Document identical to 10-K filed on 3/23/99.  Resubmitted to
correct technical problem with original submission; financial
pages included in original submission did not get displayed on
public Edgar sites.



                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                   FORM 10-K/A

   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES    
   EXCHANGE  ACT OF 1934 - For the fiscal year ended December 31, 1998
                                       OR
   TRANSITION   REPORT   PURSUANT   TO   SECTION  13  OR  15(d)  OF  THE  
   SECURITIES    EXCHANGE ACT OF 1934

                         Commission file number 0-28538

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

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

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

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

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

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



          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 1, 1999, 31,369,405 shares of common stock were outstanding.  The
aggregate market value of the 19.1 million shares of voting stock held by
nonaffiliates of Titanium Metals Corporation as of such date approximated $135
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," "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 impact 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,
<PAGE>

including in the portions referenced above and those described from time to time
in the Company's other filings with the Securities and Exchange Commission, such
as the cyclicality of the Company's business and its dependence on the aerospace
industry, the sensitivity of the Company's business to global industry capacity,
global economic conditions, changes in product pricing, the impact of long term
contracts with customers on the ability to raise prices, 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, potential difficulties
in integrating acquisitions, uncertainties associated with new product
development and the supply of raw materials and services and the possibilities
of disruptions of normal business activities from "Year 2000" issues.  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 manufacturing facilities in both the United
States and Europe, the world's principal markets for titanium.  The Company
estimates that in 1998 it accounted for approximately 27% of worldwide industry
shipments of mill products and approximately 12% 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 half of industry mill product shipments in 1998,
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 new and emerging
uses such as medical implants, sporting equipment, offshore oil and gas
production installations, geothermal facilities, military armor and automotive
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 products produced from ingot or slab, including
<PAGE>

billet, bar, flat products (plate, sheet, and strip), extrusions and wire.  The
Company believes it is among the lowest 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.

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

     . 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.

     . 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.

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

     . Stabilize the cost and supply of raw materials.

     . Maintain a strong balance sheet.


<PAGE>

     ~Outlook~for~1999.~~~The business environment in which TIMET finds itself
in 1999 is substantially different from the 1996-1998 market for titanium metal.
Throughout 1996, 1997 and much of 1998, the Company was producing titanium ingot
and mill products for aerospace customers in contemplation of continuing record
jet aircraft build rates that were expected to last through at least 2001.
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 widebody planes.  As aerospace customers continue to reduce
inventories during 1999 and adjust to decreases in overall production rates,
TIMET faces a decrease in demand from 1997-98 levels.

     Adding to the challenges in the aerospace sector, industrial demand for
titanium has also declined due to the weakness in Asian and other economies.
This has led to significant declines in volume and pricing.  These declines in
TIMET's key markets occurred earlier than had been anticipated and at a time
when the Company was in the midst of a large capital expenditure program to
modernize operations and to provide lower-cost, more efficient capacity to meet
peak demand for its products.  The Company was also in the middle of installing
enterprise-wide systems and software in order to standardize systems and
information, improve efficiencies, reduce costs and also to help make its
systems "Year 2000" ("Y2K") ready.

     Assuming demand remains at currently expected levels and does not decrease
or increase significantly in 1999, the Company currently expects net losses in
at least the first two quarters and a return to modest profitability in the
third or fourth quarter.  In both the aerospace and industrial sectors, reduced
demand and lower prices (including prices under new long term contracts referred
to below) will cause lower sales and gross profit margins.

     On the expense side, TIMET's costs related to the new enterprise-wide
system and Y2K compliance program will continue to run at high levels throughout
<PAGE>

1999.  At the same time, the benefits of the new system will likely be modest in
1999, particularly with the reduction in capacity utilization.

     In the fourth quarter of 1998, 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:

 . TIMET has permanently closed manufacturing facilities in Verdi, NV, Milbury,
  MA and Pomona, CA.  The Company has also temporarily or permanently closed
  parts of facilities in Henderson, NV, Morgantown, PA and Witton, England.

 . TIMET has planned workforce reductions of approximately 600 people in the
  United States and Europe.  These reductions represent over 20% of its mid-
  1998 worldwide workforce and have occurred at all levels of the Company.
  Approximately two-thirds of the reductions have been implemented as of
  February 1999.

 . TIMET has merged all of its North American manufacturing operations into one
  operating unit to reduce costs and, at the same time, improve customer
  service.

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

 . Supply contracts with key vendors have been renegotiated in order to reduce
  volumes and, to some extent, prices.
 
 . Capital expenditures will be substantially cut back with exceptions of
  expenditure for environmental and safety purposes and funds needed to
  complete carryover projects begun in 1998, including the capital needed to
  complete implementation of the Company's business enterprise-wide software
<PAGE>

  system.  Total capital expenditures are expected to be less than $40 million
  in 1999, compared to an aggregate of approximately $180 million in 1997 and
  1998.  For the year 2000, capital expenditures should decline further.

 . Plans are already in place to reduce working capital, especially inventory
  and receivables, and the Company believes it will see the benefits of this
  program beginning in the first quarter of 1999.

 . The Company has also obtained the agreement of Nippon Mining & Metals Company
  and Mitsui & Company Incorporated to defer indefinitely TIMET's plan to
  purchase approximately 5% of the outstanding stock of Toho Titanium Company,
  Ltd. from Nippon Mining & Metals and Mitsui at a purchase price of
  approximately $13 million.  TIMET plans to proceed with the other elements of
  the previously announced strategic alliance between Toho and TIMET, including
  study of the possible formation of a titanium hearth melting joint venture in
  Japan and an anticipated long-term agreement for the purchase of certain
  grades of titanium sponge by TIMET from Toho.

     In addition to its short-term plan of actions as described above, the
Company has long-term agreements with certain major aerospace customers,
including The Boeing Company, 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.  These contracts
are 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 and in 1999 and beyond are anticipated to
account for more than 60% of aerospace revenues.  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.

<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.  When the order flow
did not meet expectations in 1998, the Company sought to restructure the terms
of certain agreements.  The Company is continuing to work with suppliers and
believes that the contracts can be amended or terminated without any material
adverse effect to the Company.

     With the new enterprise-wide information system in place, and the assured
minimum volume shares and prices of the aerospace contracts referred to above,
the Company can focus on cost reduction programs to increase TIMET's
profitability to acceptable levels.

     ~Acquisitions~and~capital~transactions~during~the~past~three~years.~At the
beginning of 1996, the Company was 75%-owned by Tremont Corporation and its
operations were conducted primarily in the United States.  During 1996, the
Company expanded both geographically and operationally as a result of the
acquisition of the titanium business of IMI plc (the "IMI Titanium
Acquisition"), the acquisition of certain assets from Axel Johnson Metals, Inc.
("the "AJM Acquisition") and certain smaller acquisitions in Europe, all of
which acquisitions are more fully described in Note 3 to the Consolidated
Financial Statements.

     The Company also significantly improved its liquidity and capital structure
during 1996 through its initial public offering of common stock and the issuance
of Company-obligated manditorily redeemable preferred securities (the
"Convertible Preferred Securities") through a subsidiary trust, TIMET Capital
Trust I.  See Notes 10 and 11 to the Consolidated Financial Statements.

     During 1997, the Company entered into a welded tube joint venture
("ValTimet") and in 1998 a castings joint venture ("Wyman-Gordon Titanium
<PAGE>

Castings"), both intended to combine best manufacturing practices and market
coverage in these smaller markets.  In 1998, TIMET acquired Loterios S.p.A. to
increase market share in industrial markets, particularly oil and gas, and
provide increased geographic sales coverage in Europe.  These transactions are
more fully described in Notes 3 and 4 to the Consolidated Financial Statements.

     TIMET's strategy for investing in new markets and uses for titanium also
includes investing in emerging businesses.  In this regard, during 1997 the
Company acquired equity interests in Ti.Pro, LLC, Titanium Memory Systems, Inc.
("TMS") and TiComp, Inc.  Ti.Pro's focus is on developing the market for
titanium in automobile racing and other specialty vehicle applications.  TMS is
continuing its development and production of a titanium substrate for use in
computer hard disk drives.  TiComp is working on the development and production
of layered titanium and composite materials for a variety of potential
applications.

     Tremont now holds approximately 39% of TIMET's outstanding common stock.
See Note 14 to the Consolidated Financial Statements.

~    Recent~Industry~Conditions.~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.

     Worldwide industry mill product 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 15% decline, to approximately 46,000 metric tons, expected in 1999.
<PAGE>

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 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 1998 accounted for approximately 80% of total
aerospace demand (40% of total titanium demand).

     According to~The~Airline~Monitor~, a leading aerospace publication, the
commercial airline industry reported operating income of over $11 billion
(estimated) in 1998, compared to $16 billion in 1997 and $12 billion in 1996.
The Company understands commercial aircraft deliveries are expected to peak 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 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 substantially. 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 new and emerging uses such as medical implants, sporting
equipment, offshore oil and gas production installations, geothermal facilities,
military armor and automotive uses. Several of these emerging applications
<PAGE>

represent potential growth opportunities that the Company believes may reduce
the industry's historical dependence on the aerospace market.
~
~    ~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) and extrusions.
In 1998, approximately 97% of the Company'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, NV, 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.

     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
<PAGE>

milling and machining operations, and significant quantities of scrap are
generated in the production process for most 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 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 and
extrusions. 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, and upon a single processor to perform certain finishing and
conditioning steps with respect to its slab 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
<PAGE>

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
materials. The Company processes rutile ore into titanium tetrachloride and
further processes the titanium tetrachloride into titanium sponge.

     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.  The Company expects to provide approximately 45% of its 1999
sponge needs from suppliers in Japan and the former Soviet Union ("FSU").

     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 have agreed in principle to a reduced
minimum for 1999, and the Company currently expects to do the same for 2000.
The Company also has agreed in principle to purchase on a long-term basis
premium quality sponge produced in Japan primarily to support production of
material for critical rotating jet engine applications.

     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
<PAGE>

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.  The Company has agreed in principle to
enter into long-term agreements with certain suppliers for a substantial portion
of its alloy requirements at fixed and/or formula-determined prices.
~
     Markets~and~Customer~Base.~About 52% of the Company's 1998 sales were to
customers within North America, with about 40% to European customers and the
balance to other regions. No single customer represents more than 10% of the
Company's direct sales. However, in 1998, about 75% of the Company's mill
product shipments sales were used by the Company's customers to produce parts
and other materials for the aerospace industry. The Company expects that while a
majority of its 1999 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
<PAGE>

manufacturers.  If any of the major aerospace manufacturers were to
significantly reduce 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 $350 million at December 31,
1998, compared to $530 million at December 31, 1997.  Approximately 95% of the
1998 year end backlog is expected to be delivered during 1999.  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.

     As of December 31, 1998, the estimated firm order backlog for Boeing and
Airbus, as reported by~The~Airline~Monitor~, was 3,224 planes versus 2,753
planes at the end of 1997 and 2,370 planes at the end of 1996.  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 1998 was 820 (25% of total
backlog) compared to 840 (30%) at the end of 1997.

     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.
<PAGE>

~         ~
~    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, FSU and China. The Company is one of four 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 generally operate at
lower capacity levels in 1999 than in 1998, increasing price competition.

     The Company's principal competitors in aerospace markets are Allegheny
Teledyne Inc., RTI International Metals, Inc. (formerly RMI Titanium Company)
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.


<PAGE>

     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.  In recent
years, the GSP program has been subject to annual review and renewal and is
currently scheduled to expire in the second quarter of 1999.

     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) has for many years been subject to
substantial antidumping penalties.  In addition, titanium sponge imports from
Japan were 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, with first
hearings expected in the second quarter of 1999.  Pending the appeal, the orders
remain revoked.

<PAGE>

     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 produce 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, one
of the Company's proprietary alloys, TIMETAL(R)21S, has been specified for a
number of aerospace applications, including the Boeing 777. Additionally,
TIMETAL LCB, a low cost beta alloy, is being tested for new non-aerospace
applications, and TIMETAL 15-3 has been introduced into the sporting goods
markets. The Company conducts the majority of its research and development
activities at its Henderson, NV laboratory, which the Company believes is one of
the largest titanium research and development centers in the world. Additional
<PAGE>

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.

~    Employees.~                   As of December 31, 1998, the Company employed
approximately 2,550 persons (1,650 in the U.S. and 900 in Europe), down
approximately 16% from a total of 3,025 at the end of 1997.  During 1999, the
Company expects to reduce employment by an additional 300 persons, the vast
majority of which should occur during the first quarter.

     The Company's production and maintenance workers in Henderson, NV and its
production, maintenance, clerical and technical workers in Toronto, OH are
represented by the United Steelworkers of America ("USWA") under contracts
expiring in October 2000 and June 2002, respectively.  Employees at the
Company's other U.S. facilities are not covered by collective bargaining
agreements.

     Over 80% of the salaried and hourly employees at the Company's European
facilities are members of various European labor unions, generally under annual
agreements, certain of which are still under negotiation for 1999.

     The USWA engaged in a nine month work stoppage at the Company's Henderson
facility in 1993 - 1994 and in a three month stoppage at the Toronto facility in
<PAGE>

1994.  While the Company currently has long-term contracts with the USWA and
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 Federal 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, NV 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
are generally less stringent than U.S. laws and which have not had, and are not
presently expected to have, a material adverse effect on the Company. There can
be no assurance that such foreign laws will not become more stringent.

     The Company believes that its operations are in compliance in all material
respects with applicable requirements of environmental and worker safety laws.
The Company's policy is to continually strive to improve environmental, health
<PAGE>

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, but to date
no material penalties have been incurred. The Company incurred capital
expenditures for health, safety and environmental protection and compliance of
approximately $4 million in each of 1997 and 1998, and its capital budget
provides for approximately $6 million of such expenditures in 1999.  However,
the imposition of more strict standards or requirements under environmental laws
and regulations could result in expenditures in excess of amounts estimated to
be required for such matters.  See Note 15 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 1999
worldwide melting capacity aggregates approximately 48,000 metric tons (26% of
world capacity), and its mill products capacity aggregates approximately 20,000
metric tons (16% of world capacity).  Approximately 63% of TIMET's worldwide
melting capacity is represented by electron beam cold hearth melting ("EB")
furnaces, 35% by vacuum arc remelting ("VAR") furnaces and 2% by a vacuum
induction melting ("VIM") furnace.

     During much of the past three years, the Company operated its major
production facilities at high levels of practical capacity.  Production levels
and capacity utilization in 1999 will be lower than in 1998.

<PAGE>

<TABLE>
<CAPTION>
~<S>~                              ~<C>~  ~Annual~Capacities~

                                          
~M~anufacturing~Location  ~P~roducts~Manufactured~  ~M~elting  Mill Products
           ~                                           ~(metric~tons)~

Henderson, Nevada+       Sponge, Ingot                13,600       -
Morgantown,              Slab, Ingot, Raw Materials   20,700       -
Pennsylvania+            Processing
Vallejo, California*     Ingot (including              1,600       -
                          non-titanium
                          superalloys)
Toronto, Ohio+           Billet, Bar, Plate, Sheet,        -   9,200
                         Strip
Witton, England*         Ingot, Billet, Bar            9,800   6,000
Ugine, France*           Ingot, Bar, Billet, Wire,     2,200   1,600
                         Extrusions
Waunarlwydd (Swansea),   Bar, Plate, Sheet                 -   3,400
Wales+
__<FN>______________
+  Owned facilities
*   Leased facilities
</TABLE>


<PAGE>


     TIMET UK's Witton, England facilities are leased from IMI 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.

     ~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 1999, 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., with some 1999 VDP production expected to be used in Europe.  Due to
changing market conditions for certain grades of sponge, the Company reopened
its original Kroll-leach process sponge plant in Nevada in 1996 and is
temporarily idling this facility 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 60% of aggregate capacity in
1999, with certain production facilities temporarily idled.

     Titanium mill products are principally produced at a forging and rolling
facility in Toronto, OH, which receives titanium ingots and slabs from the
Company's U.S. melting facilities and titanium slabs and hot bands purchased
from outside vendors.

<PAGE>

     ~European~Production.~TIMET UK's melting facility in Witton, England
produces VAR ingots sold to customers and used as raw material feedstock for its
forging operations, also in Witton.  The forging operation principally process
the ingots into billet product for sale to customers and for further processing
into bar and plate at its facility in Waunarlwydd, Wales.  U.K. melting and mill
products production in 1999 is expected to be approximately 70% and 65%,
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 1999, TIMET Savoie expects to operate at approximately
95% 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 a portion of 1999 U.K.
requirements expected to be provided by the Company's Henderson, NV 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 nine Company-owned
service centers (five 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 15 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, 1998.

                                    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 12, 1999, the closing price of TIMET common stock was $6.125
per share.  The high and low sales prices for the Company's common stock (NASDAQ
prior to July 16, 1998) are set forth below.

<PAGE>

~Year~ended~December~31,~1997~                    High     Low
   First Quarter                                $ 33.63  $ 25.00
   Second Quarter                                 32.75    25.25
   Third Quarter                                  37.38    29.38
   Fourth Quarter                                 38.00    27.63


~Year~ended~December~31,~1998:~                   High     Low
   First Quarter                                $ 32.13  $ 24.25
   Second Quarter                                 27.88    21.38
   Third Quarter                                  21.56    11.50
   Fourth Quarter                                 15.81     7.31
    

<PAGE>


     As of March 1, 1999, there were approximately 9,800 common shareholders of
record.

     In the second quarter of 1998, the Company instituted a regular quarterly
dividend of $.04 per common share.      In September 1998, the 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.

     Any payment of future dividends or stock repurchases will be at the
discretion of the Company's Board of Directors and will depend upon, among other
things, the Company's earnings, financial condition, capital requirements,
extent of indebtedness and contractual restrictions with respect to payment of
dividends and stock repurchases.  The Company's principal bank credit facility
currently provides for common dividends of up to $2 million per quarter and
currently would restrict additional repurchases of capital stock.

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."

<PAGE>

<TABLE>
<CAPTION>                       Years Ended December 31,

                         1994      1995     1996     1997    1998
<S>                      ($ In millions, except per share data)
STATEMENT OF OPERATIONS <C>       <C>      <C>      <C>      <C>
DATA:
   Net sales (1)        $ 146.0   $184.7   $507.1   $733.6   $707.7
                                 
   Operating income      (34.7)     5.4     59.8    133.0     82.7
(loss)
   Interest expense        7.6     10.4      9.0      2.0      2.9
   Net income (loss)     (42.1)    (4.2)    47.6     83.0     45.8
   Earnings per share:
     Basic              $(2.87)   $(.27)   $1.72    $2.64    $1.46
     Diluted (2)          -         -       1.72     2.49     -
   Cash dividends per     -         -       -        -         .12
share

BALANCE SHEET DATA:
   Cash and cash        $     -   $    -   $86.5   $ 69.0   $ 15.5
equivalents                   
   Total assets          240.2    248.8    703.0    793.1    953.2
   Indebtedness (3)       92.9     89.6     22.1     16.2    115.9
   Minority interest -
 Convertible Preferred     -        -      201.2    201.2    201.2
 Securities
   Stockholders' equity   64.7     68.1    326.2    408.9    448.4

OTHER OPERATING DATA:
   Cash flows provided

<PAGE>

(used):
     Operating          $(20.0)   $(6.1)   $ (.7)  $ 72.6   $ 76.1
activities              
     Investing            (4.6)    (2.5)  (131.4)   (79.8)  (223.2)
activities                                
     Financing            17.7      8.6    215.1     (9.8)    92.2
activities

          Net provided  
(used)                   $(6.9)    $-      $83.0   $(17.0)  $(54.9)
                                                       

   Mill product            4.8      5.5     12.4     15.1     14.8
shipments (metric tons                                     
000's)
   Active employees at
year end                 880      1,020    2,950    3,025    2,550
   Order backlog at     $  85.0  $125.0   $440.0   $530.0   $350.0
year end (4)                    
   Capital expenditures $  4.6    $ 3.0    $21.7    $66.3    $115.2
                           
</TABLE>

<PAGE>



(1)  Significant acquisitions accounted for by the purchase method were made
     during 1996.  See Note 3 to the Consolidated Financial Statements.

(2)  Antidilutive in 1994, 1995 and 1998.

(3)  Includes bank and other debt, capital lease obligations and loans payable
     to related parties.

(4)  "Order backlog" is defined as firm purchase orders (which are generally
     subject to cancellation by the customer upon payment of specified charges).

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 two-thirds 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.  Throughout 1996,
1997 and much of 1998, the Company was producing titanium ingot and mill
products for aerospace customers in contemplation of continuing record jet
aircraft build rates then expected to last through at least 2001.  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 widebody planes.  As aerospace customers reduce inventories
during 1999 and adjust to decreases in overall production rates, the Company

<PAGE>

faces a decrease in demand from 1997-1998 levels.  Industrial demand for
titanium has also declined due to weakness in Asian and other economies.

     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.  The Company also estimates industry
mill product shipments will further decline in 1999 to approximately 46,000
metric tons.

     The Company's order backlog decreased to approximately $350 million at
December 31, 1998 from approximately $530 million at December 31, 1997 and from
$440 million at December 31, 1996.  The Company defines "order backlog" as firm
purchase orders (which are generally subject to cancellation by the customer
upon payment of specified charges).

     The Company expects that production levels, capacity utilization, sales
volumes, sales prices, gross profit margins and operating income margins
excluding special charges will all be lower in 1999 than they were in 1998.
Assuming demand remains at currently expected levels and does not decrease or
increase significantly in 1999, the Company currently expects net losses in at
least the first two quarters of 1999 and a return to modest profitability in the
third or fourth quarter.  In both the aerospace and industrial sectors, reduced
demand and lower prices (including prices under new long-term contracts with key
aerospace customers) will cause lower sales and gross profit margins.  The
Company has implemented plans to address the current market conditions, as more
fully described in Item 1 - "Business - Outlook for 1999." Special restructuring
charges in 1998 as a result of the Company's action plans were $24 million, as
more fully described in Note 5 to the Consolidated Financial Statements.

     Expenses related to implementing and maintaining the Company's business-
enterprise system and to addressing Y2K issues are expected to remain high in
1999.
<PAGE>


     ~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 due to 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.  Average prices on 1999 shipments are expected
to be 5% to 10% lower than in 1998, reflecting both provisions of long-term
agreements effective in 1999 and increased price competition on non-contract
business.

     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.

     Total cost of sales was 77% of sales in 1998, comparable to 76% of sales in
1997.  Cost of sales is expected to be a higher percent of sales in 1999, as the
effect of lower average selling prices, lower volumes and higher depreciation
will more than offset the positive effect of the Company's cost saving
initiatives.

     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 enterprise-wide business 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

<PAGE>

as certain ventures were held for the full year, compared to a part year in
1997.

     Operating income of the "Titanium melted and mill products" segment in 1998
included special charges of $19.5 million and the "Other" segment included $4.5
million of charges.  See Note 5 to the Consolidated Financial Statements.
~
~    ~Sales~and~Operating~Income~-~1997~compared~with~1996.~~~The significant
improvement in sales, operating income and operating margins of the "Titanium
melted and mill products" segment in 1997 over 1996 were driven by price and
volume increases for titanium products in both commercial aerospace and other
markets.  Sales volume of titanium mill products increased 22% in 1997, to
approximately 15,100 metric tons.  Average selling prices in 1997 increased,
reflecting both the pass-through of cost increases, particularly raw material
costs, and real price improvement associated with increased market demand.

     The "Other" segment results declined significantly in 1997 relative to 1996
in large part due to deterioration in the golf castings market.

     Total cost of sales in 1997 was 76% of sales versus 83% of sales in 1996,
reflecting the real price improvement in sales, higher volumes and generally
higher operating levels at the Company's plants.

     Selling, general, administrative and development expenses as a percent of
sales in 1997 (6.2%) were higher than in 1996 (5.9%) primarily due to higher
information technology and market/product development costs.

     Equity in earnings of joint ventures in 1996 consisted principally of the
Company's interest in THT, reported by the equity method prior to the AJM
Acquisition.


<PAGE>

     Operating income of the "Titanium melted and mill products" segment in 1996
included special charges of $5 million related to the IMI Acquisition.  See Note
5 to the Consolidated Financial Statements.

~    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 Europe operations are substantially the same.
The relative changes in 1998 sales to customers in Europe (increased 5% compared
to 1997) and to customers in the U.S. (declined 12%) were impacted,
respectively, by the acquisition of Loterios in April 1998 and deconsolidation
of the Company's castings operations in July 1998.

     Approximately one-half of the Company's European sales are denominated in
currencies other than the U.S. dollar, principally major European currencies.
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 United States 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
<PAGE>

currency transaction/translation gains/losses included in income were less than
$.5 million in each of the past three years.   At December 31, 1998,
consolidated assets and liabilities denominated in currencies other than
functional currencies were approximately $37 million and $40 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 UK
pound Sterling) became fixed relative to each other as a result of the new
European currency unit ("Euro") effective in 1999.  Costs associated with
modifications of systems to handle Euro-denominated transactions have not been
significant.

     ~General~Corporate~Income.~General corporate income (which accounts for
substantially all of the Consolidated Statement of Operations caption "Other
income") consists principally of earnings on corporate cash equivalents and
varies with cash levels and interest rates.  Such income in 1999 is expected to
be lower than in 1998.

~    Interest~Expense.~~~Interest expense was lower in 1997 than 1996,
principally due to lower average borrowing levels.  While average borrowing
levels increased in 1998 over 1997, interest rates declined and interest
capitalized increased.  Interest expense in 1999 is expected to be higher than
in 1998 due to higher average borrowing levels and lower levels of interest
capitalization due to lower capital expenditures.

~    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 CEZUS.


<PAGE>

~    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 can impact the Company's overall effective tax rate.  In 1997 and 1996,
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 and a 1996 $10 million reduction in the deferred
tax valuation allowance resulting from a change in estimate of the net operating
loss carryforwards and alternative minimum tax  carryforwards that would more
likely than not be realized in the future.  For financial reporting purposes,
the Company has recognized all of its net operating loss carryforwards.  See
Note 12 to the Consolidated Financial Statements.
     ~
     Year~2000~("Y2K").~~~Year 2000 issues exist because many computer systems
and applications currently use two-digit fields to designate a year.  Date-
sensitive systems may recognize the year 2000 as 1900, or not at all.  This
inability to treat the year 2000 properly could cause systems to process
critical financial, manufacturing and operational information incorrectly.  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. in February 1999.  The cost of the new system, including
related equipment and networks, aggregated approximately $50 million in 1997-98
($41 million capital; $9 million expense) with an additional $4 million to $5
million expected to be incurred in 1999.

     The Company, with the help of outside specialists and consultants (i) has
substantially completed 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
enterprise-wide system, (ii) is in the process of determining, prioritizing and
implementing remedial actions, including testing, and (iii) will develop
contingency plans in the event internal or external Y2K issues are not resolved
<PAGE>

by the Company's June 30, 1999 target date for completion.  The Company's Y2K
readiness varies by location.  Some locations have completed their internal Y2K
readiness plans while others are in the midst of remediation and testing.  At
this time, most sites anticipate completing their respective Y2K readiness plans
by the June 1999 target date.  However, remediation of some items at the
Henderson, NV site, and possibly others, could be delayed beyond the June 1999
target date.  The Company expended approximately $2 million on these specific
non-information system Y2K issues in 1998, principally embedded system
technology, and expects to incur approximately $5 million on such issues in
1999.  The Company's evaluation of potential Y2K exposures related to key
suppliers and customers is also in process and will continue throughout 1999.

     Although the Company believes its key information systems will be Y2K ready
before the end of 1999, it cannot yet fully predict the outcome or success of
the Y2K readiness programs related to certain of its embedded manufacturing
systems or those comparable systems of its suppliers or customers.  The Company
also cannot predict whether it will find additional problems that would result
in unplanned upgrades of applications after June 1999 or even December 1999.  As
a result of these uncertainties, the Company cannot predict the impact on its
financial condition, results of operations or cash flows or operations resulting
from Y2K failures in systems that the Company directly or indirectly relies
upon.  Should the Company's Y2K readiness plan not be successful or be delayed
beyond December 1999, the consequences to the Company could be far-reaching and
material, including an inability to produce titanium metal products at its
manufacturing facilities, which could lead to an indeterminate amount of lost
revenue.  Other potential negative consequences could include impeded
communications or power supplies, slower transaction processing and financial
reporting, and potential liability to third parties.  Although not anticipated,
the most reasonably likely worst-case scenario of failure by the Company or its
key suppliers or customers to become Y2K ready would be a short-term slowdown or
cessation of manufacturing operations at one or more of the Company's facilities

<PAGE>

and a short-term inability on the part of the Company to process orders and
billings in a timely manner, and to deliver product to customers.

                        LIQUIDITY AND CAPITAL RESOURCES

     At December 31, 1998, the Company had $15 million of cash and equivalents
and $133 million of borrowing availability under its U.S. and European bank
credit lines.  Available borrowings in the future could potentially be reduced
due to the leverage and interest coverage ratios included in the Company's U.S.
credit agreement.  Net debt at year-end 1998 was $90 million ($15 million of
cash and equivalents and $105 million of notes payable and long-term debt,
principally borrowings under the Company's U.S. and U.K. long-term bank credit
agreements). The Convertible Preferred Securities do not require principal
amortization and the Company has the right to defer interest payments for one or
more periods of up to 20 consecutive quarters.

     ~Operating~Activities.~~~Cash provided by operating activities was
approximately $76 million in 1998 and $73 million in 1997.  Cash used by
operating activities was $1 million in 1996, as summarized below.

<PAGE>

                                       1996       1997      1998

                                            (in millions)
Excluding changes in assets and      $ 53.0    $  121.3   $108.7
liabilities                           
Changes in assets and liabilities     (53.7)     (48.7)    (32.6)


                                     $  (.7)   $  72.6    $ 76.1




<PAGE>

     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 1996 and 1997 primarily
because sales levels were increasing, and provided cash in 1998 as sales levels
were decreasing.  The Company currently expects net collections of receivables
to be a source of cash in 1999, particularly in the early part of the year due
to both lower sales levels and improved collection efforts.

     Inventories increased in 1996, reflecting the higher activity levels, and
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 build rates that were based on expected sales levels higher than
the actual sales level turned out to be.  The Company expects to significantly
reduce inventories during 1999 as excess raw materials are consumed and other
reduction/control efforts are realized.

     Changes in net current income taxes payable increased in 1996 and 1997 and
decreased in 1998 in part due to the delayed timing of cash payments for taxes
in Europe relative to earnings.  Changes in accounts with related parties
resulted primarily from payment of accrued interest in 1996 and relative changes
in receivable levels with joint ventures in 1997 and 1998.

     ~Investing~Activities.~~~The Company's capital expenditures were $115
million in 1998, up from $66 million in 1997 and $22 million in 1996.  About
one-half of capital expenditures during the two-year 1997-1998 period related to
capacity expansion projects associated with long-term customer agreements, which
projects are also expected to improve cycle times and yields and to increase
efficiency.  The majority of these significant projects in both the U.S. and
Europe have come on line or will be complete by the end of the first quarter of
1999.
<PAGE>


     Approximately one-fourth of the two-year 1997-1998 period capital spending
related to the major business enterprise-wide information systems and
information technology project being implemented throughout the Company.  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 1999 is currently expected to be below $40 million,
which is less than expected depreciation and amortization expense of
approximately $45 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, respectively, to the Consolidated Financial Statements.  In 1997,
such investments consist primarily of cash contributions in connection with the
formation of ValTimet and investments in companies developing new markets and
uses for titanium.  Acquisitions in 1996 consisted of the IMI Titanium
Acquisition, the AJM Acquisition and other smaller European acquisitions, as
described in Note 3 to the Consolidated Financial Statements.

     In October 1998, the Company purchased $80 million of Special Metals
Corporation 6.625% convertible preferred stock (the "SMC Preferred Stock"), in
connection with SMC's acquisition of the Inco Alloys International high
performance nickel alloys business unit of Inco Limited.  No dividends have been
paid to date on the SMC Preferred Stock due to limitations imposed by SMC bank
credit agreement, and the Company believes that these limitations may prevent
SMC's payment of dividends for some time.

     ~Financing~Activities.~~~Net borrowings of $97 million in 1998 were
primarily to fund capital expenditures and the Loterios acquisition.  Net debt
<PAGE>

repayments of $6 million in 1997 relate primarily to reductions in European
working capital borrowings, including amounts due to CEZUS, the Company's
minority partner in TIMET Savoie.

     The Company's net proceeds from the initial public offering in June 1996
approximated $131 million. The Company used approximately $125 million of such
net proceeds to repay existing indebtedness, including amounts due to Tremont
and IMI.  The Company received net proceeds of approximately $192 million from
the sale of the Convertible Preferred Securities by TIMET Capital Trust I in
November 1996.  The Company used approximately $96 million of such net proceeds
to repay indebtedness incurred in conjunction with the AJM Acquisition.

     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 dividend policy,
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.~


<PAGE>

     See Item 1 - "Business--Regulatory and Environmental Matters" and Note 15
to the Consolidated Financial Statements for a discussion of environmental
matters.

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.

     ~Interest~rates.~The Company is exposed to market risk from changes in
interest rates related to indebtedness.  At December 31, 1998, 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.

<PAGE>

<TABLE>
<CAPTION>                   Contractual maturity date

          <S>                                                Interest
                          1999     2000     2001     2002     rate
                                                               (1)

                                 ( In millions )
Variable rate debt:       <C>      <C>      <C>      <C>       <C>
   U. S. dollars         $  3.5   $    -   $18.8    $80.0     5.64%
                            
   Italian lira             1.6     -        -        -       6.88%

Fixed rate debt:
   German marks              .1     -        -        -       8.25%
   Italian lira              .5      .5       .4       .2     5.90%
</TABLE>

<PAGE>

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

     ~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 and are accounted for by the cost method.  See Item 7 -
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources - Investing Activities and Note 4
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-1.

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

     Not applicable.

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
<PAGE>

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").

      Name                             Age         Position(s)               
J. Landis Martin         53 Chairman and Chief Executive Officer
Andrew R. Dixey          49 President, Chief Operating Officer and Director
Joseph S. Broz           42 Vice President--Corporate Development and Technology
Charles H. Entrekin, Jr. 50 Vice President; President--North American Operations
Christian Leonhard       53 Vice President; President--European Mill 
                              Products Operations
Leslie P. Lundberg       41 Vice President--Human Resources
John P. Monahan          53 Vice President; President--Service Center Operations
J. Thomas Montgomery, Jr.52 Vice President--Finance and Treasurer
Robert E. Musgraves      44 Vice President--General Counsel and Secretary
Mark A. Wallace          41 Vice President--Strategic Change and Information
                              Technology

     J. LANDIS MARTIN, has been Chairman and a director of the Company since
1987, as Chief Executive Officer of the Company since 1995, and as President of
the Company from 1995 to 1996.  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, and of Apartment Investment & Management Corporation, a
real estate investment trust.
<PAGE>


     ANDREW R. DIXEY, has been President, Chief Operating Officer and a director
of the Company since 1996.  Prior to this appointment, Mr. Dixey was, from 1995,
Managing Director of IMI Titanium Ltd., where he had responsibility for IMI's
titanium interests in both Europe and North America.  During 1995, Mr. Dixey was
Chief Executive Officer of Helix plc, which is engaged in the scholastic
supplies business, and from 1971 to 1994, Mr. Dixey held various executive
positions in the GKN plc Group of companies, a manufacturer of automobile
components.  Mr. Dixey is also a director of Special Metals Corporation.

     JOSEPH S. BROZ has been Vice President-Corporate Development and Technology
since 1997.  Prior to joining the Company, he was Executive Director of
Operations for Tenneco, Inc. and Director of Aftermarket Product Development and
Strategy for Tenneco Automotive Europe since 1992.  From 1991 to 1992, Dr. Broz
served as a White House Fellow and as Special Assistant to the President's
Service Advisor.

     CHARLES H. ENTREKIN, JR. has been Vice President since 1997 and President-
North American Operations since January 1999.  From 1997 to January 1999, he was
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 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.

     LESLIE P. LUNDBERG has been Vice President--Human Resources since 1997.
From 1995 until joining the Company, she was Vice President, Human Resources for
Dade International, Inc., a distributor of diagnostic equipment for use in
clinical laboratories, and from 1991 until 1995 she was Vice President, Human
Resources for the Edwards CVS division of Baxter Healthcare International, a
<PAGE>

manufacturer of heart valves and angioplasty rings.

     JOHN P. MONAHAN has been  Vice President; President--Service Center
Operations since 1997.  Mr. Monahan was Vice President--Sales and Marketing from
1995 to 1997 and was Vice President--North American Sales and Marketing from
1990 to 1995.

     J. THOMAS MONTGOMERY, JR. has been Vice President--Finance and Treasurer
since 1996.  Prior to that, he was Vice President and Controller of Valhi, Inc.
and Contran Corporation since 1987.  Valhi is principally engaged, through NL,
in the chemicals industry and is Tremont's principal shareholder.  Contran is
principally a holding company which may be deemed to control Valhi, NL, Tremont
and the Company.  He has also served as Vice President, Controller and Treasurer
of Tremont since 1997.

     ROBERT E. MUSGRAVES has been 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 Vice President--Strategic Change and Information
Technology since 1996.  Prior to that, he was Vice President--Finance and
Treasurer of the Company since 1992.  He also served as Vice President and
Controller of Tremont from 1992 until 1997.

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
<PAGE>


     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 14 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-1) 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, 1998 and
the months of January and February 1999:
      
<PAGE>

  
    Filing Date            Items Reported


October 5, 1998       -       5 and 7.
October 6, 1998       -       5 and 7.
October 8, 1998       -       5 and 7.
October 22, 1998      -       5 and 7.
October 29, 1998      -       5 and 7.
January 27, 1999      -       5 and 7.
February 25, 1999     -       5 and 7.

       
<PAGE>



  (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.

Item No.                       Exhibit Index

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.

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
<PAGE>

          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
<PAGE>

          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.

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

<PAGE>

          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, 1998, incorporated
          by reference to Exhibit 10.1 to the Registrant's Quarterly Report on
          Form 10-Q for the quarter ended September 30, 1998.

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*     1996 Amended and Restated Non-Employee Director Compensation Plan.

10.8*     Employment Agreement between Andrew R. Dixey and Titanium Metals
          Corporation, dated February 13, 1996, incorporated by reference to
          Exhibit 10.21 to Titanium Metals Corporation's Registration Statement
          on Form S-1 (No. 333-2940).

10.9      Agreement, dated June 28, 1995, among Titanium Metals Corporation,
          Tremont Corporation and Union Titanium Sponge Corporation,
          incorporated by reference to Exhibit 10.24 to Titanium Metals
          Corporation's Registration Statement on Form S-1 (No. 333-2940).

10.10     Asset Purchase Agreement, dated October 1, 1996, by and between
          Titanium Metals Corporation and Axel Johnson Metals, Inc.,
          incorporated by reference to Exhibit 2.1 to the Registrant's Current
          Report on Form 8-K filed with the Commission on October 16, 1996.

10.11     Purchase Agreement, dated November 20, 1996, between Titanium Metals
          Corporation, TIMET Capital Trust I, Salomon Brothers Inc, Merrill
<PAGE>

          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.

10.12     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.

10.13     $200,000,000 Credit Agreement among Titanium Metals Corporation and
          various lending institutions dated as of July 30,1997 incorporated by
          reference to Exhibit 10.1 of a Current Report on Form 8-K dated July
          30, 1997 filed by the Registrant.

10.14     First Amendment to Credit Agreement and Waiver among Titanium Metals
          Corporation and various lending institutions dated as of May 15, 1998,
          incorporated by reference to Exhibit 10.2 to the Registrant's
          Quarterly Report on Form 10-Q for the quarter ended June 30, 1998.
     
10.15     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.

10.16     Intercorporate Services Agreement between Titanium Metals Corporation
          and NL Industries, Inc. effective as of January 1, 1998, incorporated
          by reference to Exhibit 10.2 to the Registrant's Quarterly Report on
          Form 10-Q for the quarter ended September 30, 1998.


<PAGE>

10.17*    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.

10.18     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.

10.19     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.

10.20     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 (File No. 000-22029).

21.1      Subsidiaries of the Registrant

23.1      Consent of PricewaterhouseCoopers LLP

27.1      Financial Data Schedule for the year ended December 31, 1998


*    Management contract, compensatory plan or arrangement.
<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 15, 1999
                                    (Chairman of the Board
                                    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/ Andrew R. Dixey                  
J. Landis Martin, March 15, 1999    Andrew R. Dixey, March 15, 1999
(Chairman of the Board and          (President, Chief Operating
 Chief Executive Officer)            Officer and Director)

<PAGE>


                                              
/s/ Edward C. Hutcheson            /s/ Joseph S. Compofelice               
Edward C. Hutcheson, Jr.,          Joseph S. Compofelice, March 15, 1999
March 15, 1999                     (Director)
(Director)


/s/ Thomas P. Stafford             /s/ J. Thomas Montgomery, Jr.             
Thomas P. Stafford, March 15, 1999 J. Thomas Montgomery,Jr., March 15, 1999
(Director)                         (Vice President - Finance and Treasurer)
                                 (Principal Finance and Accounting Officer)

/s/ Glenn R. Simmons                                        
Glenn R. Simmons, March 15, 1999
(Director)

<PAGE>




                          TITANIUM METALS CORPORATION

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

                  INDEX OF FINANCIAL STATEMENTS AND SCHEDULES

                                                           Page
FINANCIAL STATEMENTS

  Report of Independent Accountants                         F-1

  Consolidated Balance Sheets - December 31, 1997 and 1998  F-2/F-3

  Consolidated Statements of Operations - Years ended       F-4
     December 31, 1996, 1997 and 1998

  Consolidated Statements of Comprehensive Income - Years ended
     December 31, 1996, 1997 and 1998                       F-5

  Consolidated Statements of Cash Flows - Years ended
     December 31, 1996, 1997 and 1998                       F-6/F-7

  Consolidated Statements of Stockholders' Equity - Years ended
     December 31, 1996, 1997 and 1998                       F-8

  Notes to Consolidated Financial Statements                F-9/F-29


FINANCIAL STATEMENT SCHEDULES

  Report of Independent Accountants                         S-1
<PAGE>


  Schedule II - Valuation and qualifying accounts           S-2

  Schedules I, III and IV are omitted because they are not applicable.

<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 as of December 31, 1997
and 1998 and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1998 in conformity with
generally accepted accounting principles.  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 generally accepted auditing
standards 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 25, 1999
<PAGE>


                          TITANIUM METALS CORPORATION

                          CONSOLIDATED BALANCE SHEETS

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

<PAGE>

<TABLE>
<CAPTION>
ASSETS                                              1997       1998

<S>                                                 <C>        <C>
Current assets:
   Cash and cash equivalents                      $68,957     $15,464
                                                  
   Accounts and other receivables, less
     allowance of $2,218 and $1,932               155,678     126,988
   Receivable from related parties                 15,844       8,119
   Refundable income taxes                              -       6,819
   Inventories                                    153,818     225,880
   Prepaid expenses and other                      13,253      10,650
   Deferred income taxes                            6,219       1,900

          Total current assets                    413,769     395,820


Other assets:
   Investment in joint ventures                    23,270      32,633
   Preferred securities                                 -      80,000
   Goodwill                                        59,771      59,547
   Other intangible assets                         17,889      19,894
   Other                                           15,341      14,129
   Deferred income taxes                              593           -

          Total other assets                      116,864     206,203


Property and equipment:
   Land                                             6,545       5,974
   Buildings                                       26,823      25,610
   Information technology systems and equipment    24,031      56,089

<PAGE>

   Manufacturing and other equipment              213,926     278,669
   Construction in progress                        43,628      52,651

                                                  314,953     418,993
   Less accumulated depreciation                   52,527      67,770

     Net property and equipment                   262,426     351,223


                                                 $793,059    $953,246

</TABLE>

<PAGE>

<PAGE>

                          TITANIUM METALS CORPORATION

                    CONSOLIDATED BALANCE SHEETS (CONTINUED)

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

<PAGE>

<TABLE>
<CAPTION>
LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS'    1997       1998
EQUITY

<S>                                                 <C>        <C>
Current liabilities:
   Notes payable                                  $ 3,372      $5,134
                                                    
   Current maturities of long-term debt and         1,354         771
capital lease obligations
   Accounts payable                                59,501      69,302
   Accrued liabilities                             46,809      50,628
   Payable to related parties                       1,298       3,223
   Income taxes                                    11,482       5,391
   Deferred income taxes                                -       2,500

          Total current liabilities               123,816     136,949


Noncurrent liabilities:
   Long-term debt                                     451      99,950
   Capital lease obligations                       10,996      10,069
   Payable to related parties                         847       1,395
   Accrued OPEB cost                               26,192      24,065
   Accrued pension cost                               836       8,754
   Other                                            1,441           -
   Deferred income taxes                           11,620      14,200

          Total noncurrent liabilities             52,383     158,433


Minority interest - Company-obligated mandatorily
redeemable

<PAGE>

   preferred securities of subsidiary trust
holding solely
   subordinated debt securities ("Convertible     201,250     201,250
Preferred Securities")
Other minority interest                             6,663       8,237

Stockholders' equity:
     Preferred stock $.01 par value; 1 million
shares authorized,
        none outstanding                                -           -
     Common stock, $.01 par value; 99 million
shares authorized,
        31.4 million shares issued and                315         315
outstanding
     Additional paid-in capital                   346,723     347,972
     Retained earnings                             58,001      99,981
     Accumulated other comprehensive income         3,908       1,317
     Treasury stock at cost - 90,000 shares             -      (1,208)

          Total stockholders' equity              408,947     448,377


                                                 $793,059    $953,246
                                                


<FN>
Commitments and contingencies (Note 15)
</TABLE>

<PAGE>



                          TITANIUM METALS CORPORATION

                      CONSOLIDATED STATEMENT OF OPERATIONS

                  Years ended December 31, 1996, 1997 and 1998
                     (In thousands, except per share data)

<PAGE>

<TABLE>
<CAPTION>
                                            1996       1997       1998

<S>                                          <C>        <C>        <C>
Revenues and other income:
     Net sales                          $507,074   $733,577    $707,677
                                          
     Equity in earnings of joint ventures  6,237     (1,013)        351
     Other, net                            1,049      4,530       6,859

                                         514,360    737,094    714,887


Costs and expenses:
     Cost of sales                       418,775    554,546    542,285
     Selling, general, administrative and 29,917     45,319     59,837
development
     Special charges                       4,824          -     24,000
     Interest                              8,953      2,066      2,916

                                         462,469    601,931    629,038



     Income before income taxes and       51,891    135,163     85,849
minority interest

Income tax expense                         2,336     41,004     29,197
Minority interest - Convertible Preferred    826      8,840      8,840
Securities
Other minority interest                    1,085      2,309      2,060



<PAGE>

     Net income                         $ 47,644    $83,010     $45,752
                                          



Diluted net income                      $ 48,470    $91,850     $54,592
                                

Earnings per share:
     Basic                              $   1.72    $  2.64     $  1.46
                                      
     Diluted                                1.72       2.49         *

Weighted average shares outstanding:
     Basic                                27,623     31,457      31,435
     Diluted                              28,142     36,955      36,846



<FN>
*  Antidilutive.
</TABLE>


<PAGE>



                          TITANIUM METALS CORPORATION

                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

                  Years ended December 31, 1996, 1997 and 1998

                                 (In thousands)

<PAGE>

<TABLE>
<CAPTION>
                                1996         1997         1998

<S>                          <C>          <C>          <C>
Net income                   $  47,644    $  83,010    $  45,752
Other comprehensive income:
   Currency translation          5,352       (1,727)       1,692
adjustment
   Pension liabilities
  adjustment, net of             1,521          858       (4,283)
  deferred taxes


     Comprehensive income    $  54,517    $  82,141    $  43,161



</TABLE>
<PAGE>

<PAGE>

                          TITANIUM METALS CORPORATION

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                  Years ended December 31, 1996, 1997 and 1998
                                 (In thousands)

<PAGE>

<TABLE>
<CAPTION>                               1996       1997       1998

<S>                                   <C>        <C>        <C>
Cash flows from operating activities:
   Net income                        $ 47,644   $ 83,010   $ 45,752
   Depreciation and amortization       18,974     28,384     32,514
   Special charges - non cash portion       -          -     15,425
   Earnings of joint ventures, net of  (5,992)     1,013        170
distributions
   Deferred income taxes              (10,416)     6,578     13,172
   Other minority interest              1,085      2,309      2,060
   Other, net                           1,753        (36)      (433)
   Change in assets and liabilities,
net of acquisitions:
      Receivables                     (29,998)   (41,781)    36,564
      Inventories                     (13,309)       294    (62,990)
      Prepaid expenses                 (6,207)     1,600      2,539
      Accounts payable and accrued       (106)     1,231     (9,497)
liabilities
      Accrued restructuring charges         -         -       6,727
      Income taxes                      4,521      5,526    (12,213)
      Accounts with related parties,   (8,412)   (13,292)     9,650
net
      Other, net                         (269)    (2,266)    (3,323)


      Net cash provided (used) by        (732)    72,570     76,117
operating activities


Cash flows from investing activities:
   Capital expenditures               (21,679)   (66,295)   (115,155)

<PAGE>

                                              
   Business acquisitions and joint    (109,934)  (13,496)   (27,413)
ventures                                    
   Purchase of preferred securities         -         -     (80,000)
   Other, net                             213         -        (647)


      Net cash used by investing     (131,400)  (79,791)   (223,215)
activities                                


Cash flows from financing activities:
   Indebtedness:
     Borrowings                       113,793         -     153,765
     Repayments                      (179,480)  (4,833)     (56,670)
                                          
     Deferred financing costs            (579)   (2,230)         -
   Repayment of related parties loans (42,521)     (930)         -
   Proceeds from issuance of:
     Common stock, net                131,488         -          -
     Convertible Preferred            192,409         -          -
Securities, net
   Dividends paid                           -         -     (3,772)
   Treasury stock purchased                 -         -     (1,208)
   Other, net                               -    (1,830)       117


     Net cash provided (used) by      215,110    (9,823)    92,232
financing activities


                                      $ 82,978   $(17,044) $(54,866)


<PAGE>

                                  


</TABLE>

<PAGE>


                          TITANIUM METALS CORPORATION

               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                  Years ended December 31, 1996, 1997 and 1998
                                 (In thousands)

<PAGE>

<TABLE>
<CAPTION>                               1996       1997       1998

<S>                                        <C>        <C>        <C>
Cash and cash equivalents:
   Net increase (decrease) from:
     Operating, investing and         $82,978   $(17,044)  $(54,866)
financing activities                
     Cash acquired                      3,053          -      1,187
     Currency translation                 471       (525)       186

                                       86,502    (17,569)   (53,493)
   Balance at beginning of year            24     86,526     68,957


   Balance at end of year             $86,526    $68,957    $15,464
                                    



Supplemental disclosures:
   Cash paid for:
     Interest, net of amounts         $ 8,958    $ 2,159    $ 2,215
capitalized                           
     Convertible Preferred Securities       -     13,332     13,332
dividends
     Income taxes                       6,348     22,483     23,737

   Business acquisitions and joint
ventures:
                                        3,053          -      1,187
     Receivables                       45,067        736      6,574
     Inventories                       62,415        769     15,352
<PAGE>

     Property, equipment and other     73,365      1,998     21,765
     Investments in joint ventures          -     24,307      8,460
     Goodwill and other intangibles    85,158        577      8,566
     Liabilities assumed              (89,124)    (3,604)   (18,117)
                                    

                                      179,934     24,783     43,787
      Less noncash consideration:
        Common stock issued           (70,000)         -          -
                                      
        Other, principally property         -    (11,287)   (16,374)
and equipment


        Cash paid                     $109,934   $13,496   $ 27,413
                                                 



</TABLE>
<PAGE>

<PAGE>

                          TITANIUM METALS CORPORATION

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                  Years ended December 31, 1996, 1997 and 1998
                                 (In thousands)

<PAGE>

<TABLE>
<CAPTION>
                                          Additionaal   Retained
                        Common    Common    paid-in    Earnings
                        shares     stock    capital    (deficit)
<S>  >                     <C>       <C>       <C>        <C>
Balance at December 31, 15,693    $  157   $142,720   $(72,653)
1995                            
   Comprehensive income      -         -         -      47,644
   Common stock issued:
      IMI Titanium       9,561        96    69,904           -
Acquisition (Note 3)
      Stock Offering     6,200        62    132,926          -
(Note 10)
      Other                  1         -        28           -
   Other, net                -         -       555           -


Balance at December 31, 31,455       315    346,133    (25,009)
1996
   Comprehensive income      -         -         -      83,010
   Other, net                3         -       590           -


Balance at December 31, 31,458       315    346,723     58,001
1997
   Comprehensive income      -         -         -      45,752
   Dividends paid ($.12      -         -         -      (3,772)
per share)
   Treasury stock          (90)        -         -           -

<PAGE>

purchases
   Other, net                1         -     1,249           -


Balance at December 31, 31,369    $  315   $347,972   $ 99,981
1998                             



</TABLE>

<PAGE>



                          TITANIUM METALS CORPORATION

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                  Years ended December 31, 1996, 1997 and 1998
                                 (In thousands)

<PAGE>

<TABLE>
<CAPTION>               Accumulated Other
                          Comprehensive
                              Income

                      Currency    Pension   Treasury
                    translation liabilities   Stock  Total
           

<S>                     <C>       <C>       <C>       <C>
Balance at December 31,
1995                    $  283  $(2,379)    $   -    $68,128
   Comprehensive income  5,352    1,521         -     54,517
   Common stock issued:                         -
      IMI Titanium           -        -         -     70,000
Acquisition (Note 3)
      Stock Offering         -        -         -    132,988
(Note 10)
      Other                  -        -         -         28
   Other, net                -        -         -        555


Balance at December 31,  5,635     (858)        -    326,216
1996
   Comprehensive income (1,727)     858         -     82,141
   Other, net                -        -         -        590


Balance at December 31,  3,908        -         -    408,947
1997
   Comprehensive income  1,692    (4,283)       -     43,161
   Dividends paid ($.12      -        -         -     (3,772)
per share)
<PAGE>

   Treasury stock            -        -     (1,208)   (1,208)
purchases
   Other, net                -        -         -      1,249

Balance at December 31, $5,600   $(4,283)  $(1,208)  $448,377
1998                     



</TABLE>

<PAGE>

<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 stockholders' equity, net of related deferred income
taxes.  Currency transaction gains and losses are recognized in income
currently, and were a net gain of $421,000 in 1998 and nominal in 1997 and 1996.

     ~Net~sales.~~~  Sales are recognized when products are shipped.

<PAGE>

     ~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 costed using an average or
first-in, first-out ("FIFO") 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.
~
~    ~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 at December 31, 1998 (1997 - $6.0 million).  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.

~    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
$2.6 million in 1998, $1.0 million in 1997 and nil in 1996.  Software
development costs are capitalized; training, reengineering and similar costs are
expensed as incurred.

<PAGE>

     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.

     S~tock-based~compensation.~~~~~The Company has elected the disclosure
alternative prescribed by Standard 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 11.

     ~Employee~benefit~plans.~~~  Accounting and funding policies for retirement
plans and postretirement benefits other than pensions ("OPEB") are described in
Note 13.  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 $3.4 million in 1998 ($3.6 million in 1997 and $2 million in 1996).

     ~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 12.

<PAGE>

     ~Stock~split~and~earnings~per~share.~~~~~Common shares outstanding for all
periods presented have been adjusted to reflect the 65-for-1 split (the "Stock
Split") of the Company's common stock effected in connection with TIMET's June
1996 initial public offering of common stock (the "Stock Offering").  
     Diluted earnings per share reflects the assumed conversion of the
Convertible Preferred Securities and the dilutive effect of common stock
options.  See Note 18.

     ~Comprehensive~income.~The Company retroactively adopted SFAS No. 130,
"Reporting Comprehensive Income" in 1998.

     ~Fair~value~of~financial~instruments.~~~The fair value of the nonmarketable
preferred securities, issued in October 1998, held by the Company is deemed by
the Company to approximate net carrying 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 at December 31, 1998 and $200 million at
December 31, 1997 (book value at both dates - $201 million).

     At December 31, 1998, the fair value of the Company's common equity, based
on the quoted market closing price at that date of $8.50 per share, was
approximately $267 million (book value - $448 million).

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,
<PAGE>

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".

     The "Other" segment consists primarily of the Company's titanium castings
operations, which were combined in a joint venture during 1998.  See Note 4.

     Operating income, inventory and receivables are the key management measures
used to evaluate segment performance.  Operating income of the "Titanium melted
and mill products" segment includes special charges of $4.8 million in 1996 and
$19.5 million in 1998.  Operating income of the "Other" segment includes special
charges of $4.5 million in 1998.  These charges are more fully described in Note
5.

<PAGE>

     <TABLE>
<CAPTION>                             Years Ended December 31,

                                     1996       1997       1998

<S>                                        (In thousands)
~Operating~Segments:~                  <C>        <C>        <C>
   Net sales:
     Titanium melted and mill     $459,693   $700,427   $ 686,677
products                           
     Other                          51,501     36,217      23,936
     Eliminations                   (4,120)    (3,067)     (2,936)

                                  $507,074   $733,577   $ 707,677
                                  



   Mill product shipments:
     Volume (metric tons)           12,400     15,100      14,800
     Average price ($ per          $  32.0   $  35.00    $  35.25
Kilogram)

   Operating income:
     Titanium melted and mill      $55,644   $139,252    $ 87,411
products                          
     Other                           4,205     (6,290)     (4,706)

                                    59,849    132,962      82,705
     General corporate income          995      4,267       6,060
     Interest expense               (8,953)    (2,066)     (2,916)




<PAGE>

        Income before income taxes
     and                           $51,891   $135,163   $  85,849
           minority interest        




     Depreciation and
amortization:
        Titanium melted and mill   $ 17,332   $26,463    $ 31,599
products                           
        Other                         1,642     1,921         915

                                   $ 18,974   $28,384    $ 32,514
                                 



     Capital expenditures:
        Titanium melted and mill   $20,561    $62,869   $ 115,103
products                            
        Other                        1,118      3,426          52

                                   $21,679    $66,295   $ 115,155
                                   





                                      Years Ended December 31,


                                     1996       1997       1998

<PAGE>

                                           (In thousands)
     Inventories:
        Titanium melted and mill  $146,230   $146,782   $ 225,073
products                          
        Other                        9,432      7,165         871
        Eliminations                  (174)      (129)        (64)

                                  $155,488   $153,818   $ 225,880
                                   



     Accounts receivable:
        Titanium melted and mill  $105,231   $149,293   $ 124,900
products                           
        Other                        8,869      6,385       2,088

                                  $114,100   $155,678   $ 126,988
                                  



     Investment in joint ventures:
        Titanium melted and mill   $   270    $20,114    $ 22,044
        Products                   
        Other                            -      3,156      10,589

                                   $   270    $23,270    $ 32,633
                                       



     Equity in earnings of joint
ventures:
        Titanium melted and mill   $ 6,237    $  (517)   $  1,869
<PAGE>

products                           
        Other                            -       (496)     (1,518)

                                   $ 6,237    $(1,013)   $    351
                                    




Geographic segments:
   Net sales - point of origin:
     United States                $354,651   $534,440  $ 465,519
                                  
     United Kingdom                177,717    223,573    217,709
     Other Europe                    8,346     96,659    109,347
     Eliminations                  (33,640)  (121,095)   (84,898)
                                  

                                  $507,074   $733,577  $ 707,677
                                 


   Net sales - point of
destination:
     United States                $312,640   $401,217  $ 354,001
                                   
     Europe                        155,364    276,419    290,988
     Other                          39,070     55,941     62,688

                                  $507,074   $733,577  $ 707,677
                                  




<PAGE>

   Operating income:
     United States                 $39,014    $76,434    $45,760
                                  
     Europe                         20,835     56,528     36,945

                                   $59,849   $132,962    $82,705
                                   



   Long-lived assets - property
and equipment:
     United States                $165,096   $188,564  $ 264,856
                                  
     United Kingdom                 52,173     69,470     78,731
     Other Europe                    2,300      4,392      7,636

                                  $219,569   $262,426  $ 351,223
                                   


</TABLE>


<PAGE>


     Export sales from U.S. based operations approximated $58 million in 1996,
$97 million in 1997 and $81 million in 1998.

     Geographic segment operating income in 1998 includes special restructuring
charges of $14.5 million in the U.S. and $9.5 million in Europe.

Note 3 - Business combinations:

     ~IMI~Titanium~Acquisition.~~~~~In February 1996, the Company acquired the
titanium metals businesses of IMI plc and affiliates (the "IMI Titanium
Acquisition").  IMI previously conducted its titanium business principally
through its wholly owned United Kingdom subsidiary, IMI Titanium Ltd.  (now
known as TIMET UK), and its U.S. subsidiary, IMI Titanium, Inc.  IMI conveyed
all of its titanium-related businesses to the Company in exchange for
9.6 million newly issued shares of common stock valued at $70 million, and the
Company issued $20 million of the Company's subordinated debt to IMI in exchange
for a like amount of debt previously owed to IMI by its U.K.  subsidiary.

     The Company accounted for the IMI Titanium Acquisition by the purchase
method of accounting (purchase price approximately $72 million, including
transaction costs).  The Company has included the results of operations of the
IMI titanium business in its consolidated results of operations effective at the
beginning of 1996 with preacquisition earnings of approximately $.4 million
deducted in determining net income for 1996.  Preacquisition sales of the IMI
titanium business included in consolidated sales for 1996 approximated
$11.7 million.

     ~Axel~Johnson~Metals~Acquisition.~~~~~In October 1996, the Company acquired
substantially all of the assets and assumed substantially all of the liabilities
of Axel Johnson Metals, Inc. ("AJM") for approximately $97 million cash (the
"AJM Acquisition").  The AJM Acquisition was completed through a newly formed
<PAGE>

subsidiary, Titanium Hearth Technologies, Inc. ("THT"), and included the
acquisition of the 50% partnership interest in Titanium Hearth Technologies that
TIMET did not previously own.  THT, now part of the Company's manufacturing
operations in North America, operates titanium scrap processing facilities and
titanium melting furnaces.

     The Company accounted for the AJM Acquisition by the purchase method and
consolidated THT's results effective October 1, 1996; revenues for the fourth
quarter of 1996 approximated $21 million.  Prior to the AJM Acquisition, the
Company accounted for its 50% interest in the THT partnership by the equity
method.

     ~Other~European~acquisitions.~~~~~During the last half of 1996 and January
1997, the Company completed three acquisitions in Europe for an aggregate cash
cost of approximately $12 million which were accounted for by the purchase
method.  In August 1996, TIMET and Compagnie Europeenne du Zirconium - CEZUS,
S.A.  ("CEZUS") completed an agreement to form a new jointly-owned French
company ("TIMET Savoie") to manufacture and sell titanium products.  TIMET
Savoie is 70%-owned by TIMET and 30%-owned by CEZUS.  TIMET Savoie  manufactures
products inside CEZUS' production facility in Ugine, France both directly,
utilizing its own personnel and equipment, and, for melting and forging and
certain other operations, indirectly by subcontracting to CEZUS under a
long-term manufacturing agreement.  In July 1996, TIMET purchased the 74% equity
interest in TISTO, a German distributor of titanium products, that it did not
already own.  In January 1997, the Company purchased LASAB Laser Applikations-
und Bearbeitungs GmbH ("LASAB'), 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 of titanium pipe and fittings to the offshore oil and gas drilling
and production markets, based in Italy.  The cost of the Loterios acquisition,
accounted for by the purchase method, was approximately $19 million in cash.
<PAGE>

Additional consideration of up to approximately $7 million is contingent upon
Loterios' achieving certain operating targets.  The results of Loterios'
operations have been reflected in the consolidated financial statements from the
date of acquisition; net sales in 1998 subsequent to acquisition approximated
$23 million.

Note 4 - Joint ventures and preferred securities:

<PAGE>

<TABLE>
<CAPTION>                                       December 31,

                                               1997      1998

<S>                                            (in thousands)
Joint ventures:                                 <C>     <C>
   ValTimet                                  $ 19,845  $21,658
                                                    
   Wyman-Gordon Titanium Castings                 -      6,158
   Other                                      3,425      4,817


                                             $ 23,270  $32,633
                                               



Preferred securities                         $    -    $80,000
                                         


</TABLE>

<PAGE>

     ~Joint~ventures.~~~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.  For the six months ended December 31, 1997, and the year
ended December 31, 1998, ValTimet reported sales of $56.6 million and $119.3
million and net income of $.1 million and $4.1 million, respectively.  At
December 31, 1997 and 1998, ValTimet reported total assets of $80.1 million and
$69.1 million and equity of $28.7 million and $31.8 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, MA 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 on
the transaction.  For the five months ended December 31, 1998, Wyman-Gordon
Titanium Castings reported sales of $16.6 million and a net loss of $.4 million.
At December 31, 1998, Wyman-Gordon Titanium Castings reported total assets of
$29.2 million and equity of $25.3 million.


<PAGE>

     TIMET's strategy for developing new markets and uses for titanium includes
providing funds to third parties to prove out a new use or uses of titanium.
Other joint ventures consist principally of such investments.
     ~
     Preferred~securities.~In October 1998, the Company 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.  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.

Note 5 - Special charges:

     In 1998, TIMET implemented a plan of action designed to address current
market conditions, which resulted in recognizing $24 million of restructuring
charges.  The plan included the permanent closure of three plants, permanent or
temporary closures of parts of three other plants, the merger of all North
American manufacturing operations into one operating unit and termination of 600
people, or approximately 20% of TIMET's worldwide work force.  See also Item 1 -
"Business - Outlook for 1999" of this Annual Report.  Components of the
restructuring charge are summarized below.

<PAGE>


                                              Segment

                                      Melted and
                                         Mill      Other    Total
                                       Products

                                             (in millions)
Property and equipment                   $  7.1    $  2.6   $  9.7
Pension costs - SFAS No. 88                 5.7       -        5.7
Personnel severance and benefits            5.3        .5      5.8
Other exit costs, principally related       1.4       1.4      2.8
 to leased facilities


                                         $ 19.5    $  4.5   $ 24.0



<PAGE>

     Substantially all of the property and equipment loss relates to items sold,
scrapped or abandoned, with disposition already substantially complete.
Depreciation of equipment not impaired and only temporarily idled was not
suspended.  The pension charge relates to the actuarial valuation of accelerated
defined benefits of employees to be terminated.

     At December 31, 1998, 50% of the personnel reductions had been accomplished
with substantially all of the remainder to be accomplished in the first quarter
of 1999.  Other exit costs relate primarily to carrying costs on leased
facilities, which leases have or will be terminated, assumed or expire by mid-
year.  Of the $8.6 million personnel and other exit costs accrued, $1.9 million
had been paid at year-end.  Most of the remaining accrued costs will be paid
during the first half of 1999, although certain payments, for items such as
benefit continuation for terminated employees, will be paid later.

     In 1996, TIMET's "Titanium melted and mill products" segment incurred $4.8
million of special charges related to the IMI Titanium Acquisition, $3 million
of which related to compensation for services in connection with the
acquisition, with the remainder related principally to integration and
consolidation of certain facilities.

Note 6 - Inventories:

<PAGE>

<TABLE>
<CAPTION>                                        December 31,

                                                1997       1998

                                                (In thousands)
<S>                                           <C>        <C>
Raw materials                                 $28,514     $56,109
                                               
Work-in-process                                85,278      97,947
Finished products                              32,904      61,213
Supplies                                        7,122      10,611


                                              $153,818   $225,880
                                                       


</TABLE>
<PAGE>

     The average cost of LIFO inventories exceeded the net carrying amount of
such inventories by approximately $32 million and $28 million at December 31,
1997 and 1998, respectively.

Note 7 - Intangible and other noncurrent assets:

<PAGE>

<TABLE>
<CAPTION>                                          December 31,

                                                  1997      1998

                                                  (In thousands)
<S>                                             <C>        <C>
Intangible assets:
  Patents                                      $ 14,333   $14,381
                                                        
   Covenants not to compete                      5,000      8,759
   Intangible pension assets                     1,997      2,783

                                                21,330     25,923
   Less accumulated amortization                 3,441      6,029


                                                $ 17,889  $19,894
                                                      



Other noncurrent assets:
   Deferred financing costs                    $ 8,482    $ 9,911
   Prepaid pension costs                         2,228          -
   Notes receivable from officers                    -        580
   Other                                         4,631      3,638


                                                $ 15,341  $14,129
                                       


</TABLE>


<PAGE>


Note 8 - Accrued liabilities:

<PAGE>

<TABLE>
<CAPTION>                                         December 31,

                                                  1997      1998

                                                 (In thousands)
<S>                                             <C>        <C>
OPEB cost                                       $2,102      $2,371
                                               
Pension cost                                     1,072       1,482
Other employee benefits                         25,869      20,881
Environmental costs                              1,762       2,273
Restructuring costs                                  -       6,727
Taxes, other than income                         3,062       1,292
Accrued dividends - Convertible Preferred        1,103       1,111
Securities
Other                                           11,839      14,491


                                              $ 46,809    $ 50,628
                                                        


</TABLE>

<PAGE>

Note 9 - Notes payable, long-term debt and capital lease obligations:
<PAGE>

<TABLE>
<CAPTION>                                          December 31,

                                                  1997      1998

                                                  (In thousands)
<S>                                             <C>        <C>
Notes payable - European credit agreements      $3,372    $ 5,134
                                               



Long-term debt:
   Bank credit agreement - U.S.                 $    -    $80,000
                                                 
   Bank credit agreement - U.K.                      -     18,781
   Other                                         1,612      1,740

                                                 1,612    100,521
   Less current maturities                       1,161        571

                                                $  451    $99,950
                                                




Capital lease obligations                     $ 11,189   $ 10,269
                                                     
Less current maturities                            193        200

                                              $ 10,996   $ 10,069
                                                   


</TABLE>
<PAGE>

     ~European~credit~agreements.~At December 31, 1998, aggregate unused
borrowing availability under short-term bank credit agreements in France and
Italy approximated $8 million.

     ~Long-term~bank~credit~agreements.~~~TIMET has a $200 million revolving
bank credit facility expiring in July 2002.  Borrowings generally bear interest
at LIBOR plus 0.50% (5.56% at December 31, 1998) and are collateralized by
substantially all of TIMET's assets.  The credit agreement generally limits
dividends on TIMET's common stock to 25% of net income, limits additional
indebtedness and transactions with affiliates, requires the maintenance of
certain financial ratios and contains other covenants customary in transactions
of this type.

     TIMET UK has a  Pounds15  million ($25 million) overdraft/revolving bank
credit facility maturing in April 2001.  Borrowings may be in sterling or
dollars, are collateralized by TIMET UK's inventories and receivables, and
generally bear interest at LIBOR plus 0.75% (5.75% at December 31, 1998).

     At December 31, 1998, the Company had approximately $125 million of unused
borrowing availability under its long-term U.S. and U.K. bank credit agreements.
Available borrowings in the future could potentially be reduced due to the
leverage and interest coverage ratios included in the U.S. credit agreement.

     ~Capital~lease~obligations.~In connection with the IMI Titanium
Acquisition, TIMET UK entered into long-term leases with IMI principally
covering production facilities within England.  In connection with the TIMET
Savoie transaction, TIMET Savoie entered into long-term leases with CEZUS
covering machinery and equipment.  The terms of these capital leases range from
10-30 years.  The UK 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, 1998 were $9.7 million and $.9
<PAGE>

million, respectively, with related aggregate accumulated depreciation of $1.2
million.

     Aggregate maturities of long-term debt and capital lease obligations:

<PAGE>

<TABLE>
<CAPTION>                                     Capital    Long-term
                                              Leases       Debt

                                                (In thousands)
<S>                                          <C>         <C>
Years ending December 31,
     1999                                    $ 1,110   $      571
                                                     
     2000                                      1,110          508
     2001                                      1,110       19,216
     2002                                      1,110       80,226
     2003                                      1,110            -
     2004 and thereafter                      22,073            -
     Less amounts representing interest      (17,354)           -


                                             $ 10,269    $ 100,521


</TABLE>

<PAGE>

Note 10 - 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 beginning December 1999, initially at
approximately 104.6% of principal amount declining to 100% from December 2006.
The Company 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 Statement of Operations as minority interest, net of allocable
income tax benefit.
<PAGE>


     ~Other.~~~~~~Other minority interest relates principally to TIMET Savoie.
The Company has the right to purchase CEZUS' 30% interest in TIMET Savoie for
30% of TIMET Savoie's equity determined under French accounting principles ($7.5
million at December 31, 1998), 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 at December 31, 1998).

Note 11 - Stockholders' equity:

     ~Common~stock.~~~~~In June 1996, the Company completed the sale of
6.2 million shares of its common stock in the Stock Offering at an initial price
to the public of $23 per share.  In connection with the Stock Offering, the
Company effected the Stock Split, increased its authorized common shares to
99 million shares, increased its authorized preferred stock to 1 million shares,
and reserved up to 3.1 million shares to be issued under the 1996 Long Term
Incentive Plan (the "TIMET Incentive Plan").  The Company's net proceeds from
the Stock Offering approximated $131 million.  The Company used approximately
$42.5 million of the net proceeds to repay existing indebtedness to stockholders
($22.5 million to Tremont and $20 million to IMI) and $82 million to repay bank
indebtedness.

     Certain key executive officers of the Company received shares (the
"Management Shares") of the Company's Class B common stock and cash payments
with a combined value of approximately $3 million in consideration for their
services in connection with the IMI Titanium Acquisition, which cost was
expensed as incurred.  The Management Shares were converted into 93,000 shares
of the Company's common stock in connection with the Stock Offering, and no
Class B shares are currently outstanding or authorized.

     ~Preferred~stock.~~~~~The Company is authorized to issue 1 million shares
of preferred stock.  The rights of preferred stock as to, among other things,
<PAGE>

dividends, liquidation, redemption, conversions, and voting rights are
determined by the Board of Directors.

     ~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 1,500 shares of
the Company's common stock (5,000 beginning in 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).

     The weighted average remaining life of options outstanding at December 31,
1998 was 8.2 years (1997 - 8.7 years).  At December 31, 1998, options to
purchase approximately 199,000 shares were exercisable at an average exercise
price of $25.89 per share and approximately 242,000 options become exercisable
in 1999.

     At December 31, 1998, approximately 1.9 million shares and 50,350 shares
were available for future grant under the TIMET Incentive Plan and the
nonemployee director plan, respectively.

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



<PAGE>

<TABLE>
<CAPTION>                             
                                                           Weighted
                            Exercise   Amount               average
                            Exercise  Payable   Weighted    fair
                             price     Upon      Average    value at
                              per     Exercise   Exercies    grant
                   Shares    share  (thousands)   price      date

<S>                   <C>      <C>        <C>       <C>        <C>
Outstanding at         -    $   -      $    -    $   -
December 31, 1995        

  Granted:
    At market     370,275  23.00-31.25   9,110       24.60    $ 12.46
                       
    Above market  167,000  26.00-29.00   4,592       27.50      10.22
                      
  Canceled         (1,000)      23.00     (23)      23.00
                      


Outstanding at    536,275  23.00-31.25   13,679       25.51
December 31, 1996      

  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      11.29
                  
  Exercised        (1,250) 23.00-29.50      (33)      26.25

<PAGE>

                 
  Canceled        (79,100) 23.00-34.00   (2,045)      25.86
                     


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

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


</TABLE>

<PAGE>

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

<PAGE>


Assumptions at date of     1996       1997       1998
grant:

     Expected life          6          6          6
(years)
     Risk-free interest   6.67%      6.00%      5.56%
rate
     Volatility            40%        35%        40%
     Dividend yield         0%         0%         0%

<PAGE>


     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
pretax income, net income and earnings per share for 1998 would have been
reduced by $5.4 million, $3.5 million and $.11 per share, respectively, for 1997
would have been reduced by $3.7 million, $2.4 million and $.06 per share,
respectively, and for 1996 would have been reduced by $1.1 million, $.7 million
and $.02 per share, respectively.

Note 12 - Income taxes:

     Summarized below are (i) the components of income before income taxes and
minority interest ("pretax income"), (ii) the difference between the income tax
expense attributable to pretax income 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 attributable to pretax income, and (iv) the components of
the comprehensive tax provision.

<PAGE>

<TABLE>
<CAPTION>                              Years Ended December 31,

                                      1996       1997       1998

                                            (In thousands)
<S>                                  <C>       <C>        <C>
Pretax income:
   U.S.                             $33,941  $ 81,766   $ 51,090
                                   
   Non-U.S.                          17,950    53,397      34,759


                                    $51,891  $135,163   $ 85,849
                                   



Expected income tax expense, at 35% $18,161  $ 47,307   $30,047
                                    
Non-U.S. tax rates                       37      (464)         41
U.S. state income taxes, net            848       126         472
Export sales credit                       -      (361)       (979)
Adjustment of deferred tax valuation(16,519)   (5,785)          -
allowance                              
Other, net                             (191)      181        (384)


                                     $2,336  $ 41,004   $ 29,197
                                     



Income tax expense:
   Current income taxes:
<PAGE>

     U.S.                            $6,516  $ 17,146   $  4,617
                                    
     Non-U.S.                         6,236    17,280     11,408

                                     12,752    34,426     16,025


   Deferred income taxes (benefit):
     U.S.                           (10,809)    5,998      12,374
                                        
     Non-U.S.                           393       580         798

                                    (10,416)    6,578      13,172
                                      


                                    $ 2,336  $ 41,004   $ 29,197
                                   



Comprehensive tax provision
allocable to:
   Pretax income                    $ 2,336  $ 41,004   $ 29,197
                                      
   Minority interest - Convertible     (444)   (4,760)    (4,703)
Preferred Securities
   Stockholders' equity, including
amounts allocated
     to other comprehensive income    2,500      (533)    (3,520)


                                     $4,392   $ 35,711  $ 20,974


<PAGE>

                                     





                                          December 31,

                                     1997              1998

                                Assets Liabilities ASSETS LIABILITIES
                               

                                         (In millions)
Temporary differences relating
to net assets:
   Inventories                  $   .1  $  (5.5)  $  .1    $(5.1)
                                  
   Property and equipment,          .2    (17.8)    1.4    (30.5)
including software
   Accrued OPEB cost              11.7      -      11.0      -
   Accrued liabilities and         8.7      -      11.1      -
other deductible differences
   Other taxable differences       -       (7.7)    -       (7.7)
Tax loss and credit                5.9      -       4.9      -
carryforwards
Valuation allowance                (.4)     -       -        -

Gross deferred tax assets         26.2    (31.0)   28.5    (43.3)
(liabilities)
Netting                         (19.4)     19.4   (26.6)    26.6
                                   

Total deferred taxes               6.8    (11.6)    1.9    (16.7)

<PAGE>

Less current deferred taxes        6.2      -       1.9     (2.5)

Net noncurrent deferred taxes   $   .6  $ (11.6)  $   -   $(14.2)
                                  


</TABLE>

<PAGE>

     The Company's valuation allowance (nominal at December 31, 1997 and nil in
1998) decreased in the aggregate (including amounts allocated to items other
than pretax income) by $16.5 million in 1996, $5.8 million in 1997 and $.4
million in 1998.  The 1996 reduction included $10 million due to a change in
estimate of the future tax benefits of certain tax net operating loss
carryforwards ("NOLs") and alternative minimum tax credit ("AMT") carryforwards
that will more likely than not be realized.

     At December 31, 1998, the Company had, for U.S. federal income tax
purposes, NOLs of approximately $2.5 million expiring in 2010.  At December 31,
1998, the Company had an AMT credit carryforward of approximately $4 million,
which can be utilized to offset regular income taxes payable in future years.
The AMT credit carryforward has an indefinite carryforward period.

Note 13 - 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 $12 million in 1996, $11 million in 1997 and $6 million in 1998.

     ~Defined~contribution~plans.~~All of the Company's domestic hourly and
salaried employees (65% of total worldwide employees at December 31, 1998) 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 35% of
the Company's total employees at December 31, 1998 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 1996, 1997 and 1998.
<PAGE>


     ~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.

     The rates used in determining the actuarial present value of benefit
obligations at December 31, 1998 were: (i) discount rates -- 6% to 6.5% (1997 -
7% to 7.25%), and (ii) rates of increase in future compensation levels - 3%
(1997 - 3% to 5%).  The expected long-term rates of return on assets used was
7.5% to 9% (1997 - 7% 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, 1998, the assets of the plans are primarily
comprised of government obligations, corporate stocks and bonds.

<PAGE>

<TABLE>
<CAPTION>                                        Years ended
                                                 December 31,

                                                1997       1998

<S>                                             (in thousands)
Change in projected benefit obligations:      <C>        <C>
     Balance at beginning of year            $114,525   $136,367
                                             
     Service cost                               3,906     5,462
     Interest cost                              9,201     9,519
     Adjustments - SFAS No. 88                      -     5,725
     Actuarial loss (gain)                     13,828       553
     Benefits paid                             (5,093)   (5,334)


          Balance at end of year             $136,367   $152,292
                                           




Change in plan assets:
     Fair value at beginning of year         $113,743   $136,827
                                            
     Actual return on plan assets              20,555    (2,999)
     Contributions                              7,623     4,606
     Benefits paid                             (5,093)   (5,334)


          Fair value at end of year          $136,827   $133,100
                                           


<PAGE>



Funded status:
     Plan assets over (under) projected       $   460   $(19,192)
benefit obligations                         
     Unrecognized:
          Actuarial loss                            9    16,154
          Prior service cost                    3,077     2,783
          Transaction obligation               (1,229)     (615)


          Total prepaid (accrued) pension     $  2,317   $ (870)
cost                                           



Amounts recognized in balance sheet:
     Noncurrent prepaid pension cost          $ 2,228   $    -
                                                  
     Intangible pension asset                   1,997     2,783
     Current pension liability                 (1,072)   (1,482)
     Noncurrent pension liability                (836)   (8,754)
     Accumulated other comprehensive income         -     6,583


                                              $  2,317   $ (870)
                                                      


</TABLE>




<PAGE>


<PAGE>

<TABLE>
<CAPTION>                             Years Ended December 31,

                                      1996       1997       1998

                                           (In thousands)
<S>                                 <C>        <C>        <C>
Service cost benefits earned        $ 3,260    $ 3,906    $ 5,462
Interest cost on projected benefit    7,696      9,201      9,519
obligations
Expected return on plan assets       (7,256)   (20,555)   (12,247)
Net amortization                     (1,951)     9,724     (2,030)


   Net pension expense              $ 1,749     $2,276      $ 704


</TABLE>

<PAGE>


     ~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, 1998
were: (i) discount rate--6.5% (1997 - 7%), (ii) rate of increase in health care
costs for the following period--8.9% (1997 - 9.9%) (iii) ultimate health care
trend rate (achieved in 2016) - 4.75% (1997 - 5.25%).  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 1998, and the actuarial
present value of accumulated OPEB obligations at December 31, 1998 would have
increased approximately $2.3 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.

<PAGE>

<TABLE>
<CAPTION>                                         December 31,

                                                 1997      1998

                                                 (In thousands)
<S>                                             <C>       <C>
Actuarial present value of accumulated OPEB
obligations:
   Balance at beginning of year                $21,252   $22,297
   Service cost                                    357       326
   Interest cost                                 1,613     1,553
   Actuarial loss                                1,654     1,648
   Benefits paid, net of participant            (2,579)   (3,187)
contributions

   Balance at end of year                       22,297    22,637
Unrecognized net actuarial gain                  2,673       900
Unrecognized prior service credits               3,324     2,899

Total accrued OPEB cost                         28,294    26,436
Less current portion                             2,102     2,371


   Noncurrent accrued OPEB cost                $26,192   $24,065


</TABLE>





<PAGE>
<PAGE>

<TABLE>
<CAPTION>                               Years Ended December 31,

                                         1996     1997      1998

                                             (In thousands)
<S>                                     <C>      <C>      <C>
Service cost benefits earned            $ 407   $   357  $  326
                                        
Interest cost on accumulated OPEB       1,567     1,613   1,553
obligations
Net amortization and deferrals           (653)     (635)   (550)


   Net OPEB expense                    $1,321   $ 1,335  $1,329
                                    


</TABLE>

<PAGE>

Note 14 - Related party transactions:

     TIMET was a 75%-owned subsidiary of Tremont Corporation at December 31,
1995 with the remaining 25% held by Union Titanium Sponge Corporation ("UTSC"),
a consortium of Japanese companies.  In February 1996, TIMET acquired the
titanium businesses of IMI for stock and in June 1996 completed the Stock
Offering which together reduced Tremont's ownership in TIMET  to 30% and UTSC's
ownership to 10%.  In 1997, UTSC reduced its ownership to less than 5% and is no
longer required to publicly report its ownership.  In 1998, Tremont purchased
additional TIMET common stock in market transactions.  In connection with the
IMI Titanium Acquisition, Tremont held an option, exercised in February 1999, to
purchase approximately 2.0 million shares of the Company's common stock from IMI
for approximately $16 million ($7.95 per share).  At March 1, 1999, Tremont held
approximately 39% of TIMET's outstanding common stock.

     Valhi, Inc. (a majority-owned subsidiary of Contran Corporation) and other
entities related to Harold C. Simmons hold an aggregate of approximately 53% of
Tremont's outstanding common stock.  Mr. Simmons may be deemed to control each
of Contran, Valhi, Tremont and TIMET.  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,
<PAGE>

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 supplies castings ingot to Wyman-Gordon
Titanium Castings.  Sales to these joint ventures were $22 million in 1997 and
$40 million in 1998.  Receivables from related parties at December 31, 1997 and
1998 relate principally to sales to these joint ventures.

     In connection with the construction and financing of TIMET's vacuum
distillation process ("VDP") titanium sponge plant, 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 $12 million in 1996, $17 million in 1997
and $7 million in 1998.

     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 1996, 1997 and 1998, subject to renewal
for future years.

     The Company has guidelines for its officers regarding ownership level of
TIMET stock.  In order to facilitate compliance with these guidelines, the
Company extended loans in 1998 to certain officers pursuant to a Board-approved
<PAGE>

loan program.  The loans are 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.  At December 31, 1998, the outstanding
balance of officer notes receivable was $580,000.

     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 for such
policies in 1998, 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 1999.

     Interest expense on related party indebtedness approximated $2 million in
1996 and was nil in 1997 and 1998.  The subordinated debt to both IMI and
Tremont accrued interest at 10.4% and was repaid in 1996 with proceeds from the
Stock Offering.  During 1997, TIMET Savoie repaid amounts outstanding under a
revolving line of credit provided by CEZUS and terminated the facility.

     TIMET's purchases from THT approximated $9 million in 1996 prior to the AJM
Acquisition.

Note 15 - Commitments and contingencies:

     ~Long-term~agreements.~~~The Company has long-term agreements with certain
major aerospace customers, including The Boeing Company, Rolls-Royce plc, United
Technologies Corporation (and related companies) and Wyman-Gordon Company,
<PAGE>

pursuant to which the Company will be the 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 are
effective in 1999.  The agreements provide for minimum market shares of the
customer's titanium requirements (generally at least 70%) for 10 year periods.
The agreements generally provide for fixed or formula-determined prices, at
least for the first five years.  The contracts are structured to provide
incentives to both parties to lower TIMET's costs and share in the savings.
TIMET believes that these contracts and others will help mitigate the
cyclicality of its aerospace business.

     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 have agreed in principle to a reduced minimum
for 1999, and the Company currently expects to do the same for 2000.

     The Company may enter into other long-term agreements with other customers
and suppliers.
     ~
     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).  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.  The Company's ten largest
customers accounted for about 40% of net sales in 1998 and about one-third of
net sales in each of 1997 and 1996.

<PAGE>

     ~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 $2.7 million in 1996, $3.6 million in 1997 and $5.0 million in
1998.

     At December 31, 1998, future minimum payments under noncancellable
operating leases having an initial or remaining term in excess of one year were
as follows:

<PAGE>

<TABLE>
<CAPTION>                                                Amount

                                                          (In
                                                       thousands)
<S>                                                    <C>
Years ending
December 31,
   1999                                               $  3,784
   2000                                                  2,301
   2001                                                  1,728
   2002                                                    942
   2003                                                    805
   2004 and                                                  -
thereafter


                                                      $  9,560


</TABLE>

            
<PAGE>

     ~Environmental~matters.~

~    BMI~Companies.~TIMET and certain other companies, including Kerr-McGee
Chemical Corporation, Chemstar Lime Company and Pioneer Chlor Alkali, Inc.
(successor to Stauffer Chemical Company) operate facilities in a complex (the
"BMI Complex") owned by BMI, adjacent to TIMET's Henderson, Nevada plant.  In
1993, TIMET and each of such companies, along with certain other companies who
previously operated facilities in the common areas of the BMI Complex
(collectively the "BMI Companies") completed a Phase I environmental assessment
of the common areas of the BMI Complex and each of the individual company sites
pursuant to consent agreements with the Nevada Division of Environmental
Protection ("NDEP").  In July 1996, the Company signed a consent agreement with
NDEP regarding implementation of the Phase II assessment of the Company property
within the BMI Complex.  In July 1998, NDEP approved TIMET's Phase II assessment
report with certain conditions that required additional investigation.  TIMET
submitted its supplemental work plan in October 1998, which NDEP approved in
December 1998.  Field work to assess the sites is continuing.  Based upon the
work to date, the Company believes its likely share of remediation costs would
be in the range of $2 million to $3 million.

~    Pomona~facility.~The Company has conducted an additional study and
assessment work as required by the California Regional Water Quality Control
Board--Los Angeles Region (the "Water Quality Board") related to soil and
possible groundwater contamination at a Pomona, California facility formerly
owned by the Company.  The site is near an area that has been designated as a
U.S. Environmental Protection Agency "Superfund" site.  In December 1998, the
Company received a letter from the Water Quality Board stating that, after
review of the information provided pertaining to environmental site assessment
the case was eligible for a "no further work requirement letter".

     ~Henderson~facility.~In April 1998, the U. S. Environmental Protection
Agency ("EPA") filed a civil action against TIMET
<PAGE>

~(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.  The action seeks civil penalties in an unspecified total amount
at the statutory rate of up to $25,000 per day of violation ($27,500 per day for
violations after January 30, 1997).  In December 1998, TIMET and the EPA agreed
in principle to settle the matter for $.3 million payable in installments, plus
TIMET's agreement to carry out a supplemental environment project at an
estimated cost of $.2 million.

     At December 31, 1998, the Company had accrued an aggregate of approximately
$2.3 million for the environmental matters discussed above under
~BMI~Companies,~Pomona~facility~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.


<PAGE>

     ~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 16 - New accounting principles not yet adopted:

     The Company is required to adopt in 1999 the requirements of AICPA
Statement of Position ("SOP") 98-1 "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use".  The Company's existing
accounting policies with respect to costs of internal-use software are
substantially equivalent to those required by SOP 98-1, thus the Company
believes adoption of the pronouncement will have no significant effect on its
financial position or results of operations.

     The Company will adopt SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities," no later than the first quarter of 2000.  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.  At December 31, 1998, the Company is not a party to any derivative
contracts or engaged in any hedging activities covered by SFAS No. 133.

Note 17 - Quarterly results of operations (unaudited):
<PAGE>

<TABLE>
<CAPTION>                                 Quarters ended

                              March 31   June 30   Sept. 30   Dec. 31

                               (In millions, except per share data)

~Year~ended~December~31,~1998
:~
<S>                           <C>        <C>       <C>        <C>
   Net sales                   $ 187.1   $ 190.8   $ 173.5    $ 156.3
   Operating income               31.6      23.9      27.3        (.2)
   Net income                     18.3      13.8      16.1       (2.5)

   Net income per share:
     Basic                    $     .58  $    .44  $   .51    $  (0.8)
                                  
     Diluted                        .56       .44      .50       *

~Year~ended~December~31,~1997
:~

   Net sales                   $ 167.1   $ 181.4   $ 177.2    $ 207.9
   Operating income               26.5      32.8      33.3       40.4
   Net income                     15.8      20.3      21.3       25.6

   Net income per share:
     Basic                     $   .50   $   .65   $    .68   $   .81
                                  
     Diluted                       .49       .61        .64       .75
<FN>
     *  Antidilutive.
</TABLE>
<PAGE>


     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.

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.  The Convertible
Preferred Securities were issued in November 1996.  In 1998, the effect of the
assumed conversion of the Convertible Preferred Securities was antidilutive.
Stock options omitted from the calculation because they were antidilutive
approximated: 1.2 million in 1998 and were not material in 1996 and 1997.

<PAGE>

<TABLE>
<CAPTION>                            Years Ended December 31,

                                    1996        1997        1998

<S>                                       (in thousands)
Numerator:                        <C>         <C>         <C>
   Net income                    $ 47,644    $ 83,010    $ 45,752
   Minority interest -
Convertible
     Preferred Securities             826       8,840       8,840


   Diluted net income            $ 48,470    $ 91,850    $ 54,592



Denominator:
   Average common shares           27,623      31,457      31,435
outstanding
   Convertible Preferred              491       5,389       5,389
Securities
   Average dilutive stock options      28         109          22


   Diluted shares                  28,142      36,955      36,846


</TABLE>

<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 25, 1999 appearing on page F-1 of this 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 25, 1999


<PAGE>

                          TITANIUM METALS CORPORATION

                SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

                               (In thousands)

<PAGE>

<TABLE>
<CAPTION>                            Additions
                                      charged
                          Balance    (credited)                     
                             at         to                             Balance
       Description       Beginning   costs and                         at end
                          of year    expenses  Deductions     Other    of year

Year ended December 31,
1998:
<S>                       <C>        <C>         <C>         <C>       <C>
   Allowance for doubtful $  2,218   $    39     $  (325) (a) $  -     $1,932
accounts                                 


   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:


<PAGE>

   Allowance for doubtful $ 4,788   $      2    $(2,572) (a)  $  -     $2,218
accounts                       


   Valuation allowance
for deferred
     income taxes         $  6,158   $(5,785)   $     -       $  -     $  373
                             


   Reserve for excess and
slow
     moving inventories   $  7,719   $(1,427)   $     -       $  -     $6,292
                             



Year ended December 31,
1996:

   Allowance for doubtful $ 3,620    $ 4,695  $(4,598) (a) $1,071 (b) $ 4,788
accounts                   


   Valuation allowance
for deferred
     income taxes         $ 22,677   $(16,519) $   -       $    -     $ 6,158
                                     


   Reserve for excess and
slow
     moving inventories   $ 6,000    $(2,500)  $   -       $ 4,219 (b) $7,719


<PAGE>

                          



<FN>
(a)  Amounts written off, less recoveries.
(b)  Represents the effect of the IMI Titanium Acquisition and the AJM Acquisition.
</TABLE>


<PAGE>

<PAGE>