##### 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, 2006
   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

52-2115953(State or other jurisdiction of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)1000 Warren Avenue, Niles,
    Ohio

44446(Address of principal executive
    offices)

(Zip Code)   Registrants telephone number,
    including area code:
 (330) 544-7700
   Yes þ     No o
  Rule 12b-2
 þ o o
  Rule 12b-2
 Yes o     No þ




---



##### 



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

Financial
    Statements


2Consolidated
    Statements of Operations (Unaudited) for the Three and Nine
    Months Ended September 30, 2006 and 2005


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


3Consolidated
    Statements of Cash Flows (Unaudited) for the Nine Months Ended
    September 30, 2006 and 2005


4Consolidated
    Statement of Shareholders Equity (Unaudited) for the Nine
    Months Ended September 30, 2006


5Condensed Notes to
    Consolidated Financial Statements


6Item 2.

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


20Item 3.

Quantitative and
    Qualitative Disclosures About Market Risk


30Item 4.

Controls and
    Procedures


30PART IIOTHER
    INFORMATIONItem 1A.

Risk
    Factors


30Item 2.

Unregistered Sales
    of Equity Securities and Use of Proceeds


30Item 6.

Exhibits


30Signatures


31EX-10.1EX-10.2EX-31.1EX-31.2EX-32.1EX-32.2




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##### Table of Contents



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


Nine Months EndedSeptember 30,


September 30,2006


2005


2006


2005Net sales

$
128,855


$
80,324


$
361,601


$
247,056Cost and expenses:Cost of sales


81,112



53,681



242,442



170,249Selling, general and
    administrative expenses


13,262



12,714



43,394



34,103Research, technical and product
    development expenses


288



392



1,133



1,175Operating income


34,193



13,537



74,632



41,529Other (expense) income


(71
)


66



182



499Interest income, net


691



269



1,593



659Income from continuing operations
    before income taxes


34,813



13,872



76,407



42,687Provision for income taxes


11,766



5,246



27,491



15,133Income from continuing operations


23,047



8,626



48,916



27,554Income from discontinued
    operations, net of tax provision






36







87Net income

$
23,047


$
8,662


$
48,916


$
27,641Basic earnings per share:Continuing operations

$
1.02


$
0.38


$
2.16


$
1.24Discontinued operations














Net income

$
1.02


$
0.38


$
2.16


$
1.24Diluted earnings per share:Continuing operations

$
1.00


$
0.38


$
2.12


$
1.22Discontinued operations














Net income

$
1.00


$
0.38


$
2.12


$
1.22Weighted-average shares
    outstanding:Basic


22,689,413



22,526,194



22,628,874



22,251,556Diluted


23,017,546



22,944,670



23,036,645



22,692,283   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 SUBSIDIARIESConsolidated Balance Sheets(Unaudited)
    (In thousands, except share and per share amounts)
  September 30,


December 31,2006


2005ASSETSCurrent assets:Cash and cash equivalents

$
76,346


$
53,353Investments






2,410Receivables, less allowance for
    doubtful accounts of $2,358 and $1,604


75,958



54,212Inventories, net


237,535



223,394Deferred income taxes


3,804



3,778Other current assets


5,415



7,407Total current assets


399,058



344,554Property, plant and equipment, net


90,941



80,056Goodwill


49,129



48,646Other intangible assets, net


16,475



16,581Deferred income taxes


5,490



5,451Intangible pension asset


4,076



4,076Other noncurrent assets


955



2,387Total assets

$
566,124


$
501,751LIABILITIES AND
    SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
28,822


$
25,620Accrued wages and other employee
    costs


13,151



10,953Billings in excess of costs and
    estimated earnings


11,639



13,352Income taxes payable


6,476



3,367Deferred income taxes


3



3Other accrued liabilities


8,486



8,589Total current liabilities


68,577



61,884Accrued postretirement benefit cost


21,408



21,070Accrued pension cost


25,431



25,595Deferred income taxes


6,269



6,516Other noncurrent liabilities


6,805



7,034Total liabilities


128,490



122,099Shareholders equity:Common stock, $0.01 par
    value; 50,000,000 shares authorized; 23,330,193 and
    23,131,378 shares issued; 22,851,950 and
    22,687,306 shares outstanding


233



231Additional paid-in capital


284,693



278,690Deferred compensation






(3,078
)Treasury stock, at cost; 478,243
    and 444,072 shares


(5,285
)


(4,389
)Accumulated other comprehensive
    loss


(24,233
)


(25,112
)Retained earnings


182,226



133,310Total shareholders equity


437,634



379,652Total liabilities and
    shareholders equity

$
566,124


$
501,751   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 SUBSIDIARIESConsolidated Statements of Cash Flows(Unaudited)
    (In thousands)
  Nine Months EndedSeptember 30,2006


2005OPERATING
    ACTIVITIES:Net income

$
48,916


$
27,641Net income from discontinued
    operations






(87
)Net income from continuing
    operations


48,916



27,554Adjustment for non-cash items
    included in net income:Depreciation and amortization


10,596



9,739Stock-based compensation and other


3,668



881Excess tax benefits from
    stock-based compensation activity


(2,933
)


3,812Loss (gain) on sale of property,
    plant and equipment


95



(4
)Other


360



(590
)Changes in assets and liabilities:Receivables


(20,426
)


(10,001
)Inventories


(13,903
)


(75,166
)Accounts payable


2,198



11,067Deferred taxes and income taxes
    payable


6,122



(6,292
)Billings in excess of costs and
    estimated earnings


(1,695
)


7,593Other current liabilities


1,271



4,461Other assets and liabilities


3,186



(3,639
)Cash provided (used) by continuing
    operating activities


37,455



(30,585
)Cash provided by discontinued
    operating activities






79Cash provided (used) by operating
    activities


37,455



(30,506
)INVESTING
    ACTIVITIES:Acquisitions, net of cash
    acquired, and other investing






(290
)Proceeds from disposal of
    property, plant and equipment


102



5Proceeds from sale of investments


2,410



Capital expenditures


(20,935
)


(7,640
)Cash used by investing activities


(18,423
)


(7,925
)FINANCING
    ACTIVITIES:Proceeds from exercise of employee
    stock options


2,124



13,387Excess tax benefits from
    stock-based compensation activity


2,933



Purchase of common stock held in
    treasury


(896
)


(483
)Cash provided by financing
    activities


4,161



12,904Effect of exchange rate changes on
    cash and cash equivalents


(200
)


474Increase (decrease) in cash and
    cash equivalents


22,993



(25,053
)Cash and cash equivalents at
    beginning of period


53,353



62,701Cash and cash equivalents at end
    of period

$
76,346


$
37,648   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 SUBSIDIARIESConsolidated Statement of Shareholders
    Equity(Unaudited)
    (In thousands, except share amounts)
  Shares of

















OtherCommon





Additional











CompStock


Common


Paid-in


Deferred


Treasury


Retained


Income/





ComprehensiveOutstanding


Stock


Capital


Compensation


Stock


Earnings


(Loss)


Total


IncomeBalance at December 31, 2005


22,687,306


$
231


$
278,690


$
(3,078
)

$
(4,389
)

$
133,310


$
(25,112
)

$
379,652Shares issued for directors
    compensation


5,904



























Shares issued for restricted stock
    award plans


46,860



1























1Compensation expense recognized










3,668



















3,668Treasury Stock purchased at cost


(19,871
)














(896
)










(896
)Proceeds from exercise of employee
    options


146,051



1



2,123



















2,124Forfeiture of restricted stock
    awards


(14,300
)


























Tax benefits from stock-based
    compensation activity










3,290



















3,290SFAS 123R reclassification










(3,078
)


3,078















Net income






















48,916







48,916


$
48,916Adjustment to excess minimum
    pension liability(a)


























103



103



103Foreign currency translation


























776



776



776Comprehensive income

































$
49,795Balance at September 30, 2006


22,851,950


$
233


$
284,693


$



$
(5,285
)

$
182,226


$
(24,233
)

$
437,634     (a)
    
    Charge to minimum pension liability adjustment for the nine
    months ended September 30, 2006 is net of tax benefits of
    $64.  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:
    Note 3STOCK-BASED
    COMPENSATION:
  Accounting
    for Stock-Based Compensation
   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)
           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)
      Three Months Ended


Nine Months EndedSeptember 30, 2005


September 30, 2005Net income, as reported

$
8,662


$
27,641Add: Stock-based compensation
    expense included in reported net income, net of related tax
    effects


217



554Deduct: Total stock-based
    compensation expense determined under the fair value method for
    all awards, net of related tax effects


(367
)


(1,003
)Pro forma net income

$
8,512


$
27,192Earnings per share:Basic - as reported

$
0.38


$
1.24Basic - pro forma

$
0.38


$
1.22Diluted - as reported

$
0.38


$
1.22Diluted - pro forma

$
0.37


$
1.20       Stock
    Options and Restricted Stock Award Plans
   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)
        2006


2005Risk-free interest rate


4.37
%


4.00
%Expected dividend yield


0.00
%


0.00
%Expected lives (in years)


5.0



6.0Expected volatility


40.00
%


45.00
%     Weighted-Weighted-


AverageAverage


Remaining


AggregateExercise


Contractual


IntrinsicStock Options

Shares


Price


Term (Years)


ValueOutstanding at December 31,
    2005


601,969


$
15.04Granted


71,300



45.09Forfeited


(11,189
)


22.43Expired


(2,599
)


12.36Exercised


(146,051
)


14.54Outstanding at September 30,
    2006


513,430


$
19.25



6.50


$
12,493Exercisable at September 30,
    2006


330,187


$
13.84



5.43


$
9,821  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)
        Weighted-AverageGrant-DateFair ValueNonvested Restricted Stock Awards

Shares


per ShareNonvested at December 31, 2005


199,636


$
16.49Granted


52,764



46.91Vested


(77,246
)


16.38Forfeited


(14,300
)


17.15Nonvested at September 30,
    2006


160,854



26.46     SFAS 123R-3
  Note 4INCOME
    TAXES:
   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 5EARNINGS
    PER SHARE:
   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)
    Three Months EndedSeptember 30,


Nine Months Ended September 30,2006


2005


2006


2005Numerator:Income from continuing operations

$
23,047


$
8,626


$
48,916


$
27,554Income from discontinued
    operations, net of tax provision






36







87Net income

$
23,047


$
8,662


$
48,916


$
27,641Denominator:Basic weighted-average shares
    outstanding


22,689,413



22,526,194



22,628,874



22,251,556Effect of diluted securities


328,133



418,476



407,771



440,727Diluted weighted-average shares
    outstanding


23,017,546



22,944,670



23,036,645



22,692,283Basic earnings per share:Continuing operations

$
1.02


$
0.38


$
2.16


$
1.24Discontinued operations














Net income

$
1.02


$
0.38


$
2.16


$
1.24Diluted earnings per share:Continuing operations

$
1.00


$
0.38


$
2.12


$
1.22Discontinued operations














Net income

$
1.00


$
0.38


$
2.12


$
1.22       Note 6INVENTORIES:
  last-in, first-in,
 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)
  lower-of-cost-or-market
  September 30,


December 31,2006


2005Raw materials and supplies

$
72,387


$
66,533Work-in-process
    and finished goods


211,053



195,870Less: LIFO reserve


(45,905
)


(39,009
)Inventories, net

$
237,535


$
223,394   Note 7GOODWILL
    AND OTHER INTANGIBLE ASSETS:
    Goodwill
    TranslationDecember 31, 2005


Adjustment


September 30, 2006Titanium Group

$
2,591


$



$
2,591Fabrication &
    Distribution Group


46,055



483



46,538Total goodwill

$
48,646


$
483


$
49,129   Intangibles
      December 31,





Translation


September 30,2005


Amortization


Adjustment


2006Titanium Group

$



$



$



$
Fabrication &
    Distribution Group


16,581



(603
)


497



16,475Total intangible assets

$
16,581


$
(603
)

$
497


$
16,475  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 8BILLINGS
    IN EXCESS OF COSTS AND ESTIMATED EARNINGS:
    Note 9OTHER
    (EXPENSE) INCOME:
    Note 10EMPLOYEE
    BENEFIT PLANS:
        out-of-pocket
    Pension Benefits


Other Postretirement BenefitsThree Months


Nine Months


Three Months


Nine MonthsEnded


Ended


Ended


EndedSeptember 30,


September 30,


September 30,


September 30,2006


2005


2006


2005


2006


2005


2006


2005Service cost

$
509


$
550


$
1,527


$
1,650


$
112


$
96


$
336


$
288Interest cost


1,619



1,592



4,857



4,776



397



410



1,192



1,230Expected return on plan assets


(2,014
)


(1,922
)


(6,043
)


(5,766
)














Amortization of prior service cost


208



160



624



480



44



44



131



132Amortization of unrealized gains
    and losses


621



510



1,863



1,530



96



93



289



279Net periodic benefit cost

$
943


$
890


$
2,828


$
2,670


$
649


$
643


$
1,948


$
1,929  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)
  Note 11COMMITMENTS
    AND CONTINGENCIES:
    Environmental
    Matters
            Active Investigative or Cleanup Sites.
  Ashtabula River.
 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)
    Former Ashtabula Extrusion Plant.
  Reserve Environmental Services Landfill.
  Other
    Legal Matters
    Note 12LONG-TERM
    DEBT:
       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)
    Note 13SEGMENT
    REPORTING:
      cut-to-size just-in-time
   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)
    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2006


2005


2006


2005Net sales:Titanium Group

$
53,853


$
30,155


$
154,040


$
92,978Intersegment sales


40,789



23,296



105,647



66,346Total Titanium Group net sales


94,642



53,451



259,687



159,324Fabrication &
    Distribution Group


75,002



50,169



207,561



154,078Intersegment sales


1,290



1,714



4,600



3,754Total Fabrication &
    Distribution Group net sales


76,292



51,883



212,161



157,832Eliminations


42,079



25,010



110,247



70,100Total consolidated net sales

$
128,855


$
80,324


$
361,601


$
247,056Operating income:Titanium Group before corporate
    allocations

$
26,066


$
13,292


$
59,714


$
34,829Corporate allocations


(1,657
)


(2,372
)


(6,474
)


(5,153
)Total Titanium Group operating
    income


24,409



10,920



53,240



29,676Fabrication &
    Distribution Group before corporate allocations


13,507



6,399



33,883



21,765Corporate allocations


(3,723
)


(3,782
)


(12,491
)


(9,912
)Total Fabrication &
    Distribution Group operating income


9,784



2,617



21,392



11,853Total consolidated operating income

$
34,193


$
13,537


$
74,632


$
41,529Income from continuing
    operations before income taxes:Titanium Group

$
24,809


$
11,070


$
54,235


$
30,284Fabrication &
    Distribution Group


10,004



2,802



22,172



12,403Total consolidated income from
    continuing operations before income taxes

$
34,813


$
13,872


$
76,407


$
42,687   September 30,


December 31,2006


2005Assets:Titanium Group

$
228,642


$
230,477Fabrication &
    Distribution Group


270,946



231,658General corporate assets


66,536



39,616Total consolidated assets

$
566,124


$
501,751  18




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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 14DISCONTINUED
    OPERATIONS:
      Three Months Ended


Nine Months EndedSeptember 30, 2005


September 30, 2005Net sales

$
843


$
2,638Income before income taxes


58



140Provision for income taxes


(22
)


(53
)Net income from discontinued
    operations

$
36


$
87   Note 15NEW
    ACCOUNTING STANDARDS:
         19




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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 aerospace
    industries,
    increased defense spending,
    the success of new market development,
    long-term supply agreements,
    legislative challenges to the Specialty Metals Clause of the
    Berry Amendment,
    global economic activities,
    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.    Overview
      Discontinued
    Operations
   20




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##### Table of Contents



Results
    of Operations
    Three
    Months Ended September 30, 2006 Compared To Three Months
    Ended September 30, 2005
  Net Sales.
  Three Months EndedSeptember 30,


$ Increase/


% Increase/(In millions)

2006


2005


(Decrease)


(Decrease)Titanium Group

$
53.9


$
30.1


$
23.8



79.1
%Fabrication &
    Distribution Group


75.0



50.2



24.8



49.4
%Total consolidated net sales

$
128.9


$
80.3


$
48.6



60.5
%       Gross Profit.
  Three Months EndedSeptember 30,


$ Increase/


% Increase/(In millions)

2006


2005


(Decrease)


(Decrease)Titanium Group

$
28.1


$
14.5


$
13.6



93.8
%Fabrication &
    Distribution Group


19.6



12.1



7.5



62.0
%Total consolidated gross profit

$
47.7


$
26.6


$
21.1



79.3
%      21




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##### Table of Contents



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


$ Increase/


% Increase/(In millions)

2006


2005


(Decrease)


(Decrease)Titanium Group

$
3.4


$
3.3


$
0.1



3.0
%Fabrication &
    Distribution Group


9.9



9.4



0.5



5.3
%Total consolidated SG&A
    expenses

$
13.3


$
12.7


$
0.6



4.7
%     Research, Technical and Product Development
    Expenses.
  Operating Income.
  Three Months EndedSeptember 30,


$ Increase/


% Increase/(In millions)

2006


2005


(Decrease)


(Decrease)Titanium Group

$
24.4


$
10.9


$
13.5



123.9
%Fabrication &
    Distribution Group


9.8



2.6



7.2



276.9
%Total operating income

$
34.2


$
13.5


$
20.7



153.3
%       Other (Expense) Income.
  Interest Income, net.
  Income Tax Expense.
  Income from Discontinued Operations.
 22




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##### Table of Contents



Nine
    Months Ended September 30, 2006 Compared To Nine Months
    Ended September 30, 2005
  Net Sales.
  Nine MonthsEndedSeptember 30,


$ Increase/


% Increase/(In millions)

2006


2005


(Decrease)


(Decrease)Titanium Group

$
154.0


$
93.0


$
61.0



65.6
%Fabrication &
    Distribution Group


207.6



154.1



53.5



34.7
%Total consolidated net sales

$
361.6


$
247.1


$
114.5



46.3
%       Gross Profit.
  Nine Months EndedSeptember 30,


$ Increase/


% Increase/(In millions)

2006


2005


(Decrease)


(Decrease)Titanium Group

$
65.8


$
39.0


$
26.8



68.7
%Fabrication &
    Distribution Group


53.4



37.8



15.6



41.3
%Total consolidated gross profit

$
119.2


$
76.8


$
42.4



55.2
%       Selling, General and Administrative
    Expenses.
  Nine Months EndedSeptember 30,


$ Increase/


% Increase/(In millions)

2006


2005


(Decrease)


(Decrease)Titanium Group

$
11.4


$
8.2


$
3.2



39.0
%Fabrication &
    Distribution Group


32.0



25.9



6.1



23.6
%Total consolidated SG&A expense

$
43.4


$
34.1


$
9.3



27.3
%    23




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##### Table of Contents



Research, Technical and Product Development
    Expenses.
  Operating Income.
  Nine Months EndedSeptember 30,


$ Increase/


% Increase/(In millions)

2006


2005


(Decrease)


(Decrease)Titanium Group

$
53.2


$
29.7


$
23.5



79.1
%Fabrication &
    Distribution Group


21.4



11.8



9.6



81.4
%Total operating income

$
74.6


$
41.5


$
33.1



79.8
%       Other (Expense) Income.
  Interest Income, net.
  Income Tax Expense.
  Income from Discontinued Operations.
  Outlook
   24




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##### Table of Contents



10-year A-380 A-350
        Backlog.
  Liquidity
    and Capital Resources
      Cash provided (used) by operating
    activities.
 25




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##### Table of Contents



Cash used by investing activities.
  Cash provided by financing activities.
  Commercial
    Commitments
  Form 10-K:
  Commercial CommitmentsAmount of Commitment Expiration per Period(In thousands)

2006


2007


2008


2009


2010


Thereafter


TotalLong-term supply agreements(1)

$
20,629


$
121,015


$
22,011


$
22,011


$
22,011


$
44,022


$
251,699Purchase obligations(2)


13,262



11,095



















24,357Standby letters of credit(3)






165



1,155















1,320Total commercial commitments

$
33,891


$
132,275


$
23,166


$
22,011


$
22,011


$
44,022


$
277,376     (1)
    
    Amounts represent commitments for which contractual terms exceed
    twelve months.(2)
    
    Amounts primarily represent purchase commitments under purchase
    orders.(3)
    
    Amounts represent standby letters of credit primarily related to
    commercial performance and insurance guarantees.  Credit
    Agreement
       26




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##### Table of Contents



Environmental
    Matters
            Active Investigative or Cleanup Sites.
  Ashtabula River.
  Former Ashtabula Extrusion Plant.
 27




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##### Table of Contents



Reserve Environmental Services Landfill.
  New
    Accounting Standards
         28




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##### Table of Contents



29




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##### Table of Contents



Item 3.
    Quantitative
    and Qualitative Disclosures about Market Risk.  Form 10-K,
         Item 4.
    Controls
    and Procedures.      PART II 
    OTHER INFORMATION   Item 1A.
    Risk
    Factors.  Form 10-K Form 10-K,
  The
    ability to successfully expand our operations in a timely and
    cost effective manner
     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    Vice President and Chief Accounting Officer
 31




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##### Table of Contents



INDEX TO
    EXHIBITS  ExhibitNo.

Description10
.1

Offer of loan by and among
    RTI-Claro, Inc., as borrower and Investissement Quebec, dated
    August 3, 2006, filed herewith.10
.2

Second Amendment to Revolving
    Credit and Letter of Credit Issuance Agreement by and among RTI
    International Metals, Inc., as borrower and PNC Bank, National
    Association as administrative agent; National City Bank of
    Pennsylvania and Comerica Bank as documentation co-agents, dated
    July 25, 2006, filed herewith.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 200231
.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 200232
.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 200232
.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  32