------------

   Noncurrent accrued OPEB cost                                                          $ 24,065         $  19,961
                                                                                      =============     =============
</TABLE>

<TABLE>
<CAPTION>
                                                                                  Years Ended December 31,
                                                                         --------------------------------------------
                                                                            1997           1998             1999
                                                                         -----------    ------------     ------------
                                                                                       (In thousands)
<S>                                                                        <C>            <C>               <C>
Service cost benefits earned                                               $   357        $    326          $   252
Interest cost on accumulated OPEB obligations                                1,613           1,553            1,577
Curtailment gain                                                                 -               -             (115)
Net amortization and deferrals                                                (635)           (550)            (364)
                                                                         -----------    ------------     ------------

   Net OPEB expense                                                        $ 1,335         $ 1,329          $ 1,350
                                                                         ===========    ============     ============
</TABLE>

Note 15 - Related party transactions:

         At December 31, 1996,  Tremont  Corporation  held 36% of the  Company's
outstanding  common stock.  During 1998 and 1999,  Tremont purchased  additional
shares  of the  Company's  common  stock  in  market  or  private  transactions,
increasing  its  ownership  of TIMET  common  stock to 39% at December 31, 1999.
During 1999, the Combined Master  Retirement  Trust ("CMRT"),  a trust formed by
Valhi,  Inc. to permit the  collective  investment  by trusts that  maintain the
assets of certain employee benefit plans adopted by Valhi and related companies,
purchased shares of TIMET common stock in market  transactions.  At December 31,
1999, the CMRT held 8% of TIMET's common stock. At December 31, 1999,  Valhi and
other  entities  related to Harold C. Simmons held 55% of Tremont's  outstanding
common stock, and Contran  Corporation held,  directly or through  subsidiaries,
approximately  93% of Valhi's  outstanding  common stock.  Substantially  all of
Contran's  outstanding  voting common stock is held either by trusts established
for the benefit of certain children and  grandchildren of Mr. Simmons,  of which
Mr.  Simmons is sole  trustee,  or by Mr.  Simmons  directly.  In addition,  Mr.
Simmons  is the sole  trustee  of the CMRT and a member of the trust  investment
committee  for the CMRT.  Mr.  Simmons may be deemed to control each of Contran,
Valhi, Tremont and TIMET.

                                      F-26
<PAGE>

         Corporations  that may be deemed to be controlled by or affiliated with
Mr. Simmons  sometimes engage in (i)  intercorporate  transactions  with related
companies  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,  and understands  that
Contran,  Tremont  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.

         It is the policy of the Company to engage in transactions  with related
parties on terms which are, in the opinion of the Company,  no less favorable to
the Company than could be obtained from unrelated parties.

         TIMET  supplies  titanium  strip product to ValTimet  under a long-term
contract as the preferred  supplier and supplied  castings ingot to Wyman-Gordon
Titanium  Castings.  Sales to these joint  ventures were $40 million in 1998 and
$19 million in 1999.  Receivables  from related parties at December 31, 1998 and
1999 relate principally to sales to these joint ventures. In January 2000, TIMET
sold its interest in the castings joint venture.

         In connection  with the  construction  and financing of TIMET's  vacuum
distillation  process  ("VDP")  titanium  sponge plant,  Union  Titanium  Sponge
Corporation  ("UTSC")  licensed certain  technology to TIMET in exchange for the
right to acquire up to 20% of TIMET's annual  production  capacity of VDP sponge
at agreed-upon  prices through early 1997 and higher  formula-determined  prices
thereafter  through  2008.  A discount  from  market  value  represents  TIMET's
consideration to UTSC for the licensed  technology.  Sales to UTSC  approximated
$17 million in 1997, $7 million in 1998 and $5 million in 1999.

         The Company  has an  intercorporate  services  agreement  with  Tremont
whereby the Company provides certain management, financial and other services to
Tremont for approximately $.4 million in each of 1997 and 1998 and approximately
$.2 million in 1999, subject to renewal for future years.

         The  Company  has  an   intercorporate   services   agreement  with  NL
Industries,  Inc., a majority-owned  subsidiary of Valhi. Under the terms of the
agreement, NL provides certain management, financial and other services to TIMET
for approximately $.3 million in each of 1997, 1998 and 1999.

         The  Company  extended  market-rate  loans in 1998 and 1999 to  certain
officers  pursuant to a  Board-approved  program to  facilitate  the purchase of
Company  stock  and  6.625%  Convertible  Preferred  Securities.  The  loans are
generally payable in five annual  installments  beginning six years from date of
loan and bear interest at a rate tied to the Company's  borrowing rate,  payable
quarterly.  For certain executive officers whose positions have been eliminated,
the Board has  approved  the  deferral  of  interest  (to be added to  principal
quarterly) and principal payments for a period of up to five years commencing on
the date of each such officer's severance. At December 31, 1999, the outstanding
balance of officer notes receivable was approximately $.5 million.

                                      F-27
<PAGE>

         EWI  RE,  Inc.  arranges  for  and  brokers  certain  of the  Company's
insurance policies. Parties related to Contran own 90% of the outstanding common
stock of EWI, and a son-in-law  of Harold C. Simmons  manages the  operations of
EWI.  Consistent with insurance  industry  practices,  EWI receives a commission
from the  insurance  underwriters  for the policies that it arranges or brokers.
The Company paid an aggregate of approximately $1.8 million and $2.0 million for
such policies in 1998 and 1999, respectively,  which amount principally included
premiums for the  insurance  policies paid to third  parties,  but also included
commissions paid to EWI. In the Company's  opinion,  the premiums paid for these
insurance  policies are  reasonable  and similar to those the Company could have
obtained through an unrelated  insurance broker.  The Company expects that these
relationships with EWI will continue in 2000.

Note 16 - Commitments and contingencies:

         LONG-TERM AGREEMENTS. The Company has long-term agreements with certain
major  aerospace   customers,   including   Boeing,   Rolls-Royce   plc,  United
Technologies  Corporation  (and related  companies)  and  Wyman-Gordon  Company,
pursuant  to which  the  Company  expects  to be a major  supplier  of  titanium
products to these customers. The Boeing agreement was effective in 1998, but was
not expected to reach volume levels until 1999. The other  agreements  mentioned
were effective in 1999. These  agreements  provide for (i) minimum market shares
of the customers'  titanium  requirements  (generally at least 70%) for extended
periods  (nine  to ten  years)  and  (ii)  fixed  or  formula-determined  prices
generally for at least the first five years.

     The Boeing  contract  requires  Boeing to purchase a minimum  percentage of
their  titanium  requirements  from TIMET.  Although  Boeing  placed  orders and
accepted delivery of certain volumes in 1999, TIMET believes the level of orders
was significantly below the contractual volume requirements. Although Boeing has
informed the Company that it will either order the required  contractual  volume
under the  contract in 2000 or pay the  liquidated  damages  provided for in the
agreement,  TIMET has  received  virtually  no  Boeing-related  orders under the
contract  for the year 2000.  Boeing has also  informed  the Company  that it is
unwilling to commit to the contract  beyond the year 2000. On March 21, 2000 the
Company filed a lawsuit against Boeing in a Colorado state court seeking damages
for Boeing's  repudiation and breach of the Boeing contract.  TIMET's  complaint
seeks damages from Boeing that TIMET  believes are in excess of $600 million and
a declaration from the court of TIMET's rights under the contract.

         The Company also has long-term  arrangements with certain suppliers for
the purchase of certain raw  materials,  including  titanium  sponge and various
alloying elements,  at fixed and/or formula  determined  prices.  TIMET believes
these arrangements will help stabilize the cost and supply of raw materials. The
sponge contract  provides for annual purchases by the Company of 6,000 to 10,000
metric tons. The parties agreed to reduced minimums for 1999 and 2000.

         CONCENTRATION  OF CREDIT  AND  OTHER  RISKS.  Substantially  all of the
Company's sales and operating  income are derived from  operations  based in the
U.S., the U.K. and France.  The majority of the Company's sales are to customers
in the  aerospace  industry  (including  airframe and engine  construction).  As
described  above,  the Company  has  long-term  agreements  with  certain  major
aerospace  customers,  including  Boeing,  Rolls-Royce plc, United  Technologies
Corporation (and related companies) and Wyman-Gordon  Company.  These agreements
and others accounted for approximately  44% of aerospace  revenues in 1999. Such
concentration  of customers may impact the Company's  overall exposure to credit
and other risks, either positively or negatively,  in that such customers may be
similarly  affected by economic or other conditions.  While no customer accounts
for more than 10% of the  Company's  direct  sales,  the  Company's  ten largest
customers  accounted for about one-third of net sales in 1997,  about 40% of net
sales in 1998 and about 30% of net sales in 1999.

     OPERATING  LEASES.  The Company  leases  certain  manufacturing  and office
facilities and various  equipment.  Most of the leases contain  purchase  and/or
various   term  renewal   options  at  fair  market  and  fair  rental   values,
respectively.  In most cases  management  expects  that, in the normal course of
business,  leases will be renewed or replaced by other leases.  Net rent expense
was approximately $3.6 million in 1997, $5.0 million in 1998 and $5.9 million in
1999.

                                      F-28
<PAGE>

         At December 31, 1999,  future  minimum  payments  under  noncancellable
operating  leases having an initial or remaining term in excess of one year were
as follows:

<TABLE>
<CAPTION>
                                                                   Amount
                                                              ------------------
                                                                (In thousands)
Years ending December 31,
<S>                                                                  <C>
   2000                                                           $   5,495
   2001                                                               3,461
   2002                                                               1,781
   2003                                                               1,048
   2004                                                                  97
   2005 and thereafter                                                   48
                                                             -------------------

                                                                  $  11,930

                                                             ===================
</TABLE>

ENVIRONMENTAL MATTERS.

         BMI COMPLEX. In the early 1990s, TIMET and certain other companies (the
"Steering  Committee  Companies") that currently have or formerly had operations
within  a  Henderson,  Nevada  industrial  complex  (the  "BMI  Complex")  began
environmental  assessments of the BMI Complex and each of the individual company
sites located within the BMI Complex pursuant to a series of consent  agreements
entered into with the Nevada Division of Environmental Protection ("NDEP"). Most
of this assessment work has now been completed,  although some of the assessment
work with respect to TIMET's property is continuing. In 1999, TIMET entered into
a  series  of  agreements  with  Basic  Management,   Inc.  (together  with  its
subsidiaries,  "BMI") and, in certain cases, other Steering Committee Companies,
pursuant  to which,  among other  things,  BMI  assumed  responsibility  for the
conduct of soils remediation activities on the properties described,  including,
subject to final NDEP approval,  the  responsibility to complete all outstanding
requirements  under the consent  agreements  with NDEP insofar as they relate to
the  investigation  and remediation of soils conditions on such properties.  BMI
also  agreed  to  indemnify  TIMET and the other  Steering  Committee  Companies
against certain future  liabilities  associated with any soils  contamination on
such  properties.  The  Company  contributed  $2.8  million  to the cost of this
remediation (which payment was charged against accrued liabilities). The Company
also agreed to convey to BMI, at no additional cost,  certain lands owned by the
Company  adjacent to its plant site (the "TIMET Pond  Property") upon payment by
BMI of the cost to design,  purchase,  and install the  technology and equipment
necessary to allow the Company to stop  discharging  liquid and solid  effluents
and  co-products  onto the TIMET Pond  Property  (BMI will pay 100% of the first
$15.9 million cost for this project,  and TIMET will  contribute 50% of the cost
in excess of $15.9 million, up to a maximum payment by TIMET of $2 million;  the
Company  does not  currently  expect to incur any cost in  connection  with this
project).  The  Company,  BMI and the other  Steering  Committee  Companies  are
continuing  investigation  with respect to certain  additional issues associated
with the properties described above,  including any possible groundwater issues.
In addition,  the Company is continuing  assessment work with respect to its own
active plant site.

         HENDERSON FACILITY.  In April 1998, the U. S. Environmental  Protection
Agency  ("EPA") filed a civil ACTION  AGAINST TIMET (UNITED STATES OF AMERICA V.
TITANIUM  METALS  CORPORATION;  Civil Action No.  CV-S-98-682-HDM  (RLH),  U. S.
District  Court,  District of Nevada) in  connection  with an earlier  notice of
violation  alleging that TIMET violated several  provisions of the Clean Air Act
in connection with the start-up and operation of certain environmental equipment
at  TIMET's  Henderson,  Nevada  facility  during  the  early  to  mid-1990s.  A
settlement  agreement in this case was  approved by the court in February  2000,
pursuant  to which  TIMET will make cash  payments  totaling  approximately  $.4
million from 2000 through 2002 and undertake certain  additional  monitoring and
emissions controls at a primarily capital cost of approximately $1.5 million.

                                      F-29
<PAGE>

         At  December  31,  1999,  the  Company  had  accrued  an  aggregate  of
approximately  $1.2 million  primarily for THE  ENVIRONMENTAL  MATTERS DISCUSSED
ABOVE  UNDER  BMI  COMPANIES  AND  HENDERSON   FACILITY.   The  Company  records
liabilities  related to  environmental  remediation  obligations  when estimated
future  expenditures  are probable and reasonably  estimable.  Such accruals are
adjusted as further  information  becomes  available  or  circumstances  change.
Estimated  future  expenditures are not discounted to their present value. It is
not possible to estimate the range of costs for certain sites. The imposition of
more  stringent   standards  or  requirements   under   environmental   laws  or
regulations,  the  results of future  testing  and  analysis  undertaken  by the
Company at its  operating  facilities,  or a  determination  that the Company is
potentially  responsible for the release of hazardous substances at other sites,
could  result in  expenditures  in excess of amounts  currently  estimated to be
required for such matters.  No assurance can be given that actual costs will not
exceed accrued  amounts or that costs will not be incurred with respect to sites
as to which no problem is currently  known or where no estimate can presently be
made. Further,  there can be no assurance that additional  environmental matters
will not arise in the future.

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

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

Note 17 - Quarterly results of operations (unaudited):
<TABLE>
<CAPTION>
                                                                                Quarters ended
                                                      --------------------------------------------------------------------
                                                         March 31           June 30          Sept. 30          Dec. 31
                                                      ----------------    -------------    --------------    -------------
                                                                     (In millions, except per share data)
Year ended december 31, 1999:
<S>                                                         <C>               <C>               <C>              <C>
   Net sales                                                $ 134.1           $ 127.6           $ 112.7          $ 105.5
   Operating income (loss)                                     (1.4)              1.1              (7.8)           (23.2)
   Net loss                                                    (3.9)             (2.5)             (7.5)           (17.5)

   Net loss per share:

     Basic                                                  $  (.12)          $  (.08)          $  (.24)         $  (.56)
     Diluted                                                   *                 *                 *                *

Year ended december 31, 1998:

   Net sales                                                $ 187.1           $ 190.8           $ 173.5          $ 156.3
   Operating income (loss)                                     31.6              23.9              27.3              (.2)
   Net income (loss)                                           18.3              13.8              16.1             (2.5)

   Net income (loss) per share:

     Basic                                                  $   .58           $   .44           $   .51          $  (.08)
     Diluted                                                    .56               .44               .50              *
<FN>
         *  Antidilutive.
</FN>
</TABLE>

         Due to the timing of the  issuance and  repurchase  of common stock and
rounding  in  calculations,  the sum of  quarterly  earnings  per  share  may be
different than earnings per share for the full year.

                                      F-30
<PAGE>

Note 18 - Earnings per share:

         A  reconciliation   of  the  numerator  and  denominator  used  in  the
calculation of basic and diluted  earnings per share is presented below. In 1998
and 1999,  the effect of the assumed  conversion  of the  Convertible  Preferred
Securities was antidilutive.  Stock options omitted from the denominator because
they were antidilutive  approximated:  not material in 1997, 1.2 million in 1998
and 1.7 million in 1999.

<TABLE>
<CAPTION>
                                                                             Years Ended December 31,
                                                              ------------------------------------------------------
                                                                   1997                1998               1999
                                                              ---------------     --------------     ---------------
                                                                                  (In thousands)
Numerator:
<S>                                                               <C>                 <C>               <C>
   Net income (loss)                                              $ 83,010            $ 45,752          $ (31,390)
   Minority interest - Convertible
     Preferred Securities                                            8,840               8,840              8,667
                                                              ---------------     --------------     ---------------

   Diluted net income (loss)                                      $ 91,850            $ 54,592          $ (22,723)
                                                              ===============     ==============     ===============

Denominator:

   Average common shares outstanding                                31,457              31,435             31,371
   Convertible Preferred Securities                                  5,389               5,389              5,389
   Average dilutive stock options                                      109                  22                 22
                                                              ---------------     --------------    ---------------

   Diluted shares                                                   36,955              36,846             36,782
                                                              ===============     ==============     ===============
</TABLE>


                                      F-31

<PAGE>












                        REPORT OF INDEPENDENT ACCOUNTANTS
                         ON FINANCIAL STATEMENT SCHEDULE


To the Stockholders and Board of Directors of Titanium Metals Corporation:


     Our audits of the  consolidated  financial  statements  referred  to in our
report dated  January 28, 2000,  except for the fourth and fifth  paragraphs  of
Note 10, as to which the date is February 25, 2000, and the second  paragraph of
Note 16, as to which the date is March 21,  2000,  appearing  in the 1999 Annual
Report on Form 10-K also included an audit of the financial  statement  schedule
listed in the Index on page F of this Form 10-K. In our opinion,  this financial
statement  schedule presents fairly, in all material  respects,  the information
set  forth  therein  when  read in  conjunction  with the  related  consolidated
financial statements.


PricewaterhouseCoopers LLP


Denver, Colorado
January 28, 2000





                                      S-1
<PAGE>
<TABLE>
<CAPTION>
                                            TITANIUM METALS CORPORATION

                                  SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                                                  (In thousands)

                                                                      Additions
                                                                       charged
                                                  Balance at      (credited) to                                      Balance
                 DESCRIPTION                      beginning         costs and                                         at end
                                                   of year           expenses      Deductions        Other            of year
                                                -------------     -------------   -------------     ----------      -----------
Year ended December 31, 1999:
<S>                                                 <C>            <C>             <C>              <C>             <C>
   Allowance for doubtful accounts                  $  1,932       $    1,628       $     (230)      $         -     $   3,330
                                                =============      ===========     =============     ===========    ===========
   Valuation allowance for deferred

     income taxes                                   $      -       $    1,869       $        -       $         -     $   1,869
                                                =============      ===========     =============     ===========    ===========
   Reserve for excess and slow

     moving inventories                             $  6,520       $    4,423        $     (406)     $  3,327 (b)    $  13,864
                                                =============      ===========     ==============    ===========    ===========

Year ended December 31, 1998:

   Allowance for doubtful accounts                  $  2,218       $       39        $     (325)(a)  $        -      $   1,932
                                                =============      ===========      =============    ===========    ===========
   Valuation allowance for deferred

     income taxes                                   $    373       $        -        $     (373)     $        -      $      -
                                                =============      ===========      =============    ===========    ===========
   Reserve for excess and slow

     moving inventories                             $  6,292       $      228        $        -      $        -      $   6,520
                                                =============      ===========      =============    ===========    ===========

Year ended December 31, 1997:

   Allowance for doubtful accounts                  $  4,788       $        2        $   (2,572)(a)  $        -      $   2,218
                                                ===============    ===========      =============    ===========    ===========
   Valuation allowance for deferred

     income taxes                                   $  6,158       $   (5,785)       $        -      $        -      $     373
                                                ===============    ===========      ==============   ===========    ===========
   Reserve for excess and slow

     moving inventories                             $  7,719       $   (1,427)       $         -     $        -      $   6,292
                                                ===============    ===========      ==============   ===========    ===========

<FN>
(a)      Amounts written off, less recoveries.

(b)      Adjustment for slow moving inventory previously carried at zero value.
</FN>
</TABLE>

                                      S-2