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                                                                [CONFORMED COPY]
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                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D. C. 20549
 
                                   FORM 10-K
(MARK ONE)
 
[X]   Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
      Act of 1934 [fee required] 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 [no fee required] for the transition period from
                           to
     ---------------------    ---------------------
 
                        COMMISSION FILE NUMBER 001-14437
 
                         RTI INTERNATIONAL METALS, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
<TABLE>
<S>                                               <C>
                      OHIO                                        52-2115953
            (State of Incorporation)                 (I.R.S. Employer Identification No.)
 
        1000 WARREN AVENUE, NILES, OHIO                             44446
    (Address of principal executive offices)                      (Zip code)
</TABLE>
 
        REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 330-544-7700
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
 
<TABLE>
<CAPTION>
              TITLE OF EACH CLASS                 NAME OF EACH EXCHANGE ON WHICH REGISTERED
              -------------------                 -----------------------------------------
<S>                                               <C>
    Common Stock, Par Value $0.01 Per Share               New York Stock Exchange
</TABLE>
 
        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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes  X   No 
                                               ---     ---
 
     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  X
           ---
 
     Aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 1 1999: $93,593,845. The amount shown is based on the
closing price of the registrant's common stock on the New York Stock Exchange on
that date. Shares of common stock known by the registrant to be beneficially
owned by officers or directors of the registrant or persons who have filed a
report on Schedule 13D or 13G are not included in the computation. The
registrant, however, has made no determination that such persons are
"affiliates" within the meaning of Rule 12b-2 under the Securities Exchange Act
of 1934.
 
     Number of shares of common stock outstanding at March 1, 1999: 20,721,508.
 
                      DOCUMENTS INCORPORATED BY REFERENCE:
 
     Selected Portions of the 1999 Proxy Statement-Part III of this Report.
 
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<PAGE>   2
 
                         RTI INTERNATIONAL METALS, INC.
                         AND CONSOLIDATED SUBSIDIARIES
 
     As used in this report, the terms "RTI", "Company", and "Registrant" mean
RTI International Metals, Inc., its predecessors and consolidated subsidiaries,
taken as a whole, unless the context indicates otherwise.
 
                            ------------------------
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                          PAGE
                                                                          ----
<S>         <C>                                                           <C>
                                 PART I
Item 1.     Business....................................................    1
Item 2.     Properties..................................................   10
Item 3.     Legal Proceedings...........................................   10
Item 4.     Submission of Matters to a Vote of Security Holders.........   12
 
                                PART II
Item 5.     Market for the Registrant's Common Stock and Related
            Stockholder Matters.........................................   13
Item 6.     Selected Financial Data.....................................   14
Item 7.     Management's Discussion and Analysis of Financial Condition
            and Results of Operations...................................   14
Item 7(a).  Quantitative and Qualitative Disclosures About Market
            Risk........................................................   23
Item 8.     Financial Statements and Supplementary Data.................   23
Item 9.     Changes in and Disagreements with Accountants on Accounting
            and Financial Disclosure....................................   42
 
                                PART III
Item 10.    Directors and Executive Officers of the Registrant..........   43
Item 11.    Executive Compensation......................................   43
Item 12.    Security Ownership of Certain Beneficial Owners and
            Management..................................................   43
Item 13.    Certain Relationships and Related Transactions..............   43
 
                                PART IV
Item 14.    Exhibits, Financial Statement Schedules and Reports on Form
            8-K.........................................................   43
Signatures..............................................................   44
Index to Exhibits.......................................................   45
</TABLE>
<PAGE>   3
 
                                     PART I
 
ITEM 1. BUSINESS
 
THE COMPANY
 
     RTI International Metals, Inc. is a leading U.S. producer of titanium mill
and fabricated-metal products for the global market. The Company is currently
structured in two operating groups, the Titanium Group and the Fabrication and
Distribution Group. The Titanium Group's mill products are processed by RTI's
customers to provide products for use in the aerospace industry and industrial
markets. The Fabrication and Distribution Group's products are used primarily in
the aerospace, oil and gas, geothermal energy production and chemical process
industries as well as for a number of other industrial applications. This Group
also provides fabrication, extrusion and conversion services for titanium and
other specialty metals producers, and operates a number of distribution centers,
specializing in high temperature and corrosion resistant alloys including
titanium, stainless steel and nickel based products.
 
     On September 30, 1998, the shareholders of the Company's now wholly-owned
subsidiary RMI Titanium Company ("RMI") approved a proposal to reorganize into a
holding company structure (the "1998 Reorganization"). Pursuant to this
reorganization, the Company became the parent company of RMI Titanium, and
shares of RMI Common Stock were automatically exchanged on a one-for-one (1:1)
basis for shares of the Company. Shares of RTI began trading on the New York
Stock Exchange on October 1, 1998.
 
     The Company is a successor to entities that have been operating in the
titanium industry since 1958. In 1990, USX and Quantum Chemical Corporation
("Quantum") transferred their entire ownership interest in RMI's immediate
predecessor, RMI Company, an Ohio general partnership, to the Company in
exchange for shares of Common Stock (the "1990 Reorganization"). Quantum sold
its shares of Common Stock to the public while USX retained ownership of its
shares. At December 31, 1998, USX owned approximately 27% of the Company's
outstanding Common Stock.
 
     In November, 1996, USX Corporation completed a public offering of its notes
which are exchangeable in February, 2000, for 5,483,600 shares of RTI Common
Stock owned by USX (or for an equivalent amount of cash at USX's option). Such
shares represent all of the RTI Common Stock owned by USX.
 
     On October 1, 1998, RTI acquired all of the capital stock of New Century
Metals ("NCM") of Solon, Ohio. NCM is a manufacturer and distributor of high
temperature and corrosion resistant alloys such as titanium, stainless steel and
nickel, in long bar form, to the aerospace, chemical processing, oil exploration
and production, and power generation industries. In addition to manufacturing
facilities NCM operates five distribution centers. Also on October 1, 1998, RTI
acquired the assets of Weld-Tech Engineering, L.P. ("Weld-Tech"). Weld-Tech,
based in Houston, Texas will operate under the name Weld-Tech Engineering
Services, L.P. Weld-Tech provides engineering and fabrication services for the
oil and gas industry, including weld design, fabrication and repair as well as
materials engineering and testing services.
 
     On July 3, 1997, the Company acquired 90% of the common stock of Galt
Alloys, Inc., a manufacturer of ferro titanium and a producer and worldwide
distributor of specialty alloys to ferrous and nonferrous customers.
 
INDUSTRY OVERVIEW
 
     Titanium is one of the newest specialty metals. Its physical
characteristics include high strength-to-weight ratio, high temperature
performance and superior corrosion and erosion resistance. The first major
commercial application of titanium occurred in the early 1950's when it was used
as a component in aircraft gas turbine engines. Subsequent applications were
developed to use the material in other aerospace component parts and in airframe
construction. Historically, a majority of the U.S. titanium industry's output
has been used in aerospace applications. However, significant quantities of the
industry's output is used in nonaerospace applications, such as oil and gas,
geothermal energy production, chemical process industries and armor plate for
military applications.
 
     Aerospace demand originates from two aerospace sectors: commercial and
military. Since the late 1980's, commercial aerospace has been the dominant
factor in titanium demand. The commercial aerospace sector is
 
                                        1
<PAGE>   4
 
expected to continue to dominate the demand for titanium as a result of the
expected growth of worldwide airline traffic and the need to repair and replace
aging commercial airline fleets and reduced military aerospace spending.
 
     Historically, the cyclical nature of the aerospace industry has been the
principal cause of the fluctuations in performance of companies engaged in the
titanium industry. Over the past 20 years, U.S. titanium mill product shipments
registered cyclical peaks of 62 million pounds in 1997 to a low of 32 million
pounds in 1983.
 
     In the last several years, commercial aerospace markets have shown dramatic
increases in demand while military aerospace markets have stabilized at
historically reduced build rate levels. During this period, most major U.S.
commercial airline carriers have reported strong operating profits and,
beginning in the second half of 1995 and continuing into early 1998, aircraft
manufacturers significantly increased their build rates. Because of the Asian
financial crisis, production difficulties at its manufacturing facilities and
uncertain global economic conditions which may affect the demand for commercial
aircraft, Boeing Commercial Airplane Group has recently made a number of
announcements reducing its forecasted production rates on a number of aircraft
models in the 1999-2000 time frame. Other aerospace contractors have announced
delivery delays and rescheduling resulting from the Boeing announcements and,
therefore, have a need to adjust inventory requirements downward from peak
levels. The slowing in the growth of commercial aircraft build rates will impact
the overall demand for titanium mill products for at least the next two to three
quarters. Based on currently available information, the Company anticipates that
U.S. titanium industry's total shipments will decrease in 1999 from 1998 levels
of approximately 58 million pounds, although the amount of decrease cannot be
accurately predicted. If worldwide economic conditions cause commercial airlines
to cancel or delay aircraft, titanium demand and pricing could come under
further pressure. Current oil and gas prices are expected to reduce demand for
the Company's products used in the oil and gas markets. However, deep water,
offshore exploration projects, where most of the Company's efforts are
concentrated, are expected to remain active.
 
PRODUCTS AND MARKETS
 
     The Company's products are produced and marketed by two groups.
 
     The Titanium Group's products consist primarily of titanium mill products
and specialty alloys for use in the ferrous and nonferrous metals industries.
Titanium mill products consist of basic mill shapes such as ingot, slab, bloom,
billet, bar, sheet, plate, strip and welded tube. These products are sold to a
customer base consisting primarily of manufacturing and fabrication companies in
the aerospace and nonaerospace markets such as prime aircraft manufacturers and
subcontractors including metal fabricators, forge shops, machine shops and metal
distribution companies. Titanium mill products are semi-finished goods and most
often represent the raw or starting material for these customers, who then form,
fabricate, machine or further process them into finished or semi-finished parts.
This Group also manufactures titanium powders and, through Galt Alloys, Inc.,
specialty alloys used by the ferrous and nonferrous metal industries. Galt also
processes, consolidates and melts titanium scrap which is used in the Company's
titanium mill product melting facilities. In addition, this Group administers
and acts, through its Environmental Services Division, as prime contractor for
the U.S. Department of Energy ("DOE") for the remediation and restoration of the
Company's closed facilities located in Ashtabula, Ohio.
 
     The Fabrication and Distribution Group consists primarily of businesses
engaged in the fabrication and distribution of titanium and other ferrous and
nonferrous metals such as stainless steel and nickel based alloys. Fabricated
products include pipe, engineered tubular products, hot-formed and
superplastically formed parts, cut shapes, and various specialized cut-to-size
programs. New Century Metals, Inc., extrudes numerous shapes and sizes of
specialty metals for use in the aerospace and nonaerospace applications.
Weld-Tech Engineering Services, L.P. fabricates oil and gas components such as
production manifolds and riser systems which are used in offshore oil and gas
production. RTI Energy Systems, Inc., designs and markets offshore riser
systems, stress joints and drill pipe. This Group also operates a number of
metal distribution facilities, both foreign and domestic, which stock and
deliver cut-to-size titanium products, as well as other nonferrous and ferrous
metals.
 
                                        2
<PAGE>   5
 
     The amount of sales and the Company's consolidated percentage of
consolidated sales represented by each Group during each of the years beginning
in 1996 was as follows (dollars in millions):
 
<TABLE>
<CAPTION>
                                                        1998          1997(2)         1996(2)
                                                    ------------    ------------    ------------
                                                      $       %       $       %       $       %
<S>                                                 <C>      <C>    <C>      <C>    <C>      <C>
Titanium Group....................................  $229.2    68%   $243.9    77%   $206.1    82%
 
Fabrication and Distribution Group................    91.6    27      61.4    19      34.8    14
 
Other (1).........................................    16.7     5      13.2     4      10.5     4
                                                    ------   ---    ------   ---    ------   ---
     Total........................................  $337.5   100%   $318.5   100%   $251.4   100%
                                                    ======   ===    ======   ===    ======   ===
</TABLE>
 
---------------
 
(1) Includes DOE remediation and restoration contract which is managed as part
    of the Titanium Group.
 
(2) Certain prior year amounts have been reclassified to reflect current
    business segments.
 
     Operating profits and the percentage of consolidated operating profit
contributed by each Group during each of the years beginning in 1996 was as
follows (dollars in millions):
 
<TABLE>
<CAPTION>
                                                          1998           1997           1996
                                                       -----------    -----------    -----------
                                                         $      %       $      %       $      %
<S>                                                    <C>     <C>    <C>     <C>    <C>     <C>
Titanium Group.......................................  $59.8    88%   $53.5    95%   $30.2    89%
 
Fabrication and Distribution Group...................    7.4    11      2.5     4      3.1    10
 
Other (1)............................................    0.8     1      0.3     1      0.4     1
                                                       -----   ---    -----   ---    -----   ---
     Total...........................................  $68.0   100%   $56.3   100%   $33.7   100%
                                                       =====   ===    =====   ===    =====   ===
</TABLE>
 
---------------
 
(1) Includes DOE remediation and restoration contract which is managed as part
    of the Titanium Group.
 
     The amount of the Company's consolidated assets identified with each Group
for each of the years ended December 31 were as follows (dollars in millions):
 
<TABLE>
<CAPTION>
                                                            1998          1997          1996
                                                           ------        ------        ------
<S>                                                        <C>           <C>           <C>
Titanium Group...........................................  $253.4        $212.8        $184.1
 
Fabrication and Distribution Group.......................   116.8          36.0          19.3
 
Other (1)................................................     0.2           0.4           0.3
 
General Corporate (2)....................................    25.6          42.1          12.1
                                                           ------        ------        ------
     Total...............................................  $396.0        $291.3        $215.9
                                                           ======        ======        ======
</TABLE>
 
---------------
 
(1) Includes DOE remediation and restoration contract which is managed as part
    of the Titanium Group.
 
(2) Consists primarily of unallocated cash, short-term investments and deferred
    tax assets.
 
  TITANIUM GROUP
 
     The Company produces a full range of titanium mill products which are used
in both the aerospace and nonaerospace markets.
 
     Aerospace Business. Approximately 86% of the Company's 1998 mill product
sales were aerospace related compared with approximately 83% in 1997 and 78% in
1996. The Company's products are certified and approved for use by all major
domestic and most international manufacturers of commercial and military
aircraft and jet engines. Products such as sheet, plate, strip, bar, billet and
ingot, are utilized in aircraft bulkheads, tail sections, wing support and
carry-through structures and various engine components including rotor blades,
vanes, discs, rings and engine cases.
                                        3
<PAGE>   6
 
     As of December 31, 1998, the leading manufacturers of commercial aircraft,
Boeing Company, (including the former McDonnell Douglas Corporation which was
acquired by Boeing in 1997), and Airbus Industrie, reported an aggregate of
3,095 planes under firm order and deliverable over the next five years. The
comparable backlogs as of December 31, 1997 and 1996 were 2,753 planes, and
2,370 planes, respectively. Included in the backlog for December 31, 1998 are
251 firm orders for the new Boeing 777 wide-body aircraft, which requires more
titanium than any other commercial aircraft. Deliveries of commercial aircraft
by these three manufacturers totaled 790 in 1998, 557 in 1997, and 345 in 1996.
Because it typically takes from 12 to 18 months from placement of an order until
delivery of a commercial aircraft, realized delivery rates generally lag behind
announced backlog estimates. In addition, changing economic conditions and
instability in the domestic and international commercial airline industry has
caused manufacturers to re-evaluate aircraft orders and options, thus affecting
realized aircraft delivery rates. Recent announcements by Boeing regarding
reductions in its forecasted production rates in the 1999-2000 time frame has
resulted in some industry wide rescheduling and delays resulting in a need to
adjust inventory levels downward from peak levels. This slowing of build rates
will impact the overall demand for titanium products in the near term. However,
the Company expects that increased military spending will increase military
aerospace demand.
 
     Nonaerospace. Principal nonaerospace mill products include commercially
pure (unalloyed) strip, welded tube and plate used for chemical processing and
pulp and paper equipment. Bar is sold for the production of medical implants and
high-performance automotive engine parts. The Company is also a supplier of
commercially pure titanium plate and strip, which offers superior corrosion
resistance and ductility for critical forming and metal expansion required in
applications such as heat exchangers and anodes for the chlorine industry.
Nonaerospace sales accounted for 14% of the Company's mill product sales in
1998, 17% in 1997 and 22% in 1996. Since the Company's entry into strip
production in 1984 and tube production in 1986, sales of these two products have
grown to a majority of the Company's total nonaerospace mill product sales.
 
     In July 1997, the Company acquired 90% of the common stock of Galt Alloys,
Inc., a manufacturer of ferro titanium and a producer and worldwide distributor
of a specialty alloys to ferrous and nonferrous customers. In connection with
this transaction, Galt undertook a major expansion program designed to enable
Galt to better serve the titanium industry and its customers.
 
     Other. The Company has a long-term agreement with the DOE covering the
remediation and restoration of the Company's closed facilities in Ashtabula,
Ohio, for which the DOE is responsible as a result of work performed there by
the Company for the U.S. government. The Company is serving as the prime
contractor during the remediation and restoration period. Year-to-year revenues
and the time of completion of the project will depend on DOE funding. In 1998,
the Company recognized $16.7 million in such revenues compared to $13.2 million
in 1997 and $10.5 million in 1996. As the prime contractor, the Company provides
management services necessary to complete assessment, clean-up and remediation
activities.
 
  FABRICATION AND DISTRIBUTION GROUP
 
     Fabricated products include pipe, engineered tubular products for the oil
and gas and geothermal energy production industries, hot-formed and
superplastically formed parts and cut shapes for aerospace applications.
 
     The Company owns and operates a number of distribution facilities, both
foreign and domestic. These centers stock titanium as well as other nonferrous
and ferrous metals to fill customer needs for smaller quantity, quick delivery
orders. These centers also provide cutting and light fabrication services. Two
locations, one in St. Louis, Missouri, and the other in Birmingham, England
operate stocking and cut-to-size programs designed to meet the needs of
aerospace customers.
 
     In an effort to expand the fabrication and distribution business, the
Company made two strategic acquisitions during the fourth quarter of 1998. On
October 1, RTI acquired New Century Metals, Inc. ("NCM") of Solon, Ohio. NCM
manufactures and distributes high temperature and corrosion resistant alloys
such as titanium, stainless steel and nickel to the aerospace, chemical
processing, oil exploration and production, and power distribution industries.
NCM also operates five distribution facilities. Additionally, in order to
enhance and further expand its already significant efforts to develop new
markets for titanium in the oil, gas and geothermal energy production
industries, RTI acquired the assets of Weld-Tech Engineering Services, L.P.
("Weld-Tech") of Houston, Texas on October 1, 1998. Weld-Tech provides
engineering and fabrication services to the oil and gas
                                        4
<PAGE>   7
 
industry, including weld design, fabrication and repair, as well as materials
engineering and testing services. RTI plans to increase its investment in
Weld-Tech with the addition of a heat treatment facility, machining center and a
corrosion protection coating facility. These additions will result in improved
capabilities and provide complete fabrication services to Weld-Tech's expanding
customer base in titanium and other specialty metals, as well as various steels.
 
     The acquisition and planned expansion of Weld-Tech displays a further
commitment to increase the use of titanium in the oil and gas industry. Another
newly formed subsidiary, RTI Energy Systems, Inc., also serves the oil and gas
markets. RTI Energy Systems specializes in the design, engineering and marketing
of offshore riser systems, connectors, stress joints and drill pipe from
titanium and other metals.
 
     The Company continues to work closely with a number of oil companies and
engineering concerns to develop other titanium projects or applications in the
oil and gas and geothermal energy production industries. RTI has entered into
several cooperative ventures to market, engineer, fabricate and install titanium
production risers, flow lines and other titanium subsea systems.
 
     RTI has entered into a Joint Industry Project ("JIP") with a number of
significant companies in the oil and gas field including Mobil, Oryx Energy,
Statoil, SagaPetroleum and NorskAgip for the purpose of identifying potential
applications where titanium, either alone or in combination with other
materials, can provide a cost effective, lightweight solution to competing
materials in offshore oil and gas applications, such as production and export
riser systems.
 
EXPORTS
 
     The majority of the Company's exports consist of titanium mill products
used in aerospace markets. Other exports include slab, commercially pure strip,
plate and welded tubing used in nonaerospace markets. The Company's export sales
were 21% of sales in 1998, 19% in 1997 and 17% of sales in 1996. Such sales were
made primarily to the European market, where the Company believes it is a leader
in supplying alloy flat-rolled titanium mill products. Most of the Company's
export sales are made in U.S. dollars, which minimizes exposure to foreign
currency fluctuations.
 
     As a leading supplier of alloy flat-rolled titanium mill products to the
European market, the Company has worked through its distributors to secure
contracts to furnish mill products to the major European aerospace
manufacturers. As a result, the Company has significant export sales to
customers in France, the United Kingdom and Germany. In order to enhance its
presence in the European market, in 1992 the Company acquired a 40% ownership
interest in its French distributor, Reamet, SA. In addition, the Company has
expanded its operations in the United Kingdom to include a distribution and
service center facility in Birmingham, England. Operations at the facility
commenced during the second quarter of 1995, and have exhibited steady growth
since that time. In 1996, the Company became a qualified supplier to Rolls Royce
Plc and has received orders to supply material from the Birmingham facility for
use in fan blades and other critical rotating parts in Rolls Royce's family of
jet engines. In January, 1998 RMI, through its French affiliate, Reamet, SA.,
was chosen by Aerospatiale as a major supplier of the titanium flat rolled
products required for its Airbus programs beginning in 1999 and extending
through 2001.
 
BACKLOG
 
     For a discussion of order backlog, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
 
RAW MATERIALS
 
     The principal raw materials used in the production of titanium mill
products are titanium sponge, a porous metallic material; titanium scrap; and
alloying agents. RTI acquires its raw materials from a number of suppliers, both
domestic and foreign, under long-term contracts and other negotiated
transactions. The Company purchased approximately 19 million pounds of titanium
sponge in 1998 and approximately 20 million pounds of titanium sponge in 1997.
Based on current levels of customer demand, current production schedules, and
the level of inventory on hand, the Company broadly estimates its 1999 sponge
purchases will approximate 9-10 million
 
                                        5
<PAGE>   8
 
pounds. Requirements for sponge vary based upon product mix and the level of
scrap usage. The completion of the Galt Alloys, Inc. expansion program referred
to below will permit the Company to consume significantly more scrap in its
primary melting facility, thus reducing the need for titanium sponge.
 
     Following the closure of its sponge production facilities in 1992, the
Company began purchasing its titanium sponge from outside sources. The Company
has entered into two long-term sponge supply arrangements, each with pricing
below the cost of sponge which was produced at the Company's own facilities
prior to their closure. In addition, the Company has supplemented its metal
requirements with additional sponge and raw material purchases, including
titanium scrap, from other U.S. and foreign suppliers.
 
     One of the sponge contracts, which is with a competing producer of mill
products, permits the Company to purchase up to seven million pounds per year at
negotiated price levels in 1999, depending on the volume of sponge purchased,
and thereafter through 2003 at the Company's option at either market price (but
not below the supplier's cost) or the price in effect under the contract plus
adjustments for changes in certain of the supplier's costs, such as labor,
electricity and raw materials. The other contract, which is with a Japanese
supplier, permits the Company to purchase up to four million pounds of sponge
per year through 2005, either at market price or the price in effect under the
contract plus changes in certain of the suppliers' costs, such as labor,
electricity and raw materials. In addition, this contract permits the Company to
purchase up to an additional four million pounds of sponge at negotiated prices.
These contracts are subject to renegotiation or termination under certain
circumstances. Both contracts contain force majeure clauses which the Company
has invoked for the duration of the work stoppage at RMI's Niles, Ohio plant.
The Company purchases the balance of its sponge requirements pursuant to
short-term agreements or at negotiated prices. Prices for the Company's 1999
requirements have already been set under these contracts and other short-term
arrangements. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
 
     In November 1996, the Company was notified that the Department of Commerce
had issued a final determination that dumping did not occur on sales of titanium
sponge made by Interlink, a major trading company for Russian produced titanium
sponge. The Company purchases nearly all of its Russian titanium sponge through
Interlink. These purchases previously carried an 84% dumping duty. The
no-dumping finding eliminated the duty, and has allowed the Company to purchase
a significant portion of its titanium sponge at lower prices.
 
     On July 3, 1997, the Company acquired 90% of the common stock of Galt
Alloys, Inc., a manufacturer of ferro titanium and a producer and worldwide
distributor of specialty alloys to ferrous and nonferrous customers. In
connection with this transaction, Galt undertook a major expansion program
estimated to cost approximately $25 million, designed to enable Galt to better
serve the titanium industry and its customers, and to provide RMI with an
increased supply of scrap and consumable titanium electrodes for remelt at lower
cost and easier to use sizes and shapes. The expansion will include a new scrap
preparation facility, a plasma consolidation furnace, and a plasma hearth
furnace. The scrap preparation facility and the consolidation furnace were
brought online in 1998, and startup of the hearth furnace is expected in the
first half of 1999. During 1998 Galt expended approximately $21 million on these
projects.
 
     The Company purchases titanium tetrachloride, the primary raw material used
in the manufacture of titanium sponge, from SCM Chemicals, Inc. pursuant to a
long-term supply agreement expiring in 2003. Titanium tetrachloride is shipped
to one of the Company's long-term sponge suppliers where it is used in providing
sponge for the Company. This contract also contains a force majeure clause which
the Company has invoked.
 
     Companies in the Fabrication and Distribution group obtain the majority of
their titanium mill product requirements from RMI. These transactions are made
at an arm's length pricing arrangement, which approximates market price.
Titanium products which are not available from or are not produced by RMI, are
purchased at market prices from independent third-party suppliers. Non-titanium
metallic requirements are generally sourced from the best available producer at
competitive market prices.
 
     The Company believes it has adequate sources for titanium sponge, scrap,
alloying agents and other raw materials.
 
                                        6
<PAGE>   9
 
COMPETITION AND OTHER MARKET FACTORS
 
     The titanium metals industry is highly competitive on a worldwide basis.
Competition is primarily on the basis of price, quality and timely delivery.
Titanium also competes with other metals such as stainless steel and nickel
based corrosion resistant alloys. A metal manufacturing company with rolling and
finishing facilities could participate in the mill product segment of the
titanium industry. However, entry into the titanium industry as an integrated
producer would require a significant investment of capital and extensive
technical expertise.
 
     The aerospace consumers of titanium mill products tend to be highly
concentrated. The Boeing Company and Airbus Industrie, through direct purchase
and their families of subcontractors, consume a majority of aerospace products.
Shipments of aerospace products represented approximately 86% of RMI's mill
product shipments in 1998. Producers of titanium mill products are located
primarily in the U.S., Japan, Russia, Europe and China. There are also a small
number of domestic nonintegrated producers that, along with the Company, produce
mill products from purchased sponge, scrap or ingot. The Company does not
believe, however, that any of its nonintegrated U.S. competitors produce as full
a line of mill products as does RMI.
 
     Imports of titanium mill products from countries that receive the
most-favored-nation ("MFN") tariff rate are subject to a 15% tariff. The tariff
rate applicable to imports from countries that do not receive MFN treatment is
45%. Japanese producers, which benefit from MFN treatment, participate
significantly in the European market, but historically have not been a major
factor in the U.S. mill products market. The United States currently grants MFN
treatment to imports, including titanium mill product imports, from the former
Soviet Union countries, including Russia. Effective October 18, 1993, the U.S.
Government extended the benefits of the Generalized System of Preferences
("GSP") to Russia. Under GSP, the U.S. grants duty-free access to semifinished
and agricultural products from developing countries and territories. Certain
wrought titanium products are covered by GSP up to certain competitive needs
based limits, which effectively restrict the volume of imports for these
products. However, unwrought products such as titanium sponge, ingot and billet
have not been afforded GSP treatment. In 1995, a Russian producer began to
participate in the U.S. market for titanium mill products. This titanium
producer has the largest rated capacity in the world (although management
believes practical capacity is substantially less).
 
     In the second half of 1997, this Russian producer filed two separate
petitions under the trade laws. The first seeks GSP treatment for unwrought
products from Russia (sponge, powders, ingot and billet). The second petition
seeks removal of the competitive needs limit for wrought products (plate, sheet,
pipe, etc.). The competitive needs limit was actually exceeded by this producer
in 1997. In the fall of 1998 the second petition was granted providing GSP
treatment to all wrought products from Russia. A decision on whether or not to
grant similar GSP treatment to unwrought products is pending.
 
     The Company believes that any significant increase in the imports of
titanium mill products from Russia, without similar treatment for unwrought
products, in particular for sponge, could materially affect competition in the
domestic titanium industry. The Company is vigorously supporting the granting of
the petition for unwrought products.
 
     Competition in the Fabrication and Distribution Group is primarily on the
basis of price, quality, timely delivery and customer service. Weld-Tech
Engineering Services, L.P., competes with a number of other fabricators, some of
which are significantly larger, in the offshore oil and gas fabrication
industry.
 
MARKETING AND DISTRIBUTION
 
     RMI Titanium Company markets its titanium mill products and related
products and services worldwide. The majority of the company's sales are made
through its own sales force and smaller amounts through independent
distributors. RMI's domestic sales force has offices in Niles, Ohio; Houston,
Texas; Brea, California; Washington, Missouri; and Salt Lake City, Utah.
Technical marketing personnel are available to service these offices and to
assist in new product applications and development. In addition, the Company's
Customer Technical Service and Research and Development departments, both
located in Niles, Ohio, provide extensive customer support. Sales of products
and services provided by companies in the Fabrication and Distribution Group are
made by personnel at each plant location. Major locations are in Solon, Ohio;
Houston, Texas; Sullivan
 
                                        7
<PAGE>   10
 
and Washington, Missouri; Birmingham, England, and Niles, Ohio. Major
distribution centers are located in California, Texas, Missouri, Connecticut,
and England.
 
RESEARCH, TECHNICAL AND PRODUCT DEVELOPMENT
 
     The Company conducts research, technical and product development activities
at facilities in Niles, Ohio. The principal goals of the Company's research
program are maintaining technical expertise in the production of titanium mill
and fabricated products and providing technical support in the development of
new markets and products. In addition to the Company's own funding, certain
major customers have assisted in funding the Company's development of specific
titanium applications. Research, technical and product development costs totaled
$4.4 million in 1998 and $3.7 million in each of 1997 and 1996. Customer
assisted funding, which is treated as a reduction of research and development
spending, reduced the Company's portion of research and development expense to
$3.9 million in 1998, $3.1 million in 1997, and $2.1 million in 1996.
 
     The Company has research laboratories in Niles with melting, metal
processing and metal testing facilities and a corrosion laboratory for support
of nonaerospace markets. NCM, through its Extrusion Technology Corporation of
America subsidiary, conducts research into extrusion processes and technology at
its Solon, Ohio facility.
 
PATENTS AND TRADEMARKS
 
     The Company possesses a substantial body of technical know-how and trade
secrets and owns a number of U.S. patents applicable primarily to product
formulations and uses. The Company considers its know-how, trade secrets and
patents important to conduct its business, although no individual item is
considered to be material to the Company's current business.
 
EMPLOYEES
 
     As of December 31, 1998, the Company and its subsidiaries employed 1,469
persons, 487 of whom were classified as administrative and sales personnel.
1,181 of the total number of employees were in the Titanium Group, while 288
were employed in the Fabrication and Distribution Group.
 
     The United Steelworkers of America ("USWA") represents 527 of the hourly
and clerical and technical employees at the Company's plant in Niles, Ohio and
the hourly employees at the closed facilities in Ashtabula, Ohio. Other than
four hourly workers at the Ashtabula facilities, who are represented by the Oil,
Chemicals and Atomic Workers Union, the Company's other employees are not
represented by a union. After the United Steelworkers of America and RMI failed
to reach agreement on a new contract covering the hourly workforce at its Niles,
Ohio plant, a work stoppage commenced October 1, 1998, and is continuing. The
Niles plant is the Company's largest production facility. Operations at the
plant are being conducted by nonstriking personnel at a rate of approximately
40-50% of normal production levels while negotiations continue. Because of
numerous acts of violence committed during the strike, a state court injunction,
and a federal court injunction obtained by the National Labor Relations Board,
are in place to limit picket line misconduct and violence. The hourly employees
at the facilities in Ashtabula agreed to a five-year contract on January 15,
1996.
 
                                        8
<PAGE>   11
 
EXECUTIVE OFFICERS OF THE REGISTRANT
 
     Listed below are the executive officers of the Company, together with their
ages as of December 31, 1998, and titles.
 
<TABLE>
<CAPTION>
                NAME                  AGE                             TITLE
                ----                  ---                             -----
<S>                                   <C>    <C>
Richard R. Burkhart.................  48     Group Vice President (Fabrication and Distribution
                                             Group)
Dawne S. Hickton....................  41     Vice President and General Counsel
Lawrence W. Jacobs..................  43     Vice President and Treasurer
John H. Odle........................  56     Executive Vice President
Timothy G. Rupert...................  52     Executive Vice President & Chief Financial Officer
Harry B. Watkins....................  60     Vice President
</TABLE>
 
     Mr. Burkhart was elected Group Vice President in February, 1999. Mr.
Burkhart had been half-owner and President of NCM prior to its acquisition by
RTI on October 1, 1998. He joined NCM in 1992. Prior to that, he directed a
number of corporate reorganizations, start-ups and buy-outs in the capital
goods, metals and systems integration industries. He has been affiliated with
Republic Steel Corporation, Quanex Corporation, Pratt & Whitney Company, Data
Systems Network Corporation, and Emerald Asset Management.
 
     Ms. Hickton was elected Vice President and General Counsel in June 1997.
From 1994 to 1997, she was an Associate Professor of Law at The University of
Pittsburgh School of Law and was associated with the Pittsburgh law firm of
Burns, White and Hickton in an Of Counsel capacity. Prior to 1994 she was a
member of the Law Department of a major corporation.
 
     Mr. Jacobs was elected Vice President and Treasurer in March 1998. Mr.
Jacobs had been Senior Vice President of PNC Bank, N.A. in Pittsburgh,
Pennsylvania, where he was the segment executive for the bank's metal industry
clients. Prior to joining PNC in 1985, Mr. Jacobs was an account executive with
American Standard, Evansville, Indiana.
 
     Mr. Odle was elected Executive Vice President in June 1996. He previously
was Senior Vice President-Commercial of RMI and its predecessor since 1989 and
served as Vice President-Commercial from 1978 until 1989. Prior to that, Mr.
Odle served as General Manager-Sales. He is also a Director of the Company.
 
     Mr. Rupert was elected Executive Vice President and Chief Financial Officer
in June 1996 and had served as Vice President and Chief Financial Officer since
September 1991. He is also a Director of the Company.
 
     Mr. Watkins was elected to his present position of Vice President on April
25, 1996. Previously, he held a number of managerial and sales positions with
RMI beginning in 1985.
 
                                        9
<PAGE>   12
 
ITEM 2. PROPERTIES
 
MANUFACTURING FACILITIES
 
     The Company has over 750,000 square feet of manufacturing facilities,
exclusive of office space, which are located primarily in Niles, Ohio. The
Company's principal manufacturing plants, the principal products produced at
such plants and their aggregate capacities are set forth below.
 
                            MANUFACTURING FACILITIES
 
<TABLE>
<CAPTION>
                                                                         OPERATING     ANNUAL RATED
     LOCATION                            PRODUCTS                       SEGMENT(1)       CAPACITY
     --------                            --------                     ---------------  ------------
<S>                   <C>                                             <C>              <C>
Niles, Ohio           Ingot (million pounds)........................     Titanium           36
Niles, Ohio           Mill Products (million pounds)................     Titanium           22
Hermitage, PA         Tube (thousand pounds)........................     Titanium          780
                      Hot-Formed and Superplastically Formed
Washington, MO        Components
  Sullivan, MO        (thousand press hours)........................        F&D             21
Salt Lake City, UT    Powders (million pounds)......................     Titanium          1.5
                      Ferro titanium and specialty alloys (million       Titanium           16
Canton, Ohio          pounds).......................................
Solon, Ohio           Extruded products (million pounds)............        F&D            1.8
</TABLE>
 
---------------
 
(1) F&D represents Fabrication and Distribution Group
 
     The Company owns all of the foregoing facilities, except for the Solon,
Ohio, and Sullivan, Missouri facilities and certain buildings and property at
Washington, Missouri, all of which are leased. The plants have been constructed
at various times over a long period, many of the buildings have been remodeled
or expanded and additional buildings have been constructed from time to time.
 
CONVERSION SERVICES
 
     The Company utilizes third-party converters to melt and/or finish
approximately 35% of its mill products. The use of these converters raises the
Company's effective processing capacity. Certain mill products, such as hot band
and cold rolled strip and oversized plate, are produced entirely by such
converters using semi-finished titanium mill products supplied by RMI. RMI,
however, is responsible for inspecting and delivering these products to
customers. RMI maintains long-term relationships with many of these conversion
companies. The Company believes that, if necessary, it could obtain alternative
sources for conversion services.
 
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. Given the
critical nature of many of the aerospace end uses for the Company's products,
including specifically their use in critical rotating parts of gas turbine
engines, the Company maintains aircraft products liability insurance of $250
million, which includes grounding liability.
 
  ENVIRONMENTAL
 
     The Company is subject to extensive federal, state and local laws and
regulations concerning environmental matters. During each of 1998, 1997 and
1996, the Company spent approximately $1.4 million, $1.3 million and $0.6
million, respectively, for environmental-related expenditures. The Company
broadly estimates environmental-related expenditures, including capital items
and compliance costs, will total approximately $4.0 million during the 1999-2000
period.
 
     In connection with the 1990 Reorganization, the Company assumed all
responsibility for environmental matters relating to RMI Company and its
immediate predecessor, Reactive Metals, Inc., which commenced business on April
1, 1964, and agreed to indemnify Quantum and USX against any liability relating
to such
 
                                       10
<PAGE>   13
 
environmental matters. Quantum and USX have been named as potentially
responsible parties in connection with the Fields Brook Superfund site discussed
below. In addition, Quantum initially acquired the Company's now closed
Ashtabula facilities in 1950, which it owned until 1964, when they were acquired
by Reactive Metals, Inc. Although the Company believes it may have claims with
respect to possible remediation and other costs against Quantum for the pre-1964
period, ultimate apportionment of any liability between the Company and Quantum
has not been finally agreed upon.
 
     Active Investigative or Cleanup Sites. The Company is involved in
investigative or cleanup projects at certain waste disposal sites, including
those discussed below.
 
     Fields Brook Superfund Site. The Company, together with 31 other companies,
has been identified by the U. S. Environmental Protection Agency the ("EPA") as
a potentially responsible party ("PRP") under Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA") with respect to a superfund
site defined as the Fields Brook Watershed in Ashtabula, Ohio, which includes
the Company's now closed Ashtabula facilities. The EPA's 1986 estimate of the
cost of remediation of the Fields Brook sediment operable unit was $48 million.
Recent studies, together with improved remediation technology and redefined
cleanup standards, have resulted in a more recent estimate of the remediation
cost of approximately $25 million. The actual cost of remediation may vary from
the estimate depending upon any number of factors.
 
     The EPA, beginning in March 1989, ordered 22 of the PRPs to conduct a
design phase study for the sediment operable unit and a source control study.
These studies are nearly complete. The Company, working cooperatively with
fourteen others, is complying with the order and has accrued and has been paying
its portion of the cost of such compliance. Actual cleanup is not expected to
commence prior to late 1999. The Company's share of the study costs has been
established at 9.95%. In June 1995, the Company and twelve others entered into a
Phase 2 (actual cleanup) allocation agreement which assigns 9.44% of the cost to
RMI. However, actual percentages may be more or less based on contributions from
other parties which are not currently participating in the Phase 2 allocation
agreement.
 
     Resource Conservation and Recovery Act of 1976 ("RCRA")
Proceedings-Ashtabula Sodium Plant. The Company, through its independent
environmental consultant, has identified and reported to the EPA the presence of
metals and hazardous organic materials on portions of its closed facilities in
Ashtabula, Ohio. As to the organic material, the consultant has determined it
originates from an off-site source, and the Company does not anticipate it will
be required to clean up this material.
 
     A Corrective Measures Study report prepared for the Company by the
consultant states that the presence of metals would not be expected to have an
adverse impact on humans or the environment, and, after conducting a detailed
analysis of cleanup alternatives, the study recommended that metals contaminated
material be consolidated at an on-site landfill and contained in place, at an
estimated cost of $1 million. The EPA has approved the Corrective Measures Study
but has not yet selected a cleanup alternative. The Company has accrued an
amount for this matter.
 
     Ashtabula River. The Ashtabula River and Harbor has been designated one of
43 Areas of Concern on the Great Lakes by the International Joint Commission.
Fields Brook empties into the Ashtabula River, which in turn flows into Lake
Erie. The State of Ohio has appropriated $7 million in state funds to the
Ashtabula River dredging project to assist in securing federal funds needed to
conduct the dredging.
 
     The Company believes it is most appropriate to use public funds to cleanup
a site with regional environmental and economic development implications such as
the Ashtabula River and Harbor. The Ashtabula River Partnership ("ARP"), a
voluntary group of public and private entities including, among others, the
Company, the EPA, and the Ohio EPA, was formed in July 1994 to bring about the
remediation of the river. The ARP is working both to design a cost-effective
remedy and to secure public funding. Phase 1, the Comprehensive Management Plan,
is well underway and is completely funded with public money. To fund the
Detailed Design and Remedial Action, the Company has estimated the private
contribution to the project could approximate $10 million, of which roughly 10%
is allocated to the Company (before contributions from third parties). It is
possible that the EPA could determine that the Ashtabula River and Harbor should
be designated as an extension of the Fields Brook Superfund site, or,
alternatively, as a separate Superfund site. It is not possible at this time to
predict the methods or responsibility for any remediation and whether the
Company will have any liability for any
 
                                       11
<PAGE>   14
 
costs incurred in cleaning up the Ashtabula River and Harbor. The Fields Brook
PRP group has indicated to the Ashtabula River Partnership the group's
willingness to participate in funding in exchange for a release from CERCLA
liability.
 
     With respect to each of the above sites, all of which are located in Ohio,
the State of Ohio may assert its interests and rights independent of those of
the EPA. The Company has notified all its insurers relative to the environmental
claims reported above and has demanded that the insurers assume the Company's
defense of such claims and indemnify the Company against such claims. The
Company has settled claims with several insurers.
 
     Given the status of the proceedings at certain of these sites, and the
evolving nature of environmental laws, regulations, and remediation techniques,
the Company's ultimate obligation for investigative and remediation costs cannot
be predicted. It is the Company's policy to recognize in its financial
statements environmental costs as an obligation becomes probable and a
reasonable estimate of exposure can be determined. At December 31, 1998, the
amount accrued for future environmental-related costs was $3.5 million. Based on
available information, RMI believes that its share of potential
environmental-related costs, before expected contributions from third parties,
is in a range from $4.2 to $7.0 million in the aggregate. The amount accrued is
net of expected contributions from third parties (which does not include any
amounts from insurers) of approximately $2.1 million which the Company believes
are probable. The Company has been receiving contributions from such third
parties for a number of years as partial reimbursement for costs incurred by the
Company. As these proceedings continue toward final resolution, amounts in
excess of those already provided may be necessary to discharge the Company from
its obligations for these sites.
 
     The ultimate resolution of the foregoing contingencies could, individually
or in the aggregate, be material to the consolidated financial statements.
However, management believes that RMI will remain a viable and competitive
enterprise even though it is possible these matters could be resolved
unfavorably.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
     None.
 
                                       12
<PAGE>   15
 
                                    PART II
 
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
 
COMMON STOCK DATA:
 
     Principal market for common stock: New York Stock Exchange
 
     Holders of record of common stock at January 31, 1999: 857
 
RANGE OF COMMON STOCK PRICES AND DIVIDENDS FOR 1998
 
<TABLE>
<CAPTION>
                                                                        DIVIDEND
                     QUARTER                         HIGH      LOW      DECLARED
                     -------                        ------    ------    --------
<S>                                                 <C>       <C>       <C>
First.............................................  $24-11/16 $20         $ --
Second............................................   23-1/8    20-1/16      --
Third.............................................   23-7/8    16-11/16     --
Fourth............................................   20        10-5/8       --
Year..............................................  $24-11/16 $10-5/8     $ --
</TABLE>
 
RANGE OF COMMON STOCK PRICES AND DIVIDENDS FOR 1997
 
<TABLE>
<CAPTION>
                                                                        DIVIDEND
                     QUARTER                         HIGH      LOW      DECLARED
                     -------                        ------    ------    --------
<S>                                                 <C>       <C>       <C>
First.............................................  $28       $17-1/2     $ --
Second............................................   28        20           --
Third.............................................   29-9/16   20-1/16      --
Fourth............................................   26-3/16   16-1/2       --
Year..............................................  $29-9/16  $16-1/2     $ --
</TABLE>
 
     The Company has not paid dividends on its Common Stock since the second
quarter of 1991. The declaration of dividends is at the discretion of the Board
of Directors of the Company. The declaration and payment of future dividends and
the amount thereof will be dependent upon the Company's results of operations,
financial condition, cash requirements for its business, future prospects and
other factors deemed relevant by the Board of Directors.
 
                                       13
<PAGE>   16
 
ITEM 6. SELECTED FINANCIAL DATA
 
                               FIVE YEAR SUMMARY
                            Years Ended December 31
                (Dollars in thousands except for per share data)
 
<TABLE>
<CAPTION>
                                        1998        1997        1996        1995        1994
                                      --------    --------    --------    --------    --------
<S>                                   <C>         <C>         <C>         <C>         <C>
INCOME STATEMENT DATA:
Sales...............................  $337,476    $318,530    $251,357    $171,166    $143,392
Operating income (loss).............    67,996      56,315      33,730      (5,220)(1)   (7,971)
Income (loss) before income taxes
  and cumulative effect of a change
  in accounting principle...........    70,101      57,317      31,659      (4,608)(3)  (11,562)
Net income (loss)...................    68,143(2)   60,085(2)   31,759      (4,608)(3)  (12,764)(4)
BALANCE SHEET DATA:
  (at end of period)
Working Capital.....................  $196,225    $184,824    $132,136    $ 86,738    $ 74,694
Total assets........................   396,020     291,309     215,880     171,559     160,810
Long-term debt......................    20,080          --       3,600      64,020      54,740
Equity..............................   292,765     221,173     158,736(5)   36,889      42,596(6)
NET INCOME (LOSS) PER COMMON SHARE:
Before income taxes and change in
  accounting principle..............  $   3.41    $   2.81    $   1.71    $  (0.30)   $  (1.45)
Net income (loss):
  Basic.............................  $   3.31    $   2.94    $   1.71    $  (0.30)   $  (1.60)
  Diluted...........................  $   3.29    $   2.92    $   1.70    $  (0.30)   $  (1.60)
</TABLE>
 
---------------
 
(1) Includes a $5.0 million charge reflecting the June 30, 1995 adoption of
    Statement of Financial Accounting Standards ("SFAS") No. 121.
 
(2) Includes a $22.8 million and a $21.2 million income tax benefit relating to
    NOL utilization and the reduction in the deferred tax valuation allowance in
    1998 and 1997, respectively.
 
(3) Includes a $5.0 million charge reflecting the adoption of SFAS No. 121 and a
    $7.2 million income tax benefit.
 
(4) Includes a $1.2 million charge reflecting the adoption of SFAS No. 112.
 
(5) Includes a $80.3 million increase resulting from the net proceeds of a
    common stock offering.
 
(6) Includes a $26.4 million increase resulting from the net proceeds of a
    rights offering.
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS
 
     The following discussion should be read in connection with the information
contained in the Consolidated Financial Statements and Notes to Consolidated
Financial Statements. The following information contains "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, and are subject to the safe harbor created by that Act. Such
forward-looking statements include, without limitation, statements regarding the
future availability and prices of raw materials, the competitiveness of the
titanium industry, demand for the Company's products, the historic cyclicality
of the titanium and aerospace industries, uncertain defense spending, long-term
supply agreements, the ultimate determination of pending trade petitions, global
economic conditions, the Company's order backlog and the conversion of that
backlog into revenue, labor relations, the effects of an ongoing work stoppage,
the impact of Year 2000 compliance, and other statements contained herein that
are not historical facts. Because such forward-looking statements involve risks
and uncertainties, there are important factors that could cause actual results
to differ materially from those expressed or implied by such forward-looking
statements. These and other risk factors are set forth below in the "Outlook"
section, as well as being described in the Company's other filings with the
Securities and Exchange Commission
 
                                       14
<PAGE>   17
 
("SEC") over the last 12 months, copies of which are available from the SEC or
may be obtained upon request from the Company.
 
OVERVIEW
 
     Historically, a majority of the U.S. titanium industry's output has been
used in aerospace applications. The cyclical nature of the aerospace industry
has been the principal cause of the fluctuations in performance of companies
engaged in the titanium industry. Over the past 20 years, titanium mill products
shipments registered a cyclical peak of 62 million pounds in 1997 and a low of
32 million pounds in 1983.
 
     In the last several years, commercial aerospace markets have shown a
significant increase in demand while military aerospace markets have stabilized
at the reduced build rate levels. In the 1995-1997 period, most major commercial
airlines reported stronger operating profits and, during this same period,
aircraft manufacturers increased build rates. As of December 31, 1998, the
leading manufacturers of commercial aircraft, Boeing Commercial Airplane Group
and Airbus Industrie, reported an aggregate of 3,095 planes under firm order and
deliverable over the next five years. The comparable backlogs as of December 31,
1997 and 1996 were 2,753 planes and 2,370 planes, respectively. The Company
estimates that total industry shipments in 1998 were 58 million pounds, down
from 62 million pounds in 1997.
 
     However, because of the ongoing Asian financial crisis, production
difficulties at its manufacturing facilities and uncertain global economic
conditions which may affect the demand for commercial aircraft, Boeing
Commercial Airplane Group has recently made a number of announcements reducing
its forecasted production rates on a number of aircraft models in the 1999-2000
time frame. Boeing and Airbus Industrie, through direct purchases and their
families of subcontractors, consume the majority of titanium mill products
produced for aerospace needs. These companies and their subcontractors exercise
considerable purchasing power in the industry. Other aerospace contractors have
announced delivery delays and rescheduling resulting from the Boeing
announcements and, therefore, a need to adjust inventory requirements downward
from peak levels. The slowing in the growth of commercial aircraft build rates
will impact the overall demand for titanium mill products for at least the next
two to three quarters. Based on currently available information, the Company
anticipates that U.S. titanium industry's total shipments will decrease in 1999
from 1998 levels of approximately 58 million pounds; although, the amount of
decrease cannot be accurately predicted. If worldwide economic conditions cause
commercial airlines to cancel or delay aircraft, titanium demand and pricing
could come under further pressure.
 
     In recent years, the Company has devoted significant resources in
developing new markets for titanium in the oil and gas and geothermal energy
production industries. In addition to designing and fabricating the world's
first all titanium high pressure drilling riser in 1995, the Company has also
produced significant quantities of seamless titanium pipe for use in geothermal
energy applications. The Company also received orders to supply titanium stress
joints for use in a production riser system located in the Gulf of Mexico. In an
effort to expand on these successes, and reach other offshore application
markets, in October 1998 the Company acquired the assets of Weld-Tech
Engineering Services, L.P., ("Weld-Tech") of Houston, Texas. Weld-Tech
fabricates oil and gas components such as production manifolds, connectors and
riser systems used in offshore oil and gas production. Additionally, the Company
has formed a new subsidiary, RTI Energy Systems, Inc., which engineers, designs
and markets offshore riser systems, stress joints, drill pipe and components.
RTI intends to build on its capabilities in these areas, and is currently
planning an expansion at Weld-Tech, including a heat treating facility,
machining center, and a corrosion protection coating facility.
 
     RTI's strategy is to build on its leading position in the worldwide
titanium industry while maintaining a strong financial condition and stringent
quality, safety and environmental standards. RTI is emphasizing higher margin
products in its traditional markets, while continuing to develop new markets and
products such as seamless tubulars for oil and gas and geothermal energy
production.
 
RESULTS OF OPERATIONS
 
YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997
 
     Net Sales. Net sales for the year ended December 31, 1998 increased to
$337.5 from $318.5 million in 1997, an increase of $19.0 million, or 6%. Sales
in the Titanium Group decreased to $229.1 million in 1998 from
 
                                       15
<PAGE>   18
 
$243.9 million in 1997. This decrease is due primarily to reduced titanium mill
product shipments in the fourth quarter of 1998 resulting from a work stoppage
at RMI's Niles, Ohio plant, partially offset by higher average selling prices on
mill products and a shift in product mix toward more value added higher margin
flat rolled products such as sheet and plate and away from lower margin
commodity products such as billet and bloom. Mill products shipments for 1998
amounted to 17.0 million pounds compared to 18.8 million pounds in 1997. Average
realized selling prices for mill products increased to $15.15 per pound in 1998
compared to $14.23 per pound in 1997. Fabrication and distribution group sales
increased to $91.6 million in 1998 from $61.4 in 1997. Fabrication and
distribution sales were favorably impacted by the addition of New Century Metals
and Weld-Tech during the fourth quarter of 1998.
 
     Gross Profit. Gross profit for the year ended December 31, 1998 amounted to
$91.8 million, or 27.2% of sales compared to $72.8 million, or 22.9% of sales in
1997. This increase results primarily from increased selling prices for titanium
mill products, a favorable shift in product mix to higher value-added flat
rolled products and the inclusion of NCM and Weld-Tech results, partially offset
by the effects of the work stoppage.
 
     Selling, General and Administrative Expenses. Selling, general and
administrative expenses amounted to $19.9 million in 1998 compared to $13.4
million in 1997. This increase results primarily from increased levels of
business activity and the acquisitions of New Century Metals and Weld-Tech.
 
     Research, Technical and Product Development Expenses. The Company's major
research objectives are to maintain its technical expertise in titanium
production, provide customer technical support and develop new products and
markets. Gross research, technical and product development costs amounted to
$4.4 million in 1998 and $3.7 million in 1997. Certain customers assist in
funding the Company's overall research and product development costs. Such
funding, which is treated as a reduction of expense, reduced the Company's
portion of research and development expense to $3.9 million in 1998 and $3.1
million in 1997.
 
     Operating Income. Operating income for the year ended December 31, 1998
amounted to $68.0 million, or 20.2% of sales compared to $56.3 million, or 17.7%
of sales in 1997. This improvement results primarily from increases in average
realized selling prices, a shift in mill product shipments from low margin
commodity products to higher-value flat rolled products and the inclusion of NCM
and Weld-Tech operating results during the fourth quarter, partially offset by
the adverse effects of the work stoppage.
 
     Income Taxes. For the year ended December 31, 1998, the Company recorded a
provision for income taxes of $2.0 million compared to a $2.8 million income tax
benefit recorded in 1997. The income tax provision of $2.0 million recorded in
1998 is comprised of a current income tax provision of $8.2 million and a
deferred tax benefit of $6.2 million. Both components were significantly
affected by adjustments to the Company's deferred tax asset valuation allowance
resulting from changes in the Company's expectations about the ultimate
realization of its deferred tax assets. Exclusive of these adjustments, the
effective federal tax rate for the year ended December 31, 1998 was
approximately 26%. The difference between the statutory tax of 35% and the
effective tax rate for the year ended December 31, 1998 is primarily due to
adjustments to the deferred tax asset valuation allowance related to expected
current year results. Because the net operating loss carryforwards were fully
utilized in 1998, both the effective book income tax rate and actual cash
payments for income taxes are expected to more closely approximate statutory tax
rates in 1999.
 
     Other Income. Other income in 1998 amounted to $2.8 million compared to
$1.2 million in 1997. This increase results primarily from increased investment
income on short-term securities.
 
     Interest Expense. Interest expense in 1998 amounted to $0.7 million
compared to $0.2 million in 1997. This increase results primarily from increased
levels of borrowing.
 
     Net Income. Net income for year ended December 31, 1998 amounted to $68.1
million, or 20.2% of sales compared to $60.1 million, or 18.9% of sales in 1997.
This increase is due primarily to increased profit margins on titanium mill
products partially offset by increased income tax expense and the unfavorable
effects of the work stoppage.
 
                                       16
<PAGE>   19
 
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
 
     Net Sales. Net sales in 1997 increased to $318.5 million from $251.4
million in 1996, an increase of $67.1 million or 27%. The increase in sales
results primarily from significantly higher demand and pricing for the Company's
aerospace related products such as titanium mill products and fabricated
products. Shipments of titanium mill products in 1997 amounted to 18.8 million
pounds compared to 18.5 million pounds in 1996. Average realized mill product
selling prices increased to $14.23 per pound in 1997 from $11.88 per pound in
1996, an increase of $2.35 per pound or approximately 20%. This increase results
primarily from a further increase in demand for higher valued added aerospace
products, particularly flat roll sheet and plate, as well as the imposition of
metallic surcharges. Sales of fabricated products and other services, including
oil and gas and geothermal energy extraction projects amounted to $61.4 million
in 1997 compared to $34.9 million in 1996, an increase of $26.5 million or 76%.
This increase is attributable primarily to increased demand and pricing for
aerospace related components such as superplastically formed shapes and
cut-to-size parts.
 
     Gross Profit. Gross profit for year ended December 31, 1997 amounted to
$72.8 million, or 22.9% of sales, compared to gross profit of $45.6 million, or
18.1% of sales in 1996. This increase results primarily from increased selling
prices, including metallic surcharges, for titanium mill products and fabricated
products in the Company's aerospace markets.
 
     Selling, General and Administrative Expenses ("SG&A"). SG&A expenses
amounted to $13.4 million in 1997 compared to $9.8 million in 1996. This
increase results primarily from increased levels of business activity and the
inclusion of Galt Alloys, Inc. Selling, general and administrative expenses
amounted to 4.2% of sales in 1997 compared to 3.9% in 1996.
 
     Research, Technical and Product Development Expenses. The Company's gross
research, technical and product development costs, amounted to $3.7 million in
each of 1996 and 1997. The Company's major research objectives are to maintain
its technical expertise in titanium production, provide customer technical
support and develop new products and markets. Certain major customers have
assisted in funding the Company's overall product development effort. Such
funding, which is included as a reduction of expense, reduced the Company's
portion of research and development expense to $3.1 million in 1997, and $2.1
million in 1996.
 
     Operating Income. Operating income in 1997 amounted to $56.3 million, or
17.7% of sales compared to $33.7 million, or 12.6% in 1996. This improvement
results primarily from increases in demand and pricing for the Company's
aerospace related products.
 
     Other Income (Expense). Other income (expense) in 1997 includes
approximately $1.0 million in interest income from short-term cash investments.
1996 amounts include a loss of $0.4 million on the disposal of fixed assets.
 
     Interest Expense. Interest expense in 1997 amounted to $0.2 million
compared to $2.2 million in 1996. This improvement results primarily from
reduced levels of indebtedness during 1997 when compared to 1996.
 
     Income Taxes. During 1997, the Company recorded an income tax benefit of
$2.8 million. This benefit is comprised of an income tax provision against
pretax income for the year of $5.9 million and an income tax benefit of $8.7
million resulting from an adjustment to the deferred tax asset valuation
allowance due to changes in the Company's expectations about the ultimate
realization of its deferred tax assets in years subsequent to 1997. Excluding
the $8.7 million valuation allowance adjustment, the effective tax rate for the
year ended December 31, 1997, was approximately 10.3%. The difference between
the statutory federal tax rate of 35% and the effective tax rate is principally
due to an adjustment to the deferred tax asset valuation allowance which existed
at December 31, 1996 as it related to expected 1997 results. The effect of this
adjustment reduced the 1997 tax provision by approximately $14.2 million.
 
     Net Income. Net income for the year ended December 31, 1997 amounted to
$60.1 million, or 18.9% of sales compared to $31.8 million in 1996. This
increase results primarily from improved operating margins in Company's
aerospace related markets.
 
                                       17
<PAGE>   20
 
OUTLOOK
 
     During the period 1995-1997, and continuing into early 1998, the U.S.
titanium industry experienced a significant increase in demand and pricing for
titanium mill products. This increase in demand resulted primarily from an
unprecedented increase in demand from the commercial aerospace markets. During
the 1995-1997 period, most commercial airlines reported stronger operating
profits. In order to meet increasing passenger load demands and the need to
replace older, less efficient aircraft, commercial airlines placed orders for
new and replacement aircraft at near record levels, and the leading
manufacturers of commercial aircraft announced increased build and delivery
rates for certain aircraft. However, because of the Asian financial crisis,
production difficulties at its manufacturing facilities and uncertain global
economic conditions which may affect the demand for commercial aircraft, Boeing
Commercial Airplane Group recently made a number of announcements reducing its
forecasted production rates on a number of aircraft models in the 1999-2000 time
frame. Other aerospace contractors have announced delivery delays and
rescheduling resulting from the Boeing announcements and, therefore, a need to
adjust inventory requirements downward from peak levels. The extent or duration
of this inventory adjustment period, or the amount of excess inventory in the
procurement pipeline is unknown. The Company has experienced some order
cancellations, and in addition volume and pricing of incoming orders has shown
some softening particularly in the forging products such as ingot and bloom.
Demand and pricing for the Company's core value-added products, alloy sheet and
plate, while softening somewhat, remain relatively strong. The slowing in the
growth of commercial aircraft build rates will impact the overall demand for
titanium mill products for at least the next two to three quarters. However,
increased military spending should result in increased military aerospace
demand. Based on currently available information, the Company anticipates that
the U.S. titanium industry's total shipments will decrease in 1999 from 1998
levels; although, the amount of decrease cannot be accurately predicted. If
worldwide economic conditions cause commercial airlines to cancel or delay
aircraft, titanium demand and pricing could come under further pressure.
 
     On February 2, 1998, RTI entered into an agreement with Boeing Commercial
Airplane Group whereby RMI will supply Boeing and its family of commercial
suppliers with up to 4.5 million pounds of titanium products annually. The
agreement, beginning in 1999, will have an initial term of five years and,
subject to review by the parties in the fourth year, could be extended for an
additional five years. Under the accord, Boeing will receive firm prices in
exchange for RMI receiving a minimum volume commitment of 3.25 million pounds
per year. Should volumes drop below the minimum commitment, the contract
contains provisions for financial compensation.
 
     In another accord, RTI, through its French affiliate, Reamet, has been
chosen by Aerospatiale as the major supplier of the titanium flat rolled
products required for its Airbus programs beginning in 1999 and extending
through 2001. Requirements are principally for flat rolled products, including
value added cut-to-size shapes.
 
     Also, during the second quarter of 1998, RTI was designated the sole
supplier of titanium mill products for the Air Force F-22 fighter being built by
Lockheed Martin and Boeing. The new contract, which begins this year, will
continue through the life of the program with approximately 339 aircraft
forecast to be produced by the year 2012. The value of this contract could
potentially total $340 million.
 
     RTI has also been selected by military aircraft producers Boeing and
Northrop as the principal supplier of titanium alloy plate and alloy sheet
including just-in-time, cut-to-size products, for the C-17 Transport, F-15 Eagle
and the F/A-18 Hornet programs. The Hornet program includes the new E/F version
which utilizes considerably more titanium than earlier C/D models. The agreement
will begin with May 1999 requirements and runs through April 2001.
 
     During the second quarter of 1998, RTI was named by B.F. Goodrich Aerospace
Aerostructures Group, which designs and manufactures engine nacelle systems for
large commercial and military aerospace applications, as its principal supplier
of alloy sheet. During the same period, RMI secured contracts with Contrucciones
Aeronauticas S.A. (CASA) of Spain and Daimler-Benz Aerospace AG of Germany for
their alloy plate and sheet requirements in connection with the Airbus and
Eurofighter programs. All three contracts totaling more than $60 million begin
in 1999 and extend for a minimum of three years.
 
     As a result of softening aerospace demand, and the aerospace inventory
adjustments referred to above, the Company's total order backlog as of December
31, 1998 was approximately $303 million, compared to
 
                                       18
<PAGE>   21
 
$383 million at December 31, 1997. The backlog includes amounts for the
Company's newly acquired subsidiaries, New Century Metals and Weld-Tech
Engineering Services L.P., are included in the 1998 totals.
 
     After the United Steelworkers of America and RMI failed to reach agreement
on a new contract covering the hourly workforce at its Niles, Ohio plant, a work
stoppage commenced October 1, 1998, and is continuing. The Niles plant is the
Company's largest production facility. Operations at the plant are being
conducted by nonstriking personnel at a rate of approximately 40-50% of normal
production levels while negotiations continue. The cost of the strike, including
lost shipments, is currently estimated at $1.0 to $2.5 million per month. Fourth
quarter 1998 and first quarter 1999 results were adversely impacted by the
effects of the work stoppage. An extended work stoppage would be likely to have
an adverse impact on full-year 1999 earnings. The Company is currently unable to
quantify the impact of an extended work stoppage on 1999 results. However,
depending on a number of factors including the length of the work stoppage, the
amount of lost production and the potential inability to supply customer
requirements, the work stoppage could have a material adverse effect on the
Company's operating results.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     Net cash flows from operating activities totaled $49.2 million in 1998
compared to $38.4 million in 1997. The change in net cash flows from operating
activities for the year ended December 31, 1998, compared to the comparable 1997
period was due primarily to improved results of operations offset by increases
in working capital requirements. Working capital amounted to $196.2 million at
December 31, 1998, compared to $184.8 million at December 31, 1997. The increase
in working capital results primarily from increases in inventory partially
offset by a decrease in cash and accounts receivable and an increase in current
liabilities. The Company's working capital ratio was 4.3 to 1 at December 31,
1998 compared to 4.9 to 1 at December 31, 1997.
 
     During 1998 and 1997, the Company's cash flow requirements for capital
expenditures were funded by cash provided from operating activities. Cash flow
requirements for the acquisitions made in 1998 were provided through a
combination of cash from operating activities and borrowings under the Company's
credit facility described below.
 
     The Company anticipates that it will be able to fund its 1999 working
capital requirements and its capital expenditures from funds generated by
operations. However, to the extent the work stoppage referred to above impairs
the Company's ability to generate sufficient cash flows to support its operating
needs, the Company may borrow funds under its credit facility to supplement
available cash resources. The Company's long-term liquidity requirements,
including capital expenditures and business acquisitions are expected to be
financed by a combination of internally generated funds, borrowings and other
sources of external financing if needed.
 
CREDIT AGREEMENT
 
     Concurrent with the reorganization referred to above, RTI entered into a
credit agreement, dated September 30, 1998 (the "Credit Facility"), to replace
RMI's then existing credit facilities. The unsecured Credit Facility provides
for $125 million five-year and $25 million one-year borrowings, on a revolving
basis, of up to the lesser of $150 million or a borrowing base equal to the sum
of 85% of qualifying accounts receivable and 60% of qualifying inventory. Under
the terms of the Credit Facility, the Company, at its option will be able to
borrow at (a) a base rate (which is the higher of PNC Bank's prime rate or the
Federal Funds Effective Rate plus 0.5% per annum), or (b) LIBOR plus a spread
(ranging from 0.5% to 1.5%) determined by the ratio of the Company's
consolidated total indebtedness to consolidated earnings before interest, taxes,
depreciation and amortization. At December 31, 1998, $20.1 million was
outstanding under the facility.
 
INCOME TAXES
 
     SFAS 109 requires a valuation allowance when it is more likely than not
that some portion or all of the deferred tax assets will not be realized. It
further states that forming a conclusion that a valuation allowance is not
needed is difficult when there is negative evidence such as cumulative losses in
recent years. The ultimate realization of all or part of the Company's deferred
income tax assets depends on the Company's ability to generate sufficient
taxable income in the future.
 
                                       19
<PAGE>   22
 
     When preparing interim and annual financial statements, the Company
periodically evaluates its strategic and business plans, in light of evolving
business conditions, and the valuation allowance is adjusted for future income
expectations resulting from that process, to the extent different from those
inherent in the current valuation allowance. In making an assessment of
realizability at June 30, 1998, the Company considered a number of factors
including the improved profitability in 1998 as a result of increased sales,
product pricing and gross margins, when compared to expectations inherent in the
December 31, 1997 valuation allowance. Accordingly, the valuation allowance was
fully released in 1998.
 
     For federal income tax return purposes, the amount of remaining net
operating loss carryforwards at December 31, 1997 amounted to approximately $43
million, which were available to offset future taxable income. Because the
Company was able to generate sufficient taxable income, the currently available
net operating loss carryforwards were fully utilized in 1998. Because of the
availability of these net operating loss carryforwards to offset taxable income,
actual cash payments for federal income taxes in 1998 were well below the level
which could be expected by applying the statutory federal tax rate of 35% to
pretax income. Both the effective book income tax rate and actual cash payments
for income taxes are expected to more closely approximate statutory tax rates in
1999.
 
ENVIRONMENTAL MATTERS
 
     The Company is subject to environmental laws and regulations as well as
various health and safety laws and regulations that are subject to frequent
modifications and revisions. While the costs of compliance for these matters
have not had a material adverse impact on the Company in the past, it is
impossible to predict accurately the ultimate effect these changing laws and
regulations may have on the Company in the future.
 
     At December 31, 1998, the amount accrued for future environment-related
costs was $3.5 million. Based on available information, the Company believes its
share of potential environmental-related costs, before expected contributions
from third parties, is in a range from $4.2 million to $7.0 million, in the
aggregate. The amount accrued is net of expected contributions from third
parties (which does not include any amounts from insurers) of approximately $2.1
million, which the Company believes are probable. The Company has received
contributions from such third parties for a number of years as partial
reimbursement for costs incurred by the Company. As these proceedings continue
toward final resolution, amounts in excess of those already provided may be
necessary to discharge the Company from its obligations for these projects.
 
     The ultimate resolution of these environmental matters could individually,
or in the aggregate, be material to the consolidated financial statements.
However, management believes that the Company will remain a viable and
competitive enterprise even though it is possible that these matters could be
resolved unfavorably.
 
CAPITAL EXPENDITURES
 
     Gross capital expenditures the years ended December 31, 1998 and 1997
amounted to $33.1 and $7.9 million, respectively. Included in the 1998 spending
is approximately $21 million expended on the Galt Alloys expansion. RTI
anticipates that current capital spending plans can be funded using cash
provided from internally generated sources, supplemented by borrowings as
required. Capital spending for 1999 is budgeted at approximately $30 million.
However, the amount and timing of capital spending could be affected by the
ongoing work stoppage referred to below.
 
     After completing an evaluation of future information technology needs and
growth, together with expanding requirements for additional decision making
tools, the Company has decided to install an Enterprise Resource Planning (ERP)
software system. Initially, the ERP will be installed at the Company's largest
domestic operations, and then eventually to all domestic and foreign operations.
The Company has recently purchased and begun installing the ERP system. A pilot
program is up and successfully running at one of the Company's distribution
facilities. Financial applications such as payroll and general ledger should be
installed and running by September 1, 1999 at all major domestic locations.
Other applications covering operations and manufacturing functions are currently
being studied and should be implemented periodically throughout 1999. The
Company estimates it has spent approximately $6.5 million on the ERP project in
1998 and has budgeted approximately $8.0 million for 1999.
 
                                       20
<PAGE>   23
 
NEW ACCOUNTING STANDARDS
 
     In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." The Company adopted SFAS No. 130 in the first quarter of 1998. Although
this standard requires new reporting for comprehensive income, it does not
impact the measurement of comprehensive income, and, as such, has not had a
material impact on the reported results of operations or financial position.
 
     Also in June 1997, the FASB issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." The Company has adopted this
standard in its annual financial statements for 1998. The standard requires
disclosure of additional information, but does not prescribe any new measurement
standards, and, as such, has not had a material impact on the reported results
of operations or financial position.
 
     In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures
about Pensions and Other Postretirement Benefits-an amendment of FASB Statements
No. 87, 88, and 106." This Statement revises employers' disclosures about
pension and other postretirement benefit plans. It does not change the
measurement or recognition of those plans. The Company has adopted the
provisions of this standard in its annual financial statements for 1998.
 
     In March 1998, the Accounting Standards Executive Committee of the AICPA
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." The principles established in
this statement are required to be applied to the Company's financial statements
in 1999. Management has not yet completed its evaluation of the impact of this
standard on the Company's reported results of operations or financial position.
 
     In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement established standards of
accounting and reporting of derivative financial instruments. The standard is
required to be adopted in 2000. Management has not yet evaluated the impact this
standard will have on reported results of operations or financial position.
 
YEAR 2000 COMPLIANCE
 
     This is a "Year 2000 readiness disclosure" as that term is defined in the
Year 2000 Information and Readiness Disclosure Act of 1998. Beginning in January
of 1996, the Company began to aggressively manage its computer software and
hardware to insure that the Year 2000 date change will not adversely impact its
business. The Company has and will continue to make certain investments in its
application software to ensure the Company is Year 2000 compliant. In addition,
the Company is monitoring the compliance efforts of entities with which it
interacts. The Company began modification of its internally developed
proprietary software in 1996 and currently estimates that approximately 90% of
this software has been modified and tested to make it Year 2000 compliant.
Modification of the balance is expected to be completed in the first half of
1999. In any event, many of the Company's internally generated software programs
are considered noncritical applications which can, if necessary, be performed
manually. Noninformation technology systems such as process control devices and
other automated equipment which may contain imbedded chips that could be
affected by the year 2000 problem have been identified. Modifications to these
devices are underway, and the Company estimates that necessary modifications
will be completed during the first half of 1999. The Company has also contacted
its key vendors, suppliers and service providers to monitor their compliance
efforts. A follow-up has started with those third parties not responding to the
Company's original request. To the extent necessary, the Company has begun
identifying alternative suppliers. A survey of the Company's customers to assess
their Year 2000 readiness is currently underway. The Company estimates its costs
to inventory, assess, modify and test both its information and noninformation
technology requirements will be less than $1.0 million. These costs do not
include the Enterprise Resource Planning software referred to below.
 
     Following a thorough evaluation and review of its existing and future
information technology requirements, RTI has invested in a packaged Enterprise
Resource Planning (ERP) software system which will replace much of the Company's
existing business systems. Initially, the ERP system will be installed at the
Company's largest domestic operations and then, eventually, at all domestic and
foreign operations. A pilot version of the ERP system has been installed and is
successfully running at one of the Company's distribution centers. Financial
applications such as payroll and general ledger should be implemented by the
fourth quarter of 1999 at all major
 
                                       21
<PAGE>   24
 
domestic locations. Other applications covering operations and manufacturing
functions are currently being studied and should be implemented periodically
throughout 1999.
 
     The ERP system is certified to be Year 2000 compliant. The system will
replace certain existing software which has not and will not be restructured to
address the year-end change at December 31, 1999. For additional information,
see Capital Expenditures above.
 
     The most likely worst case Year 2000 scenario would be the inability of
third party suppliers such as utilities, telecommunication suppliers, critical
material suppliers, and financial institutions to continue providing their goods
and services to the Company. The inability of these vendors to continue
supplying the Company could, in the absence of alternative sources, have a
possibly material adverse impact on the Company's operations and/or financial
condition. The Company has identified multiple alternative supply sources where
possible.
 
     RTI believes it has allocated appropriate resources to identify and fix
Year 2000 problems; however, there can be no assurances that all Year 2000
problems will be identified and fixed in advance, and it is possible that some
Year 2000 problems could go undetected until after January 1, 2000.
 
     This discussion of RMI's efforts and management's expectations relating to
the effect of Year 2000 compliance on operating results are forward looking
statements. RMI's ability to achieve Year 2000 compliance and the level of
incremental costs associated therewith could be adversely impacted by, among
other things, the availability and cost of programming and testing resources,
vendors' ability to modify proprietary software and unanticipated problems
identified in the ongoing compliance review. In addition, RMI has limited or no
control over the actions of proprietary software vendors and other entities with
which it interacts. Therefore, Year 2000 compliance problems experienced by
these entities could adversely affect the results of the Company.
 
WORK STOPPAGE
 
     After the United Steelworkers of America and RMI failed to reach agreement
on a new contract covering the production and maintenance workers' clerical and
technical employees at its Niles, Ohio plant, a work stoppage, which commenced
October 1, 1998 is continuing. The Niles plant is the Company's largest
production facility. Operations at the plant are being conducted by management
and salaried personnel at a rate of approximately 40-50% of normal production
levels while negotiations continue. The cost of the strike, including lost
shipments, is currently estimated at $1.0 to $2.5 million per month. First
quarter 1999 results will be adversely impacted by the effects of the work
stoppage. An extended work stoppage would be likely to have an adverse impact on
1999 earnings. RMI is currently unable to quantify the impact of an extended
work stoppage on full-year 1999 results. However, depending on a number of
factors including the length of the work stoppage, the amount of lost production
and the potential inability to supply customer requirements, the work stoppage
could have a material adverse effect on the results of operations and financial
condition of RMI. To the extent the work stoppage impairs RMI's ability to
generate sufficient cash flows to support its operating needs, RTI may borrow
funds under its revolving credit facility to supplement available cash
resources.
 
ACQUISITIONS
 
     On October 1, 1998, RTI acquired all of the capital stock of New Century
Metals, Inc. ("NCM") for $35 million and the payment by RTI of certain bank debt
amounting to $8.9 million. The $35 million purchase price consisted of $16
million in cash, a $16 million note, payable January 4, 1999, bearing interest
at 5.81% per annum, and $3 million of the Company's common stock valued at
$19.2875 per share. NCM is a manufacturer and distributor of high temperature
and corrosion resistant alloys such as titanium, stainless steel and nickel, in
long bar form, to the aerospace, chemical processing, oil exploration and
production, and power generation industries. In addition to the manufacturing
facilities, NCM operates four distribution centers in the United States and one
in England.
 
     Also on October 1, 1998, RTI acquired all of the assets of Weld-Tech
Engineering, L.P. ("Weld-Tech") for $11.3 million in cash and the payment of a
$1.4 million note owed by Weld-Tech to a corporation, the shareholders of which
were also partners of Weld-Tech. Weld-Tech, based in Houston, Texas, will
operate under the name Weld-Tech Engineering Services, L.P. Weld-Tech provides
engineering and fabrication services for the
 
                                       22
<PAGE>   25
 
oil and gas industry, including weld design, fabrication and repair, as well as
materials engineering and testing services.
 
     RTI is also in the process of evaluating other potential acquisition
candidates. RTI evaluates such potential acquisitions on the basis of their
ability to enhance or improve the Company's existing operations or capabilities,
as well as the ability to provide access to new markets and/or customers for its
products. RTI may make acquisitions using its available cash resources,
borrowings under its existing credit facility, new debt financing, RTI Common
Stock, joint venture/partnership arrangements or any combination of the above.
 
ITEM 7(A). QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
     In the normal course of business, the Company is exposed to market risk and
price fluctuations related to the purchases of certain materials and supplies
used in its manufacturing operations. The Company obtains competitive prices for
materials and supplies when available. The majority of the Company's raw
material purchases for titanium sponge and titanium tetrachloride are made under
long-term contracts with negotiated prices.
 
     The Company's long-term debt is based on rates that float with LIBOR based
rates or bank prime rates and the carrying value approximates fair value.
 
     The Company is also subject to foreign currency exchange exposure for
operations whose assets and liabilities are denominated in currencies other than
the U.S. dollar. The Company does not used forward exchange contracts to manage
these risks, which are considered to be minimal. The majority of the Company's
sales are made in U.S. dollars, which minimizes exposure to foreign currency
fluctuation.
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
INDEX TO FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Report of Management........................................   23
Report of Independent Accountants...........................   24
FINANCIAL STATEMENTS:
  Consolidated Statement of Income for the years ended
     December 31, 1998, 1997 and 1996.......................   25
  Consolidated Balance Sheet at December 31, 1998 and
     1997...................................................   26
  Consolidated Statement of Cash Flows for the years ended
     December 31, 1998, 1997 and 1996.......................   27
  Consolidated Statement of Changes in Shareholders' Equity
     for the years ended December 31, 1998, 1997 and 1996...   28
  Notes to Consolidated Financial Statements................   29
</TABLE>
 
     All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
 
                                       23
<PAGE>   26
 
                              REPORT OF MANAGEMENT
 
     RTI International Metals, Inc. has prepared and is responsible for the
consolidated financial statements and other financial information included in
this Annual Report. The consolidated financial statements have been prepared in
conformity with generally accepted accounting principles and necessarily include
some amounts based on the best judgments and estimates of management. Financial
information displayed in other sections of this Annual Report is consistent with
that in the consolidated financial statements.
 
     The Company maintains a comprehensive formalized system of internal
accounting controls. Management believes that the internal accounting controls
provide reasonable assurance that transactions are executed and recorded in
accordance with Company policy and procedures and that the accounting records
may be relied on as a basis for preparation of the consolidated financial
statements and other financial information. In addition, as part of their audit
of the consolidated financial statements, the Company's independent accountants,
who are elected by the shareholders, review and test the internal accounting
controls selectively to establish a basis of reliance thereon in determining the
nature, extent and timing of audit tests to be applied.
 
     The Audit Committee of the Board of Directors, composed entirely of
directors who are not employees of the Company, meets regularly with the
independent accountants, management and internal auditors to discuss the
adequacy of internal accounting controls and the quality of financial reporting.
Both the independent accountants and internal auditors have full and free access
to the Audit Committee.
 
/s/ John H. Odle
John H. Odle
Executive Vice President

/s/ T. G. Rupert
T. G. Rupert
Executive Vice President &
Chief Financial Officer
 
                       REPORT OF INDEPENDENT ACCOUNTANTS
 
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF RTI INTERNATIONAL METALS, INC.
 
     In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of RTI International Metals, Inc. and its subsidiaries at December 31,
1998 and 1997, 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.


/s/ PricewaterhouseCoopers LLP
 
PricewaterhouseCoopers LLP
Pittsburgh, Pennsylvania
January 27, 1999
 
                                       24
<PAGE>   27
 
                         RTI INTERNATIONAL METALS, INC.
 
                        CONSOLIDATED STATEMENT OF INCOME
                             (DOLLARS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31
                                                             --------------------------------
                                                               1998        1997        1996
                                                             --------    --------    --------
<S>                                                          <C>         <C>         <C>
Sales......................................................  $337,476    $318,530    $251,357
Operating costs:
Cost of sales..............................................   245,710     245,687     205,748
Selling, general and administrative expenses...............    19,884      13,397       9,785
Research, technical and product development expenses.......     3,886       3,131       2,094
                                                             --------    --------    --------
       Total operating costs...............................   269,480     262,215     217,627
                                                             --------    --------    --------
Operating income...........................................    67,996      56,315      33,730
Other income-net...........................................     2,773       1,246         110
Interest expense...........................................      (668)       (244)     (2,181)
                                                             --------    --------    --------
Income before income taxes.................................    70,101      57,317      31,659
Provision (credit) for income taxes (Note 8)...............     1,958      (2,768)       (100)
                                                             --------    --------    --------
Net income.................................................  $ 68,143    $ 60,085    $ 31,759
                                                             ========    ========    ========
Net income per common share (Note 4)
  Basic....................................................  $   3.31    $   2.94    $   1.71
                                                             ========    ========    ========
  Diluted..................................................  $   3.29    $   2.92    $   1.70
                                                             ========    ========    ========
</TABLE>
 
  The accompanying notes are an integral part of these Consolidated Financial
                                  Statements.
 
                                       25
<PAGE>   28
 
                         RTI INTERNATIONAL METALS, INC.
 
                           CONSOLIDATED BALANCE SHEET
                             (DOLLARS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                1998        1997
                                                              --------    --------
<S>                                                           <C>         <C>
                                      ASSETS
CURRENT ASSETS:
Cash and cash equivalents...................................  $ 11,075    $ 30,211
Receivables, less allowance for doubtful accounts of $911
  and $1,064 (Note 6).......................................    63,077      70,898
Inventories, net (Note 5)...................................   166,835     120,732
Deferred income taxes (Note 8)..............................     2,259       4,811
Other current assets........................................    11,685       5,903
                                                              --------    --------
       Total current assets.................................   254,931     232,555
Property, plant and equipment, net (Note 7).................    77,024      43,034
Deferred income taxes (Note 8)..............................    13,675       5,157
Goodwill (Note 3)...........................................    38,144          --
Other noncurrent assets.....................................    12,246      10,563
                                                              --------    --------
       Total assets.........................................  $396,020    $291,309
                                                              ========    ========
 
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable (Note 3).......................................    16,000          --
Accounts payable............................................    16,279      25,346
Accrued wages and other employee costs......................     8,892       8,024
Other accrued liabilities...................................    17,535      14,361
                                                              --------    --------
       Total current liabilities............................    58,706      47,731
Long-term debt (Note 9).....................................    20,080          --
Accrued postretirement benefit cost (Note 10)...............    19,020      19,021
Other noncurrent liabilities................................     5,449       3,384
                                                              --------    --------
       Total liabilities....................................   103,255      70,136
                                                              --------    --------
Contingencies (Note 14).....................................
 
SHAREHOLDERS' EQUITY:
Preferred Stock, no par value; 5,000,000 shares authorized;
  no shares issued or outstanding...........................        --          --
Common Stock, $0.01 par value; 30,000,000 shares authorized;
  20,719,758 and 21,022,253 shares issued; and 20,719,758
  and 20,446,768 outstanding................................       207         210
Additional paid-in capital..................................   238,109     236,970
Deferred compensation.......................................    (2,012)     (1,100)
Treasury Stock, at cost; 0 and 575,485 shares...............        --      (3,225)
Accumulated earnings (deficit)..............................    56,461     (11,682)
                                                              --------    --------
       Total shareholders' equity...........................   292,765     221,173
                                                              --------    --------
       Total liabilities and shareholders' equity...........  $396,020    $291,309
                                                              ========    ========
</TABLE>
 
  The accompanying notes are an integral part of these Consolidated Financial
                                  Statements.
 
                                       26
<PAGE>   29
 
                         RTI INTERNATIONAL METALS, INC.
 
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                1998        1997        1996
                                                              --------    --------    --------
<S>                                                           <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)...........................................  $ 68,143    $ 60,085    $ 31,759
Adjustment for items not affecting funds from operations:
     Depreciation and amortization..........................     5,426       5,047       5,049
     Deferred income taxes..................................    (6,266)     (2,768)       (100)
     Other-noncash charges-net..............................       435         617       1,063
 
Changes in assets and liabilities (net of effects of
  businesses acquired):
     Receivables............................................    16,354     (10,463)    (16,731)
     Inventories............................................   (32,777)    (25,886)    (18,563)
     Accounts payable.......................................   (14,322)      7,368      (2,358)
     Other current liabilities..............................       514       5,259       1,125
     Other assets and liabilities...........................    (4,452)       (876)    (14,883)
                                                              --------    --------    --------
       Cash provided by (used in) operating activities......    33,055      38,383     (13,639)
 
CASH FLOWS FROM INVESTING ACTIVITIES:
  Investments in subsidiaries, net of cash acquired.........   (39,287)     (2,605)         --
  Proceeds from sale of facilities..........................        --          --       1,134
  Capital expenditures......................................   (33,131)     (7,894)     (4,194)
                                                              --------    --------    --------
       Cash used in investing activities....................   (72,418)    (10,499)     (3,060)
                                                              --------    --------    --------
 
CASH FLOWS FROM FINANCING ACTIVITIES:
  Exercise of Employee Stock Options........................       184       1,095       2,161
  Net proceeds from issuance of Common Stock................        --          --      80,393
  Borrowings under revolving credit agreements..............    20,080          --       2,900
  Debt repayments...........................................        --      (4,565)    (63,320)
  Treasury Common Stock repurchased.........................       (37)       (147)         --
                                                              --------    --------    --------
       Cash provided by (used in) financing activities......    20,227      (3,617)     22,134
                                                              --------    --------    --------
Increase (decrease) in cash and cash equivalents............   (19,136)     24,267       5,435
Cash and cash equivalents at beginning of period............    30,211       5,944         509
                                                              --------    --------    --------
Cash and cash equivalents at end of period..................  $ 11,075    $ 30,211    $  5,944
                                                              ========    ========    ========
 
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest (net of amounts capitalized).........  $    412    $     72    $  2,579
                                                              ========    ========    ========
Cash paid for income taxes..................................  $  7,982    $  1,105    $     --
                                                              ========    ========    ========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
       Issuance of Common Stock for Restricted Stock
          Awards............................................  $  1,347    $    832    $    682
NON-CASH CONSIDERATION FOR BUSINESSES ACQUIRED:
       Issuance of Note Payable.............................  $ 16,000          --          --
       Issuance of Common Stock.............................  $  2,774          --          --
</TABLE>
 
  Certain prior year amounts have been reclassified for comparative purposes.
 
  The accompanying notes are an integral part of these Consolidated Financial
                                  Statements.
 
                                       27
<PAGE>   30
 
                         RTI INTERNATIONAL METALS, INC.
 
           CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                             (DOLLARS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                                         EXCESS
                                                       ADDT'L.                   TREASURY   RETAINED     MINIMUM
                                  SHARES      COMMON   PAID-IN      DEFERRED      COMMON    EARNINGS     PENSION    COMPREHENSIVE
                                OUTSTANDING   STOCK    CAPITAL    COMPENSATION    STOCK     (DEFICIT)   LIABILITY      INCOME
                                -----------   ------   --------   ------------   --------   ---------   ---------   -------------
<S>                             <C>           <C>      <C>        <C>            <C>        <C>         <C>         <C>
Balance at January 1, 1996....  15,339,893     $159    $151,715     $    --      $(3,078)   $(103,526)   $(8,381)
Shares issued for Directors'
  Compensation................       2,585       --          56          --           --           --         --
Shares issued for Restricted
  Stock Award Plans...........      51,000       --         682        (682)          --           --         --
Compensation expense
  recognized..................          --       --          --         125           --           --         --
Shares issued as a result of
  Common Stock Offering.......   4,600,000       46      80,347          --           --           --         --
Shares issued from exercise of
  employee stock options......     297,072        3       2,158          --           --           --         --
Net income....................          --       --          --          --           --       31,759         --       $31,759
Adjustment to minimum pension
  liability...................          --       --          --          --           --           --      7,353         7,353
                                                                                                                       -------
Comprehensive income..........          --       --          --          --           --           --         --       $39,112
                                ----------     ----    --------     -------      -------    ---------    -------       =======
Balance at December 31,
  1996........................  20,290,550     $208    $234,958     $  (557)     $(3,078)   $ (71,767)   $(1,028)
Shares issued for Directors'
  Compensation................       3,346       --          87          --           --           --         --
Shares issued for Restricted
  Stock Award Plans...........      34,950       --         832        (832)          --           --         --
Compensation expense
  recognized..................          --       --          --         289           --           --         --
Treasury Common Stock
  purchased at cost...........      (7,287)      --          --          --         (147)          --         --
Shares issued from exercise of
  employee stock options......     125,209        2       1,093          --           --           --         --
Net income....................          --       --          --          --           --       60,085         --       $60,085
Adjustment to minimum pension
  liability...................          --       --          --          --           --           --      1,028         1,028
                                                                                                                       -------
Comprehensive income..........          --       --          --          --           --           --         --       $61,113
                                ----------     ----    --------     -------      -------    ---------    -------       =======
Balance at December 31,
  1997........................  20,446,768     $210    $236,970     $(1,100)     $(3,225)   $ (11,682)   $    --
Shares issued for Directors'
  Compensation................       4,416       --          92          --           --           --         --
Shares issued for Restricted
  Stock Award Plans...........      69,125       --       1,347      (1,347)          --           --         --
Compensation expense
  recognized..................          --       --          --         435           --           --         --
Treasury Common Stock
  purchased at cost...........      (1,816)      --          --          --          (37)          --         --
Shares issued from exercise of
  employee stock options......      45,725        1         183          --           --           --         --
Reorganization of RMI Titanium
  Company and RTI
  International Metals........          --       (6)     (3,256)         --        3,262           --         --
Shares issued in New Century
  Metals Acquisition..........     155,540        2       2,773          --           --           --         --
Net income....................          --       --          --          --           --       68,143         --       $68,143
                                                                                                                       -------
Comprehensive income..........          --       --          --          --           --           --         --       $68,143
                                                                                                                       =======
                                ----------     ----    --------     -------      -------    ---------    -------
Balance at December 31,
  1998........................  20,719,758     $207    $238,109     $(2,012)     $    --    $  56,461    $    --
                                ==========     ====    ========     =======      =======    =========    =======
</TABLE>
 
  The accompanying notes are an integral part of these Consolidated Financial
                                  Statements.
 
                                       28
<PAGE>   31
 
                         RTI INTERNATIONAL METALS, INC.
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             (DOLLARS IN THOUSANDS)
 
NOTE 1--ORGANIZATION AND OPERATIONS:
 
     The consolidated financial statements of RTI International Metals, Inc.
(the "Company") include the financial position and results of operations for the
Company and its subsidiaries.
 
     On September 30, 1998, the shareholders of the Company's now wholly-owned
subsidiary RMI Titanium Company ("RMI") approved a proposal to reorganize into a
holding company structure ("the 1998 Reorganization"). Pursuant to the 1998
Reorganization, the Company became the parent company of RMI, and shares of RMI
Common Stock were exchanged on a one-for-one (1:1) basis for shares of the
Company. Shares of RTI began trading on the New York Stock Exchange on October
1, 1998.
 
     The Company is a successor to entities that have been operating in the
titanium industry since 1958. In 1990, USX Corporation ("USX") and Quantum
Chemical Corporation ("Quantum") transferred their entire ownership interest in
RMI's immediate predecessor, RMI Company, an Ohio general partnership, to RMI in
exchange for shares of RMI's Common Stock. Quantum then sold its shares to the
public. USX retained ownership of its shares. At September 30, 1998
approximately 27% of the Company's outstanding common stock was owned by USX.
 
     In November, 1996, USX Corporation completed a public offering of its notes
which are exchangeable in February 2000, for 5,483,600 shares of RTI Common
Stock, owned by USX (or for an equivalent amount of cash at USX's option). Such
shares represent all of the RTI Common Stock owned by USX.
 
     On October 1, 1998, RTI acquired all of the capital stock of New Century
Metals ("NCM") of Solon, Ohio. NCM is a manufacturer and distributor of high
temperature and corrosion resistant alloys such as titanium, stainless steel and
nickel, in long bar form, to the aerospace, chemical processing, oil exploration
and production, and power generation industries. In addition to manufacturing
facilities NCM operates five distribution centers. Also on October 1, 1998, RTI
acquired the assets of Weld-Tech Engineering, L.P. ("Weld-Tech"). Weld-Tech,
based in Houston, Texas will operate under the name Weld-Tech Engineering
Services, L.P. Weld-Tech provides engineering and fabrication services for the
oil and gas industry, including weld design, fabrication and repair as well as
materials engineering and testing services. For further information see Note
3-Acquisitions.
 
     On July 3, 1997, the Company acquired 90% of the common stock of Galt
Alloys, Inc., a manufacturer of ferro titanium and a producer and worldwide
distributor of specialty alloys to ferrous and nonferrous customers.
 
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
  Principles of consolidation:
 
     The consolidated financial statements include the accounts of RTI
International Metals, Inc. and its majority owned subsidiaries. All significant
intercompany accounts and transactions are eliminated.
 
  Use of Estimates:
 
     Generally accepted accounting principles require management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at year-end
and the reported amounts of revenues and expenses during the year. Actual
results could differ from these estimates.
 
  Inventories:
 
     Inventories are primarily valued at cost as determined by the last-in,
first-out (LIFO) method which, in the aggregate, is lower than market. Inventory
costs generally include materials, labor costs and manufacturing overhead
(including depreciation).
 
                                       29
<PAGE>   32
 
  Depreciation and amortization:
 
     In general, depreciation and amortization of properties is determined using
the straight-line method over the estimated useful lives of the various classes
of assets. For financial accounting purposes, depreciation and amortization are
provided over the following useful lives:
 
<TABLE>
<S>                                                       <C>
Building and improvements...............................  20-25 years
Machinery and equipment.................................  10-14 years
Furniture and fixtures..................................   3-10 years
</TABLE>
 
  Retirement and disposal of properties:
 
     The cost of properties retired or otherwise disposed of, together with the
accumulated depreciation provided thereon, is eliminated from the accounts. The
net gain or loss is recognized in other income and expense.
 
  Maintenance and repairs:
 
     Routine maintenance, repairs and replacements are charged to operations.
Expenditures that materially increase values, change capacities or extend useful
lives are capitalized.
 
  Goodwill:
 
     Goodwill arising from business acquisitions, which represents the excess of
the purchase price over the fair value of the assets acquired is generally
amortized over the life of assets acquired, not to exceed 25 years.
 
  Revenue and cost recognition:
 
     Revenues from the sale of commercial products are recognized upon passage
of title to the customer, which in most cases coincides with shipment. Revenues
from long-term, fixed-price contracts are recognized on the
percentage-of-completion method, measured based on the achievement of certain
milestones in the production and fabrication process. Such milestones have been
weighted based on the critical nature of the operation performed, which
management believes is the best available measure of progress on these
contracts. Revenues related to cost-plus-fee contracts are recognized on the
basis of costs incurred during the period plus the fee earned.
 
     Contract costs comprise all direct material and labor costs, including
outside processing fees, and those indirect costs related to contract
performance. Provisions for estimated losses on uncompleted contracts are made
in the period in which such losses are determined.
 
     Contract costs and estimated earnings on uncompleted contracts, net of
progress billings, are included in the consolidated balance sheet under
"Inventories."
 
  Pensions:
 
     The Company and its subsidiaries have a number of pension plans which cover
substantially all employees. Most employees in the Titanium Group are covered by
defined benefit plans in which benefits are based on years of service and annual
compensation. Contributions to the defined benefit plans, as determined by an
independent actuary in accordance with regulations, provide not only for
benefits attributed to date but also for those expected to be earned in the
future. The Company's policy is to fund pension costs at amounts equal to the
minimum funding requirements of ERISA plus additional amounts as may be approved
from time to time.
 
     The majority of employees in the Fabrication and Distribution Group
participate in defined contribution or money purchase plans. Employees of
Tradco, Inc. participate in a defined benefit plan.
 
  Postretirement benefits:
 
     The Company provides health care benefits and life insurance coverage for
certain of its employees and their dependents. Under the Company's current
plans, certain of the Company's employees will become eligible for
 
                                       30
<PAGE>   33
 
those benefits if they reach retirement age while working with the Company. In
general, employees of the Titanium Group are covered by postretirement health
care and life insurance benefits.
 
     The Company does not prefund postretirement benefit costs, but rather pays
claims as presented.
 
  Income tax:
 
     In connection with the 1990 Reorganization and Initial Public Offering, the
tax basis of RMI Titanium Company's assets at that time reflected the fair
market value of the common stock then issued by the RMI. The new tax basis was
allocated to all assets of RMI based on federal income tax rules and
regulations, and the results of an independent appraisal. For financial
statement purposes, these assets are carried at historical cost. As a result,
the tax basis of a significant portion of RMI's assets exceeds the related book
values and depreciation and amortization for tax purposes exceeds the
corresponding financial statement amounts.
 
     Deferred tax assets and liabilities are determined based on the difference
between the financial statement and tax bases of assets and liabilities as
measured by the enacted tax rates which will be in effect when these differences
reverse. In addition, deferred tax assets can result from net operating losses
("NOL") which can be carried forward to offset future taxable income.
 
     Statement of Financial Accounting Standards No. 109 (SFAS No. 109),
"Accounting for Income Taxes," requires a valuation allowance when it is "more
likely than not" that some portion or all of the deferred tax assets will not be
realized. The Company continually evaluates the available evidence supporting
the realization of deferred tax assets and adjusts any necessary valuation
allowance accordingly.
 
  Stock-based compensation:
 
     Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 123 ("SFAS No. 123"), "Accounting for Stock-Based
Compensation." The statement established standards for accounting for
stock-based compensation but also allows companies to continue to account for
stock-based compensation under the provisions of Accounting Principles Board
(APB) Opinion No. 25 "Accounting for Stock Issued to Employees" and make certain
additional disclosures in the notes to financial statements. The Company
continues to account for stock-based compensation in accordance with APB Opinion
No. 25.
 
  Cash equivalents:
 
     The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
 
NOTE 3--ACQUISITIONS:
 
     On October 1, 1998, the Company completed the acquisition of two companies,
New Century Metals, Inc. (NCM) and Weld-Tech Engineering, L.P. (Weld-Tech). Both
acquisitions have been accounted for under the purchase method of accounting.
 
  NCM
 
     Pursuant to a Stock Purchase Agreement, dated as of October 1, 1998, by the
Company, Richard R. Burkhart, Joseph H. Rice and New Century Metals, Inc. (NCM),
the Company purchased all of the capital stock of NCM for $35.0 million. The
consideration consisted of $16.0 million in cash, a $16.0 million note payable
January 4, 1999, together with interest at the rate of 5.81% per annum and $3.0
million of the Company's Common Stock (155,541 shares valued at $19.2875 per
share). The note was paid in full on January 4, 1999.
 
     NCM manufactures and distributes titanium and other high temperature and
corrosion-resistant alloys in long bar form to the aerospace, chemical
processing, oil exploration and production and power generation industries. NCM
also operates five distribution centers.
 
                                       31
<PAGE>   34
 
  Weld-Tech
 
     Pursuant to an Asset Purchase Agreement, dated as of October 1, 1998, the
Company acquired substantially all of the assets, and assumed certain
liabilities, of Weld-Tech Engineering L.P. for $11.3 million in cash.
Additionally, the Company paid a total of $1.4 million owed by Weld-Tech to a
corporation, the shareholders of which were also partners of Weld-Tech.
 
     Weld-Tech provides engineering and fabrication services for the oil and gas
industry, including weld design, fabrication and repair as well as materials
engineering and testing services.
 
     As the Company's financial statements only include three months of
operations of NCM and Weld-Tech, the following selected unaudited pro forma
information is being provided to present a summary of the combined results of
the Company together with NCM and Weld-Tech as if the acquisitions had occurred
on January 1, 1998 and 1997, giving effect to purchase accounting adjustments.
This pro forma data is for informational purposes only and may not necessarily
reflect the results of operations of the Company had the acquired business
operated as part of the Company for the years ended December 31, 1998 and 1997.
 
<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31
                                                     ---------------------------------------------------
                                                               1998                       1997
                                                     ------------------------   ------------------------
                                                                   PRO FORMA                  PRO FORMA
                                                     HISTORICAL   (UNAUDITED)   HISTORICAL   (UNAUDITED)
                                                     ----------   -----------   ----------   -----------
<S>                                                  <C>          <C>           <C>          <C>
Net sales..........................................   $337,476     $368,361      $318,530     $347,758
Net income.........................................     68,143       69,428        60,085       61,561
Net income per common share:
     Basic.........................................       3.31         3.35          2.94         2.99
     Diluted.......................................       3.29         3.33          2.92         2.97
</TABLE>
 
     The pro forma amounts reflect the results of operations for the Company,
the acquired business, and the following purchase accounting adjustments for the
periods presented:
 
     1. Elimination of sales and costs of goods sold on transactions between the
        Company, NCM and Weld-Tech of $4.2 million and $3.7 million in 1998 and
        1997 respectively. The combined historical net sales of NCM and
        Weld-Tech for the years ended December 31, 1998 and 1997 amounted to
        $48.4 million and $32.7 million respectively.
 
     2. Depreciation on fixed assets and amortization of intangible assets based
        on the purchase price allocation for each period presented. Intangible
        assets, consisting primarily of goodwill, are amortized over 25 years.
 
     3. Estimated income tax effect on the pro forma adjustments.
 
                                       32
<PAGE>   35
 
NOTE 4--EARNINGS PER SHARE:
 
     A reconciliation of the income and weighted average number of outstanding
common shares used in the calculation of basic and diluted earnings per share
for each of the years ended December 31, 1998, 1997, 1996 follows. (in thousands
except number of shares and per share amounts):
 
<TABLE>
<CAPTION>
                                                                                      EARNINGS
                                                               NET                    PER SHARE
                                                             INCOME       SHARES       AMOUNT
                                                             -------    ----------    ---------
<S>                                                          <C>        <C>           <C>
For the year ended December 31, 1998
Basic EPS..................................................  $68,143    20,560,824      $3.31
Effect of dilutive securities:
  Exercise of stock options................................       --       123,803        .02
                                                             -------    ----------      -----
Diluted EPS................................................  $68,143    20,684,627      $3.29
                                                             =======    ==========      =====
For the year ended December 31, 1997
Basic EPS..................................................  $60,085    20,401,601      $2.94
Effect of dilutive securities:
  Exercise of stock options................................                165,254        .02
                                                             -------    ----------      -----
Diluted EPS................................................  $60,085    20,566,855      $2.92
                                                             =======    ==========      =====
For the year ended December 31, 1996
Basic EPS..................................................  $31,759    18,516,645      $1.71
Effect of dilutive securities:
  Exercise of stock options................................       --       166,959        .01
                                                             -------    ----------      -----
Diluted EPS................................................  $31,759    18,683,604      $1.70
                                                             =======    ==========      =====
</TABLE>
 
NOTE 5--INVENTORIES:
 
<TABLE>
<CAPTION>
                                                             DECEMBER 31
                                                         --------------------
                                                           1998        1997
                                                         --------    --------
<S>                                                      <C>         <C>
Raw materials and supplies.............................  $ 73,820    $ 55,542
Work-in-process and finished goods.....................   111,103      95,462
Adjustment to LIFO values..............................   (18,088)    (30,272)
                                                         --------    --------
                                                         $166,835    $120,732
                                                         ========    ========
</TABLE>
 
NOTE 6--ACCOUNTS RECEIVABLE:
 
<TABLE>
<CAPTION>
                                                              DECEMBER 31
                                                           ------------------
                                                            1998       1997
                                                           -------    -------
<S>                                                        <C>        <C>
Trade and commercial customers...........................  $62,634    $69,527
U.S. Government--Department of Energy....................    1,354      2,435
                                                           -------    -------
                                                            63,988     71,962
Less--Allowance for doubtful accounts....................     (911)    (1,064)
                                                           -------    -------
                                                           $63,077    $70,898
                                                           =======    =======
</TABLE>
 
                                       33
<PAGE>   36
 
NOTE 7--PROPERTY, PLANT AND EQUIPMENT:
 
     Property, plant and equipment is stated at cost and consists of the
following:
 
<TABLE>
<CAPTION>
                                                            DECEMBER 31
                                                       ----------------------
                                                         1998         1997
                                                       ---------    ---------
<S>                                                    <C>          <C>
Land.................................................  $   1,247    $     770
Buildings and improvements...........................     42,059       36,637
Machinery and equipment..............................    112,228       89,702
Other................................................     19,976       18,246
Construction in progress.............................     11,718        2,838
                                                       ---------    ---------
                                                         187,228      148,193
Less--Accumulated depreciation.......................   (110,204)    (105,159)
                                                       ---------    ---------
                                                       $  77,024    $  43,034
                                                       =========    =========
</TABLE>
 
NOTE 8--INCOME TAXES:
 
     The "Provision (credit) for income taxes" caption in the Consolidated
Statement of Income includes the following income tax expense (benefit):
 
<TABLE>
<CAPTION>
                            DECEMBER 31, 1998              DECEMBER 31, 1997              DECEMBER 31, 1996
                       ---------------------------    ----------------------------    --------------------------
                       CURRENT   DEFERRED   TOTAL     CURRENT   DEFERRED    TOTAL     CURRENT   DEFERRED   TOTAL
                       -------   --------   ------    -------   --------   -------    -------   --------   -----
<S>                    <C>       <C>        <C>       <C>       <C>        <C>        <C>       <C>        <C>
Federal..............  $6,467    $(4,155)   $2,312    $   --    $(2,768)   $(2,768)   $   --     $(100)    $(100)
State................   1,250     (2,111)     (861)       --         --         --        --        --        --
Foreign..............     507         --       507        --         --         --        --        --        --
                       ------    -------    ------    ------    -------    -------    ------     -----     -----
  Total..............  $8,224    $(6,266)   $1,958    $   --    $(2,768)   $(2,768)   $   --     $(100)    $(100)
                       ======    =======    ======    ======    =======    =======    ======     =====     =====
</TABLE>
 
A reconciliation of the expected tax at the federal statutory tax rate to the
actual provision (benefit) follows:
 
<TABLE>
<CAPTION>
                                                          DECEMBER 31,
                                                 ------------------------------
                                                   1998       1997       1996
                                                 --------   --------   --------
<S>                                              <C>        <C>        <C>
Statutory rate of 35% applied to income before
  income taxes.................................  $ 24,535   $ 20,061   $ 11,081
Effects of net operating loss carryforwards and
  valuation allowance adjustments..............   (22,752)   (21,255)   (11,235)
Other, net.....................................       175     (1,574)        54
                                                 --------   --------   --------
  Total provision (benefit)....................  $  1,958   $ (2,768)  $   (100)
                                                 ========   ========   ========
</TABLE>
 
                                       34
<PAGE>   37
 
Deferred tax assets and liabilities resulted from the following:
 
<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                              -------------------
                                                               1998        1997
                                                              -------    --------
<S>                                                           <C>        <C>
Deferred Tax Assets
  Loss Carryforwards ($0 and $43,000).......................  $    --    $ 15,551
  Inventories...............................................    6,756       6,004
  Property, plant and equipment.............................    1,705       2,308
  Intangible assets.........................................    1,652       1,478
  Other postretirement benefit costs........................    7,740       6,846
  Other employment costs....................................    2,484       1,636
  Tax credits...............................................    1,519       1,714
  Environmental related costs...............................    1,634       1,222
  Other.....................................................      986       1,019
  Valuation Allowance.......................................       --     (22,752)
                                                              -------    --------
     Total deferred tax assets..............................   24,476      15,026
Deferred tax liabilities
  Pension costs.............................................   (7,820)     (5,058)
  Federal effect of state deferred tax assets...............     (722)         --
                                                              -------    --------
     Total deferred tax liabilities.........................   (8,542)     (5,058)
                                                              -------    --------
Net deferred tax asset......................................  $15,934    $  9,968
                                                              =======    ========
</TABLE>
 
NOTE 9--LONG-TERM DEBT:
 
     Concurrent with the 1998 Reorganization, RTI entered into a credit
agreement dated September 30, 1998 (the "Credit Facility"), replacing RMI's then
existing credit facilities. The unsecured Credit Facility provides for $125
million in five-year borrowings and $25 million in one-year borrowings, on a
revolving basis, of up to the lesser of $150 million or a borrowing base equal
to the sum of 85% of qualified accounts receivable and 60% of qualified
inventory. At December 31, 1998, $20.1 million was outstanding under the
facility.
 
     Under the terms of the Credit Facility, the Company, at its option, will be
able to borrow at (a) a base rate (which is the higher of PNC Bank's prime rate
or the Federal Funds Effective Rate plus 0.5% per annum), or (b) LIBOR, plus a
spread (ranging from 0.5% to 1.5%) determined by the ratio of the Company's
consolidated total indebtedness to consolidated earnings before interest, taxes,
depreciation and amortization.
 
     The Credit Facility contains additional terms and financial covenants which
are typical for other similar facilities. At December 31, 1998 the Company was
in compliance with all covenants and terms of the Credit Facility.
 
<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                           ------------------
                                                            1998       1997
                                                           -------    -------
<S>                                                        <C>        <C>
Revolving Credit Facility dated September 30, 1998,
  maturing September 29, 2003 bearing interest at 5.88%
  at December 31, 1998...................................  $20,080    $    --
                                                           -------    -------
                                                           $20,080    $    --
                                                           =======    =======
</TABLE>
 
                                       35
<PAGE>   38
 
NOTE 10--EMPLOYEE BENEFIT PLANS:
 
     The following table provides reconciliations of the changes in the
Company's pension and other postemployment benefit plan obligations and asset
fair values for the years ended December 31, 1998 and 1997, and a statement of
the funded status as of December 31, 1998 and 1997.
 
<TABLE>
<CAPTION>
                                                         PENSION          OTHER POSTRETIREMENT
                                                      BENEFIT PLANS          BENEFIT PLANS
                                                    ------------------    --------------------
                                                     1998       1997        1998        1997
                                                    -------    -------    --------    --------
<S>                                                 <C>        <C>        <C>         <C>
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation January 1....................    $76,630    $71,833    $ 19,227    $ 19,267
Service cost....................................      1,465      1,252         291         260
Interest cost...................................      5,154      5,166       1,312       1,405
Plan amendments.................................       (710)        --          --          --
Actuarial (gain) loss...........................      2,569      4,398         522        (162)
Benefits paid...................................     (6,014)    (6,019)     (1,604)     (1,543)
                                                    -------    -------    --------    --------
Benefit obligation December 31..................    $79,094    $76,630    $ 19,748    $ 19,227
                                                    =======    =======    ========    ========
 
CHANGE IN PLAN ASSETS:
Fair value of plan assets January 1.............    $84,697    $73,601
Actual return on plan assets....................     12,512     14,066
Employer contributions..........................      3,306      3,049
Benefits paid...................................     (6,014)    (6,019)
                                                    -------    -------
Fair value of plan assets January 1.............    $94,501    $84,697
                                                    =======    =======
</TABLE>
 
     As of December 31, 1998, approximately 53% of the plans' assets are
invested in equity securities, 20% in government debt instruments, and the
balance in cash equivalents or debt securities.
 
<TABLE>
<CAPTION>
                                                         PENSION          OTHER POSTRETIREMENT
                                                      BENEFIT PLANS          BENEFIT PLANS
                                                    ------------------    --------------------
                                                     1998       1997        1998        1997
                                                    -------    -------    --------    --------
<S>                                                 <C>        <C>        <C>         <C>
FUNDED STATUS:
Funded status December 31.......................    $15,407    $ 8,068    $(19,748)   $(19,227)
Unrecognized net transition obligation..........        563        870          --          --
Unrecognized (gain) loss........................     (1,550)     2,098         728         206
Unrecognized prior service cost.................      1,857      3,012          --          --
                                                    -------    -------    --------    --------
Net amount recognized...........................    $16,277    $14,048    $(19,020)   $(19,021)
                                                    =======    =======    ========    ========
</TABLE>
 
     Amounts recognized in the Consolidated Balance Sheet at December 31 consist
of the following:
 
<TABLE>
<CAPTION>
                                                         PENSION          OTHER POSTRETIREMENT
                                                      BENEFIT PLANS          BENEFIT PLANS
                                                    ------------------    --------------------
                                                     1998       1997        1998        1997
                                                    -------    -------    --------    --------
<S>                                                 <C>        <C>        <C>         <C>
Prepaid benefit cost............................    $16,277    $14,048    $     --    $     --
Accrued benefit liability.......................         --         --     (19,020)    (19,021)
                                                    -------    -------    --------    --------
                                                    $16,277    $14,048    $(19,020)   $(19,021)
                                                    =======    =======    ========    ========
</TABLE>
 
                                       36
<PAGE>   39
 
     Net periodic benefit costs as determined by independent actuaries, include
the following components:
 
<TABLE>
<CAPTION>
                                                                         OTHER POSTRETIREMENT
                                         PENSION BENEFIT PLANS              BENEFIT PLANS
                                     -----------------------------    --------------------------
                                      1998       1997       1996       1998      1997      1996
                                     -------    -------    -------    ------    ------    ------
<S>                                  <C>        <C>        <C>        <C>       <C>       <C>
Service cost.......................  $ 1,465    $ 1,252    $ 1,358    $  291    $  260    $  303
Interest cost......................    5,154      5,166      5,055     1,312     1,405     1,492
Expected return on assets..........   (6,515)    (6,159)    (5,127)       --        --        --
Prior service cost amortization....      445        445        445        --        --        --
Amortization of actuarial loss.....      223         69        291        --       130       163
Amortization of transition
  obligation.......................      307        307        307        --        --        --
                                     -------    -------    -------    ------    ------    ------
Net periodic benefit cost..........  $ 1,079    $ 1,080    $ 2,329    $1,603    $1,795    $1,958
                                     =======    =======    =======    ======    ======    ======
</TABLE>
 
     Assumptions used in the determination of the benefit obligations include
the following:
 
<TABLE>
<CAPTION>
                                                              1998    1997
                                                              ----    ----
<S>                                                           <C>     <C>
Discount rate...............................................  6.75%   7.0%
Expected return on plan assets..............................  9.0%    9.0%
</TABLE>
 
     The ultimate costs of certain of the Company's retiree health care plans
are capped at predetermined out-of-pocket spending limits. The annual rate of
increase in the per capita costs for these plans is limited to the predetermined
spending cap. As of December 31, 1998, the predetermined limits had been reached
and, as a result, increases in claim cost rates will have no impact on the
reported accumulated postretirement benefit obligation or net periodic expense.
 
NOTE 11--OPERATING LEASES:
 
     The Company and its subsidiaries have entered into various operating leases
for the use of certain equipment, principally office equipment and vehicles. The
leases generally contain renewal options and provide that the lessee pay
insurance and maintenance costs. The total rental expense under operating leases
amounted to $2.9 million in 1998, $1.9 million in 1997 and $1.3 million in 1996.
 
NOTE 12--TRANSACTIONS WITH RELATED PARTIES:
 
     The Company, in the ordinary course of business, purchases goods and
services, including conversion services, from USX, which currently owns
approximately 27% of RTI's common stock, and related companies. The cost of such
transactions to the Company amounted to $0.6 million in 1998, $1.2 million in
1997 and $0.6 million in 1996. The cost of these transactions were on terms no
less favorable to the Company than those obtained from other parties. The United
States Steel and Carnegie Pension Fund (the "Pension Fund") is the trustee of
the Company's pension plans. The Pension Fund is a registered investment advisor
under the Investment Advisors Act of 1940, and receives a negotiated fee for
such services. Other transactions with related parties are incidental to the
Company's business and are not significant.
 
NOTE 13--SEGMENT REPORTING
 
     The Company's reportable segments are the Titanium Group and the
Fabrication and Distribution Group.
 
     The Titanium Group manufactures and sells a wide range of titanium mill
products to a customer base consisting primarily of manufacturing and
fabrication companies in the aerospace and nonaerospace markets. Titanium mill
products consist of basic mill shapes such as ingot, slab, bloom, billet, bar,
plate, sheet, strip and welded tube. Titanium mill products are sold primarily
to customers such as metal fabricators, forge shops and, to a lesser extent,
metal distribution companies. Titanium mill products are usually raw or starting
material for these customers, who then form, fabricate or further process mill
products into finished or semi-finished components or parts.
 
     The Fabrication and Distribution Group is engaged primarily in the
fabrication of titanium, specialty metals and steel products including pipe,
engineered tubular products for use in the oil and gas and geothermal energy
 
                                       37
<PAGE>   40
 
industries; hot and superplastically formed parts, cut, forged, extruded and
rolled shapes for aerospace and nonaerospace applications. This segment also
provides warehousing, distribution, finishing, cut-to-size and just-in-time
delivery services of titanium, steel and other metal products.
 
     Other Operations is comprised of certain small businesses and operations
dissimilar to either the Titanium Group or the Fabrication and Distribution
Group, and primarily consists of the Company's Environmental Services Division
located in Ashtabula, Ohio. While the Environmental Services Division is
structurally a part of the Titanium Group, the aggregation rules of the
accounting standard do not permit combination with that group for this footnote
disclosure.
 
     Intersegment sales are accounted for at prices which are generally
established by reference to similar transactions with unaffiliated customers.
Reportable segments are measured based on segment operating income after an
allocation of certain corporate items such as general corporate overhead and
expenses. Assets of general corporate activities include unallocated cash and
short-term investments, and deferred taxes.
 
     Segment information for the three years ended December 31, 1998 is as
follows:
 
<TABLE>
<CAPTION>
                                                               1998        1997        1996
                                                             --------    --------    --------
<S>                                                          <C>         <C>         <C>
Business Segment Net Sales:
Titanium
  Trade....................................................  $229,170    $243,906    $206,119
  Intersegment.............................................    49,716      41,064      16,944
                                                             --------    --------    --------
                                                              278,886     284,970     223,063
Fabrication and Distribution
  Trade....................................................    91,608      61,399      34,747
  Intersegment.............................................       105         130         155
                                                             --------    --------    --------
                                                               91,713      61,529      34,902
Other Operations...........................................    16,698      13,225      10,491
Adjustments and Eliminations...............................   (49,821)    (41,194)    (17,099)
                                                             --------    --------    --------
       Total Net Sales.....................................  $337,476    $318,530    $251,357
                                                             ========    ========    ========
 
Segment Operating Income (loss):
Titanium...................................................  $ 59,791    $ 53,498    $ 30,234
Fabrication and Distribution...............................     7,399       2,475       3,059
Other Operations...........................................       806         342         437
                                                             --------    --------    --------
       Total...............................................  $ 67,996    $ 56,315    $ 33,730
                                                             ========    ========    ========
 
Allocated Corporate Items included in Segment Operating
  Income(1):
Titanium...................................................  $ (5,015)   $ (3,343)   $ (3,386)
Fabrication and Distribution...............................    (1,574)       (702)       (360)
                                                             --------    --------    --------
                                                             $ (6,589)   $ (4,045)   $ (2,746)
                                                             ========    ========    ========
---------------
(1) Allocated on a three factor formula based on sales, assets and payrolls.
 
Segment Assets:
Titanium...................................................  $253,357    $212,781    $184,114
Fabrication and Distribution...............................   116,837      35,978      19,293
Other Operations...........................................       198         459         357
General Corporate Assets...................................    25,628      42,091      12,116
                                                             --------    --------    --------
       Total Consolidated Assets...........................  $396,020    $291,309    $215,880
                                                             ========    ========    ========
</TABLE>
 
                                       38
<PAGE>   41
 
<TABLE>
<CAPTION>
                                                               1998        1997        1996
                                                             --------    --------    --------
<S>                                                          <C>         <C>         <C>
Capital Spending:
Titanium...................................................  $ 32,031    $  7,193    $  3,688
Fabrication and Distribution...............................     1,100         686         506
Other Operations...........................................        --          15          --
                                                             --------    --------    --------
       Total Capital Spending..............................  $ 33,131    $  7,894    $  4,194
                                                             ========    ========    ========
Depreciation and Amortization
Titanium...................................................  $  4,450    $  4,726    $  4,834
Fabrication and Distribution...............................       958         301         195
Other Operations...........................................        18          20          20
                                                             --------    --------    --------
       Total depreciation and amortization.................  $  5,426    $  5,047    $  5,049
                                                             ========    ========    ========
 
Revenue by Market Information:
Titanium
  Aerospace................................................  $218,719    $239,472    $186,979
  Nonaerospace.............................................    60,167      53,539      44,113
                                                             --------    --------    --------
       Total...............................................   278,886     293,011     231,092
Fabrication and Distribution
  Aerospace................................................    70,773      50,945      26,609
  Nonaerospace.............................................    20,940      10,584       8,293
                                                             --------    --------    --------
       Total...............................................  $ 91,713    $ 61,529    $ 34,902
Other Operations
  Nonaerospace.............................................  $ 16,698    $ 13,225    $ 10,491
                                                             --------    --------    --------
  Adjustments and Eliminations.............................   (49,821)    (49,235)    (25,128)
                                                             --------    --------    --------
       Total Net Sales.....................................  $337,476    $318,530    $251,357
                                                             ========    ========    ========
</TABLE>
 
     The following geographic area information includes trade sales based on
product shipment destination, and property, plant and equipment based on
physical location.
 
<TABLE>
<CAPTION>
                                                               1998        1997        1996
                                                             --------    --------    --------
<S>                                                          <C>         <C>         <C>
 
Geographic location of trade sales:
  United States............................................  $266,596    $256,951    $209,868
  England..................................................    23,770      22,193       8,784
  France...................................................    16,376      15,123      10,453
  Rest of World............................................    30,734      24,263      22,252
                                                             --------    --------    --------
       Total...............................................  $337,476    $318,530    $251,357
                                                             ========    ========    ========
 
Gross Property, Plant and Equipment:
  United States............................................  $185,695    $147,014    $135,442
  England..................................................     1,533       1,179         963
                                                             --------    --------    --------
       Total...............................................  $187,228    $148,193    $136,405
                                                             ========    ========    ========
</TABLE>
 
     In 1998, no single customer accounted for more than 10% of consolidated
revenues. In the years ended December 31, 1998, 1997 and 1996, export sales were
$70.9 million, $61.6 million, and $41.5 million, respectively, principally to
customers in Western Europe.
 
     Substantially all of the Company's sales and operating revenues are
generated from its U.S. and European operations. A significant portion of the
Company's sales are made to customers in the aerospace industry. The
concentration of aerospace customers may expose the Company to cyclical, credit
and other risks generally associated with the aerospace industry. In the three
years ended December 31, 1998, no single customer accounted for as much as 10%
of consolidated sales, although Boeing Company, Airbus Industrie and their
 
                                       39
<PAGE>   42
 
subcontractors together consume in excess of 10% of the Company's sales. Trade
accounts receivable are generally not secured or collateralized.
 
NOTE 14--CONTINGENCIES:
 
     In connection with the 1990 Reorganization, the Company agreed to indemnify
USX and Quantum against liabilities related to their ownership of RMI and its
immediate predecessor, Reactive Metals, Inc., which was formed by USX and
Quantum in 1964.
 
     From time to time, the Company is involved in litigation relating to claims
arising out of its operations in the normal course of business. Given the
critical nature of many of the aerospace end uses for the Company's products,
including specifically their use in critical rotating parts of gas turbine
engines, the Company maintains aircraft products liability insurance of $250
million, which includes grounding liability.
 
  Environmental Matters
 
     In the ordinary course of business, the Company is subject to pervasive
environmental laws and regulations concerning the production, handling, storage,
transportation, emission, and disposal of waste materials and is also subject to
other federal and state laws and regulations regarding health and safety
matters. These laws and regulations are constantly evolving, and it is not
currently possible to predict accurately the ultimate effect these laws and
regulations will have on the Company in the future.
 
     The Company is involved in investigative or cleanup projects under federal
or state environmental laws at a number of waste disposal sites, including the
Fields Brook Superfund Site. Given the status of the proceedings with respect to
these sites, ultimate investigative and remediation costs cannot presently be
accurately predicted, but could, in the aggregate be material. Based on the
information available regarding the current ranges of estimated remediation
costs at currently active sites, and what the Company believes will be its
ultimate share of such costs, provisions for environmental-related costs have
been recorded. These provisions are in addition to amounts which have previously
been accrued for the Company's share of environmental study costs.
 
     With regard to the Fields Brook Superfund Site, the Company, together with
31 other companies, has been identified by the U. S. Environmental Protection
Agency ("EPA") as a potentially responsible party ("PRP") with respect to a
superfund site defined as the Fields Brook Watershed in Ashtabula, Ohio, which
includes the Company's now closed Ashtabula facilities. The EPA's 1986 estimate
of the cost of remediation of the Fields Brook operable sediment unit was $48
million. However, recent studies show the volume of sediment to be substantially
lower than projected in 1986. These studies, together with improved remediation
technology and redefined cleanup standards have resulted in a more recent
estimate of the remediation cost of approximately $25 million. The actual cost
of remediation may vary from the estimate depending upon any number of factors.
 
     The EPA, in March 1989, ordered 22 of the PRPs to conduct a design phase
study for the sediment operable unit and a source control study. The Company,
working cooperatively with fourteen other PRP's, is complying with the order and
has accrued and has been paying its portion of the cost of complying with the
cost of such compliance. It is currently anticipated that the studies will be
completed no earlier than mid 1999. Actual cleanup is not scheduled to commence
prior to late 1999. The Company's share of the study costs have been established
at 9.95%. In June 1995, the Company and twelve others entered into a Phase 2
(actual cleanup) allocation agreement which assigns 9.44% of the cost to RMI.
However, the actual percentage may be more or less based on contributions from
other parties which are not currently participating in the Phase 2 allocation
agreement.
 
     At December 31, 1998, the amount accrued for future environmental-related
costs was $3.5 million. Based on available information, RMI believes its share
of potential environmental-related costs, before expected contributions from
third parties, is in a range from $4.2 million to $7.0 million, in the
aggregate. The amount accrued is net of expected contributions from third
parties (other than insurers) of approximately $2.1 million, which the Company
believes are probable. The Company has been receiving contributions from such
third parties for a number of years as partial reimbursement for costs incurred
by the Company. As these proceedings continue toward final resolution, amounts
in excess of those already provided may be necessary to discharge the Company
from its obligations for these projects.
 
                                       40
<PAGE>   43
 
  Other
 
     The Company is also the subject of, or a party to, a number of other
pending or threatened legal actions involving a variety of matters incidental to
its business.
 
     The ultimate resolution of these foregoing contingencies could,
individually or in the aggregate, be material to the consolidated financial
statements. However, management believes that the Company will remain a viable
and competitive enterprise even though it is possible that these matters could
be resolved unfavorably.
 
NOTE 15--STOCK OPTION AND RESTRICTED STOCK AWARD PLANS:
 
1989 STOCK OPTION INCENTIVE PLAN:
 
     The 1989 Stock Option Incentive Plan authorized the granting of options to
purchase up to 775,500 shares of Common Stock to eligible officers and key
management employees at not less than the market value on the date the options
are granted. Options granted could include stock appreciation rights. The option
period was not to exceed ten years from the date of the grant. During 1995
substantially all option holders voluntarily relinquished their stock
appreciation rights. No further grants can be made under the plan. There are
still stock options outstanding under the Plan at December 31, 1998.
 
1995 STOCK PLAN
 
     The 1995 Stock Plan, which was approved by a vote of the Company's
shareholders at the 1995 Annual Meeting of Shareholders, replaced both the 1989
Stock Option Incentive Plan and the 1989 Employee Restricted Stock Award Plan.
The Plan permits the grant of any or all of the following types of awards in any
combination: a) Stock Options; b) Stock Appreciation Rights; and c) Restricted
Stock. A committee appointed by the Board of Directors administers the Plan, and
determines the type or types of grants to be made under the Plan and sets forth
in each such Grant the terms, conditions and limitations applicable to it,
including, in certain cases, provisions relating to a possible change in control
of the Company.
 
     During 1998, 132,000 option shares were granted at $20.1875 and 176,000
option shares were granted at $13.78125. In 1997, 109,500 option shares were
granted at a price of $25.5625, and in 1996 215,000 option shares were granted
at a price of $21.62. All options were priced at fair market value on the date
of the grant Options are for a term of ten years from the date of the grant, and
vest ratably over the three year period beginning with the date of the grant.
All 1998 grants were outstanding at December 31, 1998.
 
     During 1998 and 1997, 39,750 shares and 37,050 shares, respectively, of
restricted stock were granted under the 1995 Stock Plan at the fair market value
on the date of the grant. Compensation expense is recognized ratably over the
vesting period of each grant which is typically five years.
 
     The following table presents a summary of stock option activity under the
plans described above for the years ended December 31, 1996 through 1998:
 
<TABLE>
<CAPTION>
                                                               SHARES            PRICE
                                                              --------    -------------------
<S>                                                           <C>         <C>
Balance January 1, 1996.....................................   615,172         $2.80 - $13.32
Granted.....................................................   215,000          $21.62
Exercised...................................................  (297,072)        $2.80 - $13.32
                                                              --------    -------------------
Balance December 31, 1996...................................   533,100         $2.80 - $21.62
                                                              ========    -------------------
Granted.....................................................   109,500          $25.56
Exercised...................................................  (127,609)        $2.80 - $21.62
                                                              --------    -------------------
Balance December 31, 1997...................................   514,991         $2.80 - $25.56
                                                              ========    ===================
Granted.....................................................   308,000        $13.78 - $20.19
Exercised...................................................  (45,725)         $4.06 - $21.62
                                                              --------    -------------------
Balance December 31, 1998...................................   777,266         $2.80 - $25.56
                                                              ========    ===================
</TABLE>
 
                                       41
<PAGE>   44
 
     At December 31, 1998 the weighted average exercise price and weighted
average remaining contractual life for all outstanding options was $17.21 and
7.64 years, respectively. 332,455 of the outstanding options at December 31,
1998 were exercisable at a weighted average exercise price of $15.35.
 
     For the purposes of the fair value requirements of SFAS No. 123, a widely
accepted option pricing model was used. If compensation expense for the
Company's stock options granted had been determined based on the fair value at
the grant date for the awards in accordance with SFAS No. 123, the effect on the
Company's net income and earnings per share for the three years ended December
31, 1998 would have been as follows:
 
<TABLE>
<CAPTION>
                                                               1998       1997       1996
                                                              -------    -------    -------
<S>                                                           <C>        <C>        <C>
Net income
     As reported............................................  $68,143    $60,085    $31,759
     Pro forma..............................................   64,532     58,460     30,154
Basic earnings per share
     As reported............................................  $  3.31    $  2.94    $  1.71
     Pro forma..............................................     3.14       2.87       1.63
Diluted earnings per share
     As reported............................................  $  3.29    $  2.92    $  1.70
     Pro forma..............................................     3.12       2.84       1.61
Weighted average fair value of options granted during the
  year......................................................  $ 16.53    $ 25.56    $ 21.62
</TABLE>
 
NOTE 16--SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED):
 
     The following table sets forth selected quarterly financial data for 1998
and 1997.
 
<TABLE>
<CAPTION>
                                                     1ST           2ND           3RD           4TH
                      1998                         QUARTER      QUARTER(1)     QUARTER      QUARTER(2)
                      ----                        ----------    ----------    ----------    ----------
<S>                                               <C>           <C>           <C>           <C>
Sales...........................................   $89,039       $96,542       $81,027       $70,868
Gross profit....................................    25,518        24,178        25,248        16,822
Operating income................................    20,665        19,394        20,019         7,918
Net income......................................    15,053        30,410        15,703         6,977
Net income per share:
  Basic.........................................      0.73          1.48          0.76          0.34
  Diluted.......................................      0.73          1.47          0.76          0.33
</TABLE>
 
<TABLE>
<CAPTION>
                                                     1ST           2ND           3RD           4TH
                      1997                         QUARTER       QUARTER      QUARTER(1)     QUARTER
                      ----                        ----------    ----------    ----------    ----------
<S>                                               <C>           <C>           <C>           <C>
Sales...........................................   $73,708       $75,034       $86,438       $83,350
Gross profit....................................    15,776        16,721        19,814        20,532
Operating income................................    12,346        13,218        15,213        15,538
Net income......................................    10,918        12,090        22,542        14,535
Net income per share:
  Basic.........................................      0.54          0.59          1.10          0.71
  Diluted.......................................      0.52          0.57          1.08          0.69
</TABLE>
 
---------------
 
(1) Net income was favorably affected by the recognition of a $16.1 million
    income tax benefit in the second quarter of 1998 and an $8.7 million tax
    benefit in the third quarter 1997.
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE
 
     None.
 
                                       42
<PAGE>   45
 
                                    PART III
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
     In addition to the information set forth under the caption "Executive
Officers of the Registrant" in Part I, Item 1 of this report, information
concerning the directors of the Company is incorporated by reference to
"Election of Directors" in the 1999 Proxy Statement, to be filed at a later
date.
 
ITEM 11. EXECUTIVE COMPENSATION
 
     Information required by this item is incorporated by reference to "The
Board of Directors-Compensation of Directors" and "Executive Compensation" in
the 1999 Proxy Statement, to be filed at a later date.
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
     Information required by this item is incorporated by reference to "Other
Information-Security Ownership" in the 1999 Proxy Statement, to be filed at a
later date.
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
     Information required by this item is incorporated by reference to "Other
Information-Certain Transactions" in the 1999 Proxy Statement, to be filed at a
later date.
 
                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
 
(a) (1) AND (2) FINANCIAL STATEMENTS
 
     See "Financial Statements."
 
     (3) SEE INDEX TO EXHIBITS.
 
(b) REPORT ON FORM 8-K FILED IN THE FOURTH QUARTER OF 1998
 
     On October 15, 1998, the Company filed a report on Form 8-K reporting Item
2., Acquisition of Assets, and Item 5., Other Events, Work Stoppage, and
Reorganization into Holding Company Structure.
 
(c) EXHIBITS
 
     The exhibits listed on the Index to Exhibits are filed herewith or are
incorporated by reference.
 
                                       43
<PAGE>   46
 
                                   SIGNATURES
 
     Pursuant to the requirements of Section 13 or 15(d) of the Securities Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
 
                                          RMI TITANIUM COMPANY
 
                                                  
                                        By       /s/ TIMOTHY G. RUPERT
                                          --------------------------------------
                                                     Timothy G. Rupert
                                                 Executive Vice President &
                                                  Chief Financial Officer
 
Dated: March 29, 1999
 
     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.
 
<TABLE>
<CAPTION>
                    SIGNATURE AND TITLE                                       DATE
                    -------------------                                       ----
<S>                                                          <C>
CRAIG R. ANDERSSON, Director;
NEIL A. ARMSTRONG, Director;
DANIEL I. BOOKER, Director;
RONALD L. GALLATIN, Director;
CHARLES C. GEDEON, Director;
ROBERT M. HERNANDEZ, Director;
WESLEY W. VON SCHACK, Director
 

By                   /s/ TIMOTHY G. RUPERT                               March 29, 1999
  ----------------------------------------------------------
                        T. G. Rupert
                      Attorney-in-Fact
 
                     /s/ TIMOTHY G. RUPERT                               March 29, 1999
------------------------------------------------------------
                        T. G. Rupert
           Director and Executive Vice President
               (Principal Executive Officer)
 
                       /s/ JOHN H. ODLE                                  March 29, 1999
------------------------------------------------------------
                        John H. Odle
           Director and Executive Vice President
               (Principal Executive Officer)
 
                     /s/ TIMOTHY G. RUPERT                               March 29, 1999
------------------------------------------------------------
                        T. G. Rupert
         Executive Vice President & Chief Financial
    Officer (Principal Financial and Accounting Officer)
</TABLE>
 
                                       44
<PAGE>   47
 
                               INDEX TO EXHIBITS
 
<TABLE>
<CAPTION>
                                                                           SEQUENTIAL
EXHIBIT                                                                       PAGE
  NO.                             DESCRIPTION                                NUMBER
  ---                             -----------                                ------
<S>       <C>                                                          <C>
 2.0      Amended and Restated Reorganization Agreement, incorporated
          by reference to Exhibit 2.1 to the Company's Registration
          Statement on Form S-1 No. 33-30667 Amendment No. 1.
 
 2.1      Stock Purchase Agreement, dated as of October 1, 1998, by
          and among RTI International Metals, Inc., New Century
          Metals, Inc., Richard R. Burkart and Joseph H. Rice,
          incorporated by reference to exhibit 2.1 and 2.2 to the
          Company's Current Report on Form 8-K dated October 15, 1998.
 
 2.2      Asset Purchase Agreement, dated October 1, 1998, by and
          among Weld-Tech Engineering Services, L.P. and Weld-Tech
          Engineering, L.P., incorporated by reference to exhibit 2.1
          and 2.2 to the Company's Current Report on Form 8-K dated
          October 15, 1998.
 
 3.1      Amended and Restated Articles of Incorporation of the
          Company, incorporated by reference to Exhibit 3.1 to the
          Company's Current Report on Form 8-K dated October 15, 1998.
 
 3.2      Amended Code of Regulations of the Company, incorporated by
          reference to Exhibit 3.3 to the Company's Registration
          Statement on Form S-4 No. 333-61935.
 
 4.1      Credit Agreement between RTI International Metals, Inc. and
          PNC Bank, National Association, as agent; Mellon Bank,
          National Association of Pennsylvania and Bank One. National
          Association as co-agents, dated as of September 30, 1998,
          incorporated by reference to the Company's Quarterly Report
          on Form 10-Q for the quarterly period ended September 30,
          1998.
 
10.1      Agreement for the sale and purchase of titanium
          tetrachloride between SCM Chemicals, Inc., and RMI Titanium
          Company dated March 9, 1993, incorporated by reference to
          Exhibit 10.13 to the Company's Annual Report on Form 10-K
          for the year ended December 31, 1992.+
 
10.2      Agreement for the supply, purchase and sale of chlorine
          between SCM Chemicals, Inc., and RMI Titanium Company dated
          as of November 13, 1990, incorporated by reference to
          Exhibit 10.3 to the Company's Annual Report on Form 10-K for
          the year ended December 31, 1990.
 
10.3      RMI Company Annual Incentive Compensation Plan, incorporated
          by reference to Exhibit 10.3 to the Company's Registration
          Statement on Form S-1 No. 33-30667 Amendment No. 2.
 
10.4      RMI Titanium Company 1989 Stock Option Incentive Plan,
          incorporated by reference to Exhibit 10.4 to the Company's
          Registration Statement on Form S-1 No. 33-30667 Amendment
          No. 2.
 
10.5      RMI Titanium Company Supplemental Pension Plan effective
          August 1, 1987, and amended as of December 12, 1990,
          incorporated by reference to Exhibit 10.8 to the Company's
          Annual Report on Form 10-K for the year ended December 31,
          1990.
</TABLE>
 
                                       45
<PAGE>   48
 
<TABLE>
<CAPTION>
                                                                           SEQUENTIAL
EXHIBIT                                                                       PAGE
  NO.                             DESCRIPTION                                NUMBER
  ---                             -----------                                ------
<S>       <C>                                                          <C>
10.6      RMI Titanium Company Excess Benefits Plan effective July 18,
          1991, incorporated by reference to Exhibit 10.11 to the
          Company's Annual Report on Form 10-K for the year ended
          December 31, 1991.
 
10.7      Sales Agreement for the supply of titanium sponge and plasma
          electrodes between Oregon Metallurgical Corporation and RMI
          Titanium Company dated as of August 8, 1994 incorporated by
          reference to Exhibit 10.9 to the Company's Annual Report on
          Form 10-K for the year ended December 31, 1995.+
 
10.8      Sales Agreement for the supply of titanium sponge between
          Osaka Titanium Co., Ltd., Sumitomo Corporation, Sumitomo
          Corporation of America, and RMI Titanium Company dated as of
          September 4, 1992 incorporated by reference to Exhibit 10.10
          to the Company's Annual Report on Form 10-K for the year
          ended December 31, 1995.+
 
10.9      RMI Titanium Company 1995 Stock Plan incorporated by
          reference to Exhibit 10.11 to the Company's Annual Report on
          Form 10-K for the year ended December 31, 1995.
 
10.10     Employment agreement, dated September 1, 1996, between the
          Company and John H. Odle, incorporated by reference to
          Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
          for the quarterly period ended September 30, 1996.
 
10.11     Employment agreement, dated September 1, 1996, between the
          Company and T. G. Rupert, incorporated by reference to
          Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q
          for the quarterly period ended September 30, 1996.
 
10.12     Employment agreement dated May 20, 1997 between the Company
          and Harry B. Watkins, incorporated by reference to exhibit
          10.14 to the Company's Annual Report on Form 10-K for the
          year ended December 31, 1997.
 
10.13     Employment agreement, dated May 1, 1997 between the Company
          and Dawne S. Hickton, incorporated by reference to exhibit
          10.15 to the Company's Annual Report on Form 10-K for the
          year ended December 31, 1997.
 
10.14     Employment agreement, dated March 6, 1998 between the
          Company and Lawrence W. Jacobs incorporated by reference to
          exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
          for the quarter ended March 31, 1998.
 
10.15     Registration Rights Agreement dated August 21, 1996 between
          the Company and USX Corporation, incorporated by reference
          to Exhibit 10.3 to the Company's Quarterly Report on Form
          10-Q for the quarterly period ended September 30, 1996.
 
21        Subsidiaries of the Company.
 
23.1      Consent of PricewaterhouseCoopers LLP.
 
24        Powers of Attorney.
 
27        Financial Data Schedule.
</TABLE>
 
                                       46
<PAGE>   49
 
<TABLE>
<CAPTION>
                                                                           SEQUENTIAL
EXHIBIT                                                                       PAGE
  NO.                             DESCRIPTION                                NUMBER
  ---                             -----------                                ------
<S>       <C>                                                          <C>
99.1      Financial Statements of The RMI Employee Savings and
          Investment Plan for the year ended December 31, 1998 (to be
          filed by amendment).
 
99.2      Financial Statements of The RMI Bargaining Unit Employee
          Savings and Investment Plan for the year ended December 31,
          1998 (to be filed by amendment).
</TABLE>
 
---------------
 
+ Confidential treatment has been requested.
 
                                       47