##### Table of Contents



UNITED STATES
 SECURITIES AND EXCHANGE
    COMMISSION
 WASHINGTON, D.C. 20549
  FORM 10-Q
    þ
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934  FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2008
   o
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934  
  001-14437
  RTI INTERNATIONAL METALS,
    INC.
 (Exact name of registrant as
    specified in its charter)
  Ohio(State or other jurisdiction of
    incorporation or organization)

52-2115953(I.R.S. Employer
    Identification No.)Westpointe Corporate Center One,
    5th Floor

    1550 Coraopolis Heights Road
    Pittsburgh, Pennsylvania(Address of principal executive offices)

15108-2973(Zip Code)   (412) 893-0026
 Registrants telephone number,
    including area code:
   Yes þ     No o
  12b-2
  Large
    accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2
 Yes o     No þ




---



##### 



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
      INDEX
   
 PagePART I  FINANCIAL INFORMATIONItem 1.


Financial Statements


2Condensed Consolidated Statements of Operations (Unaudited) for the Three and Nine Months Ended September 30, 2008 and 2007


2Condensed Consolidated Balance Sheets (Unaudited) as of September 30, 2008 and December 31, 2007


3Condensed Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2008 and 2007


4Condensed Consolidated Statement of Comprehensive Income and Shareholders Equity (Unaudited) for the Nine Months Ended September 30, 2008


5Condensed Notes to Consolidated Financial Statements


6Item 2.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


19Item 3.


Quantitative and Qualitative Disclosures About
    Market Risk


29Item 4.


Controls and Procedures


29PART II  OTHER INFORMATIONItem 1A.


Risk Factors


30Item 2.


Unregistered Sales of Equity Securities and Use
    of Proceeds


30Item 6.


Exhibits


30Signatures


31EX-31.1EX-31.2EX-32.1EX-32.2




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##### Table of Contents



PART I 
    FINANCIAL INFORMATION  Item 1.
    Financial
    Statements.  RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Condensed
    Consolidated Statements of Operations(Unaudited)
    (In thousands, except share and per share amounts) Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007Net sales

$
150,615


$
163,412


$
461,092


$
463,015Cost and expenses:Cost of sales


113,492



109,716



322,708



310,448Selling, general, and administrative expenses


18,723



16,343



54,829



49,562Research, technical, and product development expenses


555



403



1,590



1,255Operating income


17,845



36,950



81,965



101,750Other income (expense)


551



(1,035
)


(129
)


(1,940
)Interest income


799



1,179



2,172



3,626Interest expense


(979
)


(386
)


(1,595
)


(898
)Income before income taxes


18,216



36,708



82,413



102,538Provision for income taxes


6,964



12,016



30,311



34,823Net income

$
11,252


$
24,692


$
52,102


$
67,715Earnings per share:Basic

$
0.49


$
1.08


$
2.28


$
2.96Diluted

$
0.49


$
1.06


$
2.26


$
2.92Weighted-average shares outstanding:Basic


22,838,900



22,953,981



22,881,457



22,913,824Diluted


22,915,541



23,198,387



23,007,236



23,167,023   The accompanying notes are an integral part of these
    Consolidated Financial Statements.
 2




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIESCondensed Consolidated Balance Sheets(Unaudited)
    (In thousands, except share and per share amounts)
  September 30,


December 31,2008


2007ASSETSCurrent assets:Cash and cash equivalents

$
290,031


$
107,505Receivables, less allowance for doubtful accounts of $471 and
    $613


99,090



102,073Inventories, net


304,176



296,559Deferred income taxes


20,160



12,969Other current assets


7,291



2,951Total current assets


720,748



522,057Property, plant, and equipment, net


236,212



157,355Goodwill


49,910



50,769Other intangible assets, net


15,680



17,476Deferred income taxes


14,074



6,059Other noncurrent assets


2,402



1,568Total assets

$
1,039,026


$
755,284LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
56,727


$
46,666Accrued wages and other employee costs


18,439



22,028Billings in excess of costs and estimated earnings


36,429



21,573Current portion of long-term debt


1,433



1,090Current liability for post-retirement benefits


2,660



2,660Current liability for pension benefits






5,962Other accrued liabilities


18,911



16,171Total current liabilities


134,599



116,150Long-term debt


241,267



16,506Noncurrent liability for post-retirement benefits


31,837



31,019Noncurrent liability for pension benefits


3,796



8,526Deferred income taxes


69



69Other noncurrent liabilities


6,514



7,230Total liabilities


418,082



179,500Commitments and Contingencies (See Note 11)Shareholders equity:Common stock, $0.01 par value; 50,000,000 shares
    authorized; 23,681,510 and 23,610,746 shares issued;
    22,997,636 and 23,105,708 shares outstanding


237



236Additional paid-in capital


306,386



302,075Treasury stock, at cost; 683,874 and 505,038 shares


(16,891
)


(7,801
)Accumulated other comprehensive loss


(22,531
)


(20,367
)Retained earnings


353,743



301,641Total shareholders equity


620,944



575,784Total liabilities and shareholders equity

$
1,039,026


$
755,284   The accompanying notes are an integral part of these
    Consolidated Financial Statements.
 3




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
 Condensed
    Consolidated Statements of Cash Flows(Unaudited)



(In thousands) Nine Months EndedSeptember 30,2008


2007OPERATING ACTIVITIES:Net income

$
52,102


$
67,715Adjustment for non-cash items included in net income:Depreciation and amortization


14,891



11,130Deferred income taxes


(15,614
)


(21,270
)Stock-based compensation


3,942



5,804Excess tax benefits from stock-based compensation activity


(239
)


(3,964
)Other


(144
)


(826
)Changes in assets and liabilities:Receivables


899



(4,505
)Inventories


(7,935
)


(45,859
)Accounts payable


2,286



14,311Income taxes payable


494



(1,124
)Billings in excess of costs and estimated earnings


16,088



(10,157
)Other current assets and liabilities


(9,444
)


8,097Other assets and liabilities


(4,171
)


(5,677
)Cash provided by operating activities


53,155



13,675INVESTING ACTIVITIES:Proceeds from disposal of property, plant, and equipment






523Purchase of investments






(1,408
)Proceeds from sale of investments






86,442Capital expenditures


(88,815
)


(45,176
)Cash provided by (used in) investing activities


(88,815
)


40,381FINANCING ACTIVITIES:Proceeds from exercise of employee stock options


112



1,533Excess tax benefits from stock-based compensation activity


239



3,964Financing fees


(1,313
)


(845
)Borrowings on long-term debt


227,011



1,577Repayments on long-term debt


(815
)


(266
)Proceeds from government grants


2,842



Purchase of common stock held in treasury


(9,090
)


(2,516
)Cash provided by financing activities


218,986



3,447Effect of exchange rate changes on cash and cash equivalents


(800
)


(1,194
)Increase in cash and cash equivalents


182,526



56,309Cash and cash equivalents at beginning of period


107,505



40,026Cash and cash equivalents at end of period

$
290,031


$
96,335   The accompanying notes are an integral part of these
    Consolidated Financial Statements.
 4




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
 Condensed
    Consolidated Statement of Comprehensive Income and
    Shareholders Equity (Unaudited)



(In
    thousands, except share amounts) Accumulated Other Comprehensive Income (Loss)Net Unrealized Gain(Loss) FromCommon Stock


Additional











ForeignShares





Paid-In


Treasury


Retained


Pension


CurrencyOutstanding


Amount


Capital


Stock


Earnings


Liability


Translation


TotalBalance at December 31, 2007


23,105,708


$
236


$
302,075


$
(7,801
)

$
301,641


$
(30,372
)

$
10,005


$
575,784Net income


















52,102











52,102Foreign currency translation


























(4,142
)


(4,142
)Benefit plan amortization






















1,978







1,978Comprehensive income






























49,938Shares issued for directors compensation


11,912



























Shares issued for restricted stock award plans


49,250



1























1Stock-based compensation expense recognized










3,942



















3,942Treasury stock purchased at cost


(178,836
)










(9,090
)














(9,090
)Exercise of employee options


9,602







112



















112Tax benefits from stock-based compensation activity










257



















257Balance at September 30, 2008


22,997,636


$
237


$
306,386


$
(16,891
)

$
353,743


$
(28,394
)

$
5,863


$
620,944   The accompanying notes are an integral part of these
    Consolidated Financial Statements.
 5




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIESCondensed Notes to Consolidated Financial
    Statements
    (Unaudited) 
    (In thousands, except share and per share amounts, unless
    otherwise indicated)
  Note 1
    BASIS OF
    PRESENTATION:  Form 10-Q Regulation S-X.
  Form 10-K.
  Note 2
    ORGANIZATION:          just-in-time
 6




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
    Condensed Notes to Consolidated Financial Statements
    (Unaudited)
    (In thousands, except share and per share amounts, unless
    otherwise indicated)
  Note 3
    STOCK-BASED
    COMPENSATION:  Stock
    Options
    Stock Options

SharesOutstanding at December 31, 2007


312,916Granted


54,600Forfeited


(634
)Expired


(166
)Exercised


(9,602
)Outstanding at September 30, 2008


357,114Exercisable at September 30, 2008


229,236     2008Risk-free interest rate


2.81
%Expected dividend yield


0.00
%Expected lives (in years)


4.0Expected volatility


41.00
%   Restricted
    Stock
    Nonvested Restricted Stock Awards

SharesNonvested at December 31, 2007


124,642Granted


61,162Vested


(27,635
)Nonvested at September 30, 2008


158,169   Performance
    Share Awards
   7




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
    Condensed Notes to Consolidated Financial Statements
    (Unaudited)
    (In thousands, except share and per share amounts, unless
    otherwise indicated)
      Shares


Maximum SharesPerformance Share Awards

Granted


Eligible to ReceiveOustanding at December 31, 2007






Granted


28,500



57,000Outstanding at September 30, 2008


28,500



57,000   Note 4
    INCOME
    TAXES:           8




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
    Condensed Notes to Consolidated Financial Statements
    (Unaudited)
    (In thousands, except share and per share amounts, unless
    otherwise indicated)
  Note 5
    EARNINGS
    PER SHARE:  Earnings Per Share
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007Numerator:Net income

$
11,252


$
24,692


$
52,102


$
67,715Denominator:Basic weighted-average shares outstanding


22,838,900



22,953,981



22,881,457



22,913,824Effect of diluted securities


76,641



244,406



125,779



253,199Diluted weighted-average shares outstanding


22,915,541



23,198,387



23,007,236



23,167,023Earnings per share:Basic

$
0.49


$
1.08


$
2.28


$
2.96Diluted

$
0.49


$
1.06


$
2.26


$
2.92     Note 6
    INVENTORIES:  last-in, first-in,
  September 30,


December 31,2008


2007Raw materials and supplies

$
123,980


$
114,967Work-in-process
    and finished goods


258,540



267,462LIFO reserve


(78,344
)


(85,870
)Total inventories

$
304,176


$
296,559  9




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
    Condensed Notes to Consolidated Financial Statements
    (Unaudited)
    (In thousands, except share and per share amounts, unless
    otherwise indicated)
    Note 7
    GOODWILL
    AND OTHER INTANGIBLE ASSETS:  Goodwill and Intangible
    Assets
  Goodwill.
  December 31,


Translation


September 30,2007


Adjustment


2008Titanium Group

$
2,548


$



$
2,548Fabrication Group


38,388



(859
)


37,529Distribution Group


9,833







9,833Total goodwill

$
50,769


$



$
49,910   Intangibles.
    December 31,



Translation

September 30,2007

Amortization

Adjustment

2008Fabrication Group

$
17,476


$
(762
)

$
(1,034
)

$
15,680   Note 8
    BILLINGS
    IN EXCESS OF COSTS AND ESTIMATED EARNINGS:    Note 9
    OTHER
    INCOME (EXPENSE):   10




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
    Condensed Notes to Consolidated Financial Statements
    (Unaudited)
    (In thousands, except share and per share amounts, unless
    otherwise indicated)
  Note 10
    EMPLOYEE
    BENEFIT PLANS:    Pension Benefits


Other Post-Retirement BenefitsThree Months


Nine Months


Three Months


Nine MonthsEnded


Ended


Ended


EndedSeptember 30,


September 30,


September 30,


September 30,2008


2007


2008


2007


2008


2007


2008


2007Service cost

$
485


$
503


$
1,455


$
1,509


$
129


$
121


$
387


$
363Interest cost


1,783



1,728



5,349



5,184



505



508



1,515



1,523Expected return on plan assets


(2,218
)


(2,019
)


(6,654
)


(6,057
)














Amortization of prior service cost


206



173



618



520



303



303



910



910Amortization of unrealized gains and losses


537



557



1,611



1,670















Net periodic benefit cost

$
793


$
942


$
2,379


$
2,826


$
937


$
932


$
2,812


$
2,796     Note 11
    COMMITMENTS
    AND CONTINGENCIES:    Environmental
    Matters
  96-1, Environmental Remediation Liabilities Accounting for Contingencies
 11




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
    Condensed Notes to Consolidated Financial Statements
    (Unaudited)
    (In thousands, except share and per share amounts, unless
    otherwise indicated)
          Environmental


EnvironmentalAssets


LiabilitiesBalance at December 31, 2007

$
863


$
(2,874
)Environmental-related income (expense)


85



(398
)Cash paid (received)


(344
)


951Balance at September 30, 2008

$
604


$
(2,321
)     Duty
    Drawback Investigation
     12




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
    Condensed Notes to Consolidated Financial Statements
    (Unaudited)
    (In thousands, except share and per share amounts, unless
    otherwise indicated)
    Accounting for Contingencies
    Other
    Matters
   13




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
    Condensed Notes to Consolidated Financial Statements
    (Unaudited)
    (In thousands, except share and per share amounts, unless
    otherwise indicated)
  NOTE 12
    LONG-TERM
    DEBT:    September 30,


December 31,2008


2007RTI term loan

$
225,000


$
RTI Claro credit agreement


14,059



15,862Interest-free loan agreement  Canada


3,506



1,734Other


135



Total debt

$
242,700


$
17,596Less: Current portion


(1,433
)


(1,090
)Long-term debt

$
241,267


$
16,506         NOTE 13
    SEGMENT
    REPORTING:  Disclosures about Segments of an Enterprise
    and Related Information
   14




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
    Condensed Notes to Consolidated Financial Statements
    (Unaudited)
    (In thousands, except share and per share amounts, unless
    otherwise indicated)
        just-in-time
     15




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
    Condensed Notes to Consolidated Financial Statements
    (Unaudited)
    (In thousands, except share and per share amounts, unless
    otherwise indicated)
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007Net sales:Titanium Group

$
49,367


$
68,603


$
156,868


$
184,461Intersegment sales


35,931



41,808



126,599



135,808Total Titanium Group net sales


85,298



110,411



283,467



320,269Fabrication Group


35,731



34,789



106,795



96,475Intersegment sales


17,125



17,528



62,692



54,103Total Fabrication Group net sales


52,856



52,317



169,487



150,578Distribution Group


65,517



60,020



197,429



182,079Intersegment sales


642



862



1,760



3,213Total Distribution Group net sales


66,159



60,882



199,189



185,292Eliminations


53,698



60,198



191,051



193,124Total consolidated net sales

$
150,615


$
163,412


$
461,092


$
463,015Operating income:Titanium Group before corporate allocations

$
16,138


$
28,691


$
68,825


$
77,565Corporate allocations


(4,210
)


(2,799
)


(10,112
)


(8,716
)Total Titanium Group operating income


11,928



25,892



58,713



68,849Fabrication Group before corporate allocations


3,695



3,457



10,913



11,698Corporate allocations


(2,713
)


(2,244
)


(7,511
)


(7,080
)Total Fabrication Group operating income


982



1,213



3,402



4,618Distribution Group before corporate allocations


7,200



11,535



26,107



33,643Corporate allocations


(2,265
)


(1,690
)


(6,257
)


(5,360
)Total Distribution Group operating income


4,935



9,845



19,850



28,283Total consolidated operating income

$
17,845


$
36,950


$
81,965


$
101,750Income before income taxes:Titanium Group

$
12,819


$
26,524


$
60,354


$
70,992Fabrication Group


969



541



1,876



2,890Distribution Group


4,428



9,643



20,183



28,656Total consolidated income before income taxes

$
18,216


$
36,708


$
82,413


$
102,538   16




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
    Condensed Notes to Consolidated Financial Statements
    (Unaudited)
    (In thousands, except share and per share amounts, unless
    otherwise indicated)
  September 30,


December 31,2008


2007Total assets:Titanium Group

$
352,391


$
281,238Fabrication Group


234,907



226,445Distribution Group


169,142



145,953General corporate assets


282,586



101,648Total consolidated assets

$
1,039,026


$
755,284   NOTE 14
    FAIR
    VALUE MEASUREMENTS:  Fair Value Measurements
    NOTE 15
    NEW
    ACCOUNTING STANDARDS:  No. FAS 157-2, Effective Date of FASB Statement No. 157 FAS 157-2). FAS 157-2
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities-Including an amendment of FASB Statement
    No. 115 instrument-by-instrument
 17




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
    Condensed Notes to Consolidated Financial Statements
    (Unaudited)
    (In thousands, except share and per share amounts, unless
    otherwise indicated)
  Business Combinations
  Noncontrolling Interests in Consolidated Financial
    Statements  an amendment of ARB No. 51
  Disclosures about Derivative Instruments and Hedging
    Activities  an amendment of FASB Statement
    No. 133
  The
    Hierarchy of Generally Accepted Accounting Principles
 18




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##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  Forward-Looking
    Statements
    
    statements regarding the future availability and prices of raw
    materials,
    competition in the titanium industry,
    demand for the Companys products,
    the historic cyclicality of the titanium and commercial
    aerospace industries,
    changes in defense spending,
    the effect of the slowdown in U.S and global economic activity
    and policy changes following the U.S. Presidential election,
    the success of new market development,
    long-term supply agreements,
    the impact of Boeing 787 production delays,
    legislative challenges to the Specialty Metals Clause of the
    Berry Amendment,
    labor matters,
    outcome of pending U.S. Customs investigation,
    the successful completion of our expansion projects,
    the Companys order backlog and the conversion of that
    backlog into revenue, and
    other statements contained herein that are not historical facts.   19




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##### Table of Contents



Overview
          just-in-time
      Three Months Ended

Nine Months EndedSeptember 30,

September 30,2008

2007

2008

2007Fabrication Group


17
%


19
%


20
%


21
%Distribution Group


25
%


19
%


25
%


21
%  20




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##### Table of Contents



Three
    Months Ended September 30, 2008 Compared To Three Months
    Ended September 30, 2007
  Net Sales.
  Three Months EndedSeptember 30,


$ Increase/


% Increase/(In millions except percents)

2008


2007


(Decrease)


(Decrease)Titanium Group

$
49.4


$
68.6


$
(19.2
)


− 28.0
%Fabrication Group


35.7



34.8



0.9



2.6
%Distribution Group


65.5



60.0



5.5



9.2
%Total consolidated net sales

$
150.6


$
163.4


$
(12.8
)


− 7.8
%         Gross Profit.
  Three Months EndedSeptember 30,


$ Increase/


% Increase/(In millions except percents)

2008


2007


(Decrease)


(Decrease)Titanium Group

$
18.5


$
30.6


$
(12.1
)


− 39.5
%Fabrication Group


7.3



7.4



(0.1
)


− 1.4
%Distribution Group


11.3



15.7



(4.4
)


− 28.0
%Total consolidated gross profit

$
37.1


$
53.7


$
(16.6
)


− 30.9
%    21




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##### Table of Contents



Selling, General, and Administrative
    Expenses.
  Three Months EndedSeptember 30,


$ Increase/


% Increase/(In millions except percents)

2008


2007


(Decrease)


(Decrease)Titanium Group

$
6.1


$
4.3


$
1.8



41.9
%Fabrication Group


6.3



6.2



0.1



1.6
%Distribution Group


6.3



5.8



0.5



8.6
%Total consolidated SG&A expenses

$
18.7


$
16.3


$
2.4



14.7
%     Research, Technical, and Product Development
    Expenses.
  Operating Income.
  Three Months EndedSeptember 30,


$ Increase/


% Increase/(In millions except percents)

2008


2007


(Decrease)


(Decrease)Titanium Group

$
11.9


$
25.9


$
(14.0
)


− 54.1
%Fabrication Group


1.0



1.2



(0.2
)


− 16.7
%Distribution Group


4.9



9.9



(5.0
)


− 50.5
%Total operating income

$
17.8


$
37.0


$
(19.2
)


− 51.9
%  22




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##### Table of Contents



Other Income (Expense).
  Interest Income and Interest Expense.
  Provision for Income Taxes.
  Nine
    Months Ended September 30, 2008 Compared To Nine Months
    Ended September 30, 2007
  Net Sales.
  Nine MonthsEndedSeptember 30,


$ Increase/


% Increase/(In millions except percents)

2008


2007


(Decrease)


(Decrease)Titanium Group

$
156.9


$
184.5


$
(27.6
)


− 15.0
%Fabrication Group


106.8



96.5



10.3



10.7
%Distribution Group


197.4



182.0



15.4



8.5
%Total consolidated net sales

$
461.1


$
463.0


$
(1.9
)


− 0.4
%  23




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##### Table of Contents



787-related
    Gross Profit.
  Nine MonthsEndedSeptember 30,


$ Increase/


% Increase/(In millions except percents)

2008


2007


(Decrease)


(Decrease)Titanium Group

$
76.1


$
83.4


$
(7.3
)


− 8.8
%Fabrication Group


23.8



23.1



0.7



3.0
%Distribution Group


38.5



46.1



(7.6
)


− 16.5
%Total consolidated gross profit

$
138.4


$
152.6


$
(14.2
)


− 9.3
%        24




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##### Table of Contents



Selling, General, and Administrative
    Expenses.
  Nine MonthsEndedSeptember 30,


$ Increase/


% Increase/(In millions except percents)

2008


2007


(Decrease)


(Decrease)Titanium Group

$
15.9


$
13.4


$
2.5



18.7
%Fabrication Group


20.4



18.4



2.0



10.9
%Distribution Group


18.5



17.8



0.7



3.9
%Total consolidated SG&A expenses

$
54.8


$
49.6


$
5.2



10.5
%     Research, Technical, and Product Development
    Expenses.
  Operating Income.
  Nine MonthsEndedSeptember 30,


$ Increase/


% Increase/(In millions except percents)

2008


2007


(Decrease)


(Decrease)Titanium Group

$
58.7


$
68.9


$
(10.2
)


− 14.8
%Fabrication Group


3.4



4.6



(1.2
)


− 26.1
%Distribution Group


19.9



28.3



(8.4
)


− 29.7
%Total operating income

$
82.0


$
101.8


$
(19.8
)


− 19.4
%        25




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##### Table of Contents



Other Expense.
  Interest Income and Interest Expense.
  Provision for Income Taxes.
  Liquidity
    and Capital Resources
       Cash provided by operating activities.
  Cash provided by (used in) investing
    activities.
 26




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##### Table of Contents



Cash provided by financing activities.
  Credit
    Agreements
      Duty
    Drawback Investigation
         27




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##### Table of Contents



Accounting for
    Contingencies
    Backlog
    New
    Accounting Standards
  Fair Value
    Measurements No. FAS 157-2, Effective Date of FASB Statement No. 157 FAS 157-2). FAS 157-2
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities-Including an amendment of FASB Statement
    No. 115 instrument-by-instrument
  Business Combinations
 28




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##### Table of Contents



Noncontrolling Interests in Consolidated Financial
    Statements  an amendment of ARB No. 51
  Disclosures about Derivative Instruments and Hedging
    Activities  an amendment of FASB Statement
    No. 133
  The
    Hierarchy of Generally Accepted Accounting Principles
  Item 3.
    Quantitative
    and Qualitative Disclosures about Market Risk.  Form 10-K
    Item 4.
    Controls
    and Procedures.  Rules 13a-15(e) 15d-15(e)
   29




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##### Table of Contents



PART II 
    OTHER INFORMATION  Item 1A.
    Risk
    Factors.  Form 10-K Form 10-K.
  We are
    subject to risks associated with global economic and political
    uncertainties
    and/or
  Item 2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds.      Item 6.
    Exhibits.   30




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##### Table of Contents



SIGNATURES        By
    /s/  William
    T. Hull   Senior Vice President and Chief Financial Officer
 31




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##### Table of Contents



INDEX TO
    EXHIBITS
  ExhibitNo.

Description10
.1

First Amended and Restated Credit Agreement dated
    September 8, 2008, incorporated by reference to
    Exhibit 10.1 to the Companys Current Report on
    Form 8-K
    filed September 11, 2008.10
.2

Second Credit Amending Agreement dated September 8, 2008
    incorporated by reference to Exhibit 10.2 to the
    Companys Current Report on
    Form 8-K
    filed September 11, 2008.31
.1

Certification of Chief Executive Officer required by
    Item 307 of
    Regulation S-K
    as promulgated by the Securities and Exchange Commission and
    pursuant to Section 302 of Sarbanes-Oxley Act of 2002,
    filed herewith.31
.2

Certification of Principal Financial Officer required by
    Item 307 of
    Regulation S-K
    as promulgated by the Securities and Exchange Commission and
    pursuant to Section 302 of Sarbanes-Oxley Act of 2002,
    filed herewith.32
.1

Certification of Chief Executive Officer Pursuant to
    18 U.S.C. Section 1350, as Adopted Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002, filed
    herewith.32
.2

Certification of Principal Financial Officer Pursuant to
    18 U.S.C. Section 1350, as Adopted Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002, filed
    herewith.  32