##### Table of Contents





UNITED STATES
 SECURITIES AND EXCHANGE
    COMMISSION
 WASHINGTON, D.C.
    20549
  FORM 10-K
  (Mark One)
  þ
    ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  FOR  THE FISCAL YEAR ENDED
    DECEMBER 31, 2007
  OR
  o
    TRANSITION REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the transition period
    from 
    to
  Commission file
    number 001-14437
  RTI INTERNATIONAL METALS,
    INC.
 (Exact name of registrant as
    specified in its charter)
  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)   Registrants telephone number,
    including area code:330-544-7700
  Securities registered pursuant
    to Section 12(b) of the Act:
  Title of each class

Name of each exchange on which registeredCommon Stock, par value $0.01 per share

New York Stock Exchange   Securities registered pursuant
    to Section 12(g) of the Act: None
   Yes þ     No o
   Yes o     No þ
   Yes þ     No o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated
    filer þ

Accelerated filer
    o

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    company o   Rule 12b-2
 Yes o     No þ
      Documents
    Incorporated by Reference:




---



##### 





RTI
    INTERNATIONAL METALS, INC. AND CONSOLIDATED
    SUBSIDIARIES
       
 TABLE OF
    CONTENTS
  PagePART IItem 1.

Business


1Item 1A.

Risk Factors


9Item 1B.

Unresolved Staff Comments


12Item 2.

Properties


13Item 3.

Legal Proceedings


13Item 4.

Submission of Matters to a Vote of Security
    Holders


14PART IIItem 5.

Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


14Item 6.

Selected Financial Data


15Item 7.

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


16Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


29Item 8.

Financial Statements and Supplementary Data


31Item 9.

Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


66Item 9A.

Controls and Procedures


66Item 9B.

Other Information


66PART IIIItem 10.

Directors, Executive Officers and Corporate
    Governance


66Item 11.

Executive Compensation


67Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


67Item 13.

Certain Relationships and Related Transactions
    and Director Independence


68Item 14.

Principal Accountant Fees and Services


68PART IVItem 15.

Exhibits and Financial Statement Schedules


68Signatures.EX-10.1EX-10.2EX-10.11EX-10.24EX-10.26EX-21.1EX-23.1EX-24.1EX-31.1EX-31.2EX-32.1EX-32.2




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##### Table of Contents



PART I  Item 1.
    Business  The
    Company
    Industry
    Overview
  strength-to-weight
        2007


2006


2005Commercial Aerospace


50
%


45
%


42
%Defense


33
%


32
%


27
%Industrial and Consumer


17
%


23
%


31
%   Commercial
    Aerospace
   1




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##### Table of Contents



Aerospace Market News, Aerospace Market News The Airline
    Monitor,
  ®
  Defense
  F/A-22, F/A-18,
        Industrial &
    Consumer
    difficult-to-reach
     2




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##### Table of Contents



Products
    and Segments
    Titanium
    Group
        Fabrication &
    Distribution Group
    cut-to-size
  ® ®
   3




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##### Table of Contents



sub-sea
      2007


2006


2005(dollars in millions)

$


%


$


%


$


%Titanium Group(1)(2)

$
253.1



40.4
%

$
204.9



40.5
%

$
130.2



37.5
%Fabrication & Distribution Group(2)


373.7



59.6
%


300.5



59.5
%


216.7



62.5
%Total consolidated net sales

$
626.8



100.0
%

$
505.4



100.0
%

$
346.9



100.0
%     2007


2006


2005(dollars in millions)

$


%


$


%


$


%Titanium Group (2)

$
102.6



72.7
%

$
78.5



68.1
%

$
40.8



72.8
%Fabrication & Distribution Group(2)


38.6



27.3
%


36.8



31.9
%


15.3



27.2
%Total consolidated operating income (loss)

$
141.2



100.0
%

$
115.3



100.0
%

$
56.1



100.0
%     (In millions)

2007


2006Titanium Group

$
281.2


$
228.3Fabrication & Distribution Group


372.4



294.4General Corporate(3)


101.7



121.2Total consolidated assets

$
755.3


$
643.9     (1)
    
    Excludes $181 million, $152 million, and
    $96 million of intercompany sales primarily to the F&D
    Group in 2007, 2006, and 2005, respectively.(2)
    
    Excludes the effect of discontinued operations in 2005.(3)
    
    Consists primarily of unallocated cash, short-term investments,
    and deferred tax assets.  Exports
  Form 10-K.
   4




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##### Table of Contents



Backlog
    Raw
    Materials
          Competition
    and Other Market Factors
     5




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##### Table of Contents



Trade and
    Legislative Factors
      2007-2008
  de
    minimis
 6




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##### Table of Contents



Environmental
    Liabilities
  96-1, Environmental Remediation Liabilities Accounting for Contingencies
          Marketing
    and Distribution
    Research,
    Technical, and Product Development
     7




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##### Table of Contents



Patents
    and Trademarks
    Employees
      Executive
    Officers of the Registrant
    Name

Age

TitleDawne S. Hickton


50


Vice Chairman and Chief Executive OfficerMichael C. Wellham


42


President and Chief Operating OfficerStephen R. Giangiordano


49


Executive Vice PresidentWilliam T. Hull


50


Senior Vice President and Chief Financial OfficerWilliam F. Strome


52


Senior Vice PresidentStrategic Planning and FinanceChad Whalen


33


Vice President, General Counsel and Secretary   Biographies
   8




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##### Table of Contents



Available
    Information
  Form 10-K, Form 10-Q, Form 8-K 1-800-SEC-0330. www.sec.gov
  Item 1A.
    Risk
    Factors.    The
    ability to successfully expand our operations in a timely and
    cost effective manner
   9




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##### Table of Contents



The
    demand for our products and services may be adversely affected
    by demand for our customers products and
    services
    A
    substantial amount of revenue is derived from the commercial
    aerospace and defense industries and a limited number of
    customers
    We may
    be subject to competitive disadvantages
    We may
    experience a lack of supply of raw materials at costs that
    provide us with acceptable margin levels
   10




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##### Table of Contents



We are
    subject to changes in product pricing
    We may
    experience a shortage in the supply of energy or an increase in
    energy costs to operate our plants
    Our
    business could be harmed by strikes or work
    stoppages
      Our
    business is subject to the risks of international
    operations
    We are
    dependent on services that are subject to price and availability
    fluctuations
   11




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##### Table of Contents



We may
    be affected by our ability or inability to obtain
    financing
    Our
    success depends largely on our ability to attract and retain key
    personnel
    The
    demand for our products and services may be affected by factors
    outside of our control
    The
    outcome of the U.S. Customs investigation of our previously
    filed duty drawback claims is uncertain
    Item 1B.
    Unresolved
    Staff Comments.   12




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##### Table of Contents



Item 2.
    Properties.  Manufacturing
    Facilities
    Facilities
  Owned /




Annual RatedLocation

Leased


Products

CapacityTitanium GroupNiles, OH


Owned


Ingot (million pounds)


30.0Niles, OH


Owned


Mill products (million pounds)


22.0Salt Lake City, UT


Leased


Powders (million pounds)


1.5Canton, OH


Owned


Ferro titanium and specialty alloys (million pounds)


16.0Hermitage, PA


Owned


Metal processing (million pounds)


5.0Fabrication & Distribution GroupHot-formed and superplastically formed componentsWashington, MO


Owned


(thousand press hours)


50.0Sullivan, MO


Leased


Cut parts (thousand man hours)


23.0Houston, TX


Leased


Extruded products (million pounds)


4.2Machining & fabrication of oil and gas productsHouston, TX


Owned


(thousand man hours)


246.0Birmingham, England


Leased


Cut parts and components (thousand man hours)


45.0Rosny-Sur-Siene, France


Leased


Cut parts and components (thousand man hours)


16.0Los Angeles, CA (2 locations)


Leased


Metal warehousing and distribution


N/AHartford, CT


Leased


Metal warehousing and distribution


N/AIndianapolis, IN


Leased


Metal warehousing and distribution


N/AHouston, TX


Owned


Metal warehousing and distribution


N/AMachining and assembly of aerospace productsMontreal, Canada


Owned


(thousand man hours)


355.5     Item 3.
    Legal
    Proceedings.    Duty
    Drawback Investigation
   13




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##### Table of Contents



Accounting for Contingencies
  Other
    Legal Matters
    Item 4.
    Submission
    of Matters to a Vote of Security Holders.   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities.  Range of High and Low Stock Prices of Common Stock
  2007


2006Quarter

High


Low


High


LowFirst

$
94.30


$
67.82


$
56.22


$
38.00Second

$
101.49


$
73.04


$
83.33


$
46.64Third

$
88.32


$
58.42


$
57.75


$
39.81Fourth

$
85.20


$
64.59


$
80.50


$
39.94            14




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##### Table of Contents



Item 6.
    Selected
    Financial Data.      Years Ended December 31,2007


2006


2005


2004


2003Income Statement Data(4):Net sales

$
626,799


$
505,389


$
346,906


$
209,643


$
180,256Operating income (loss)


141,161



115,253
(5)


56,134



(14,566
)


(2,215
)(2)Income (loss) from continuing operations before income taxes


142,467



118,291



57,412



(4,996
)(1)


6,507
(3)Income (loss) from continuing operations


92,631



75,700



37,344



(2,319
)


4,108Income (loss) from discontinued operations, net of tax provision










1,591



(638
)


606Net income (loss)


92,631



75,700



38,935



(2,957
)


4,714Basic earnings (loss) per share:Continuing operations

$
4.04


$
3.34


$
1.68


$
(0.11
)

$
0.20Discontinued operations










0.07



(0.03
)


0.03Net income (loss)

$
4.04


$
3.34


$
1.75


$
(0.14
)

$
0.23Diluted earnings (loss) per share:Continuing operations

$
4.00


$
3.29


$
1.66


$
(0.11
)

$
0.19Discontinued operations










0.07



(0.03
)


0.03Net income (loss)

$
4.00


$
3.29


$
1.73


$
(0.14
)

$
0.22   December 31,2007


2006


2005


2004


2003Balance Sheet Data:Working capital

$
405,907


$
365,711


$
282,670


$
218,444


$
225,804Total assets


755,284



643,913



501,751



409,411



393,775Long-term debt


16,506



13,270











Total shareholders equity


575,784



462,181
(6)


379,652



323,958



317,660     (1)
    
    Includes the effect of an approximately $9 million gain for
    settlement of a contractual claim.(2)
    
    Includes the effect of an approximately $1 million gain
    from the sale of one of the Companys Ashtabula, Ohio
    facilities previously used for storage.(3)
    
    Includes the effect of an approximately $8 million gain
    from the settlement of a contractual claim.(4)
    
    All years presented have been adjusted for the impacts of the
    discontinued operations which occurred in 2005 and 2004 (see
    Note 14 of the Consolidated Financial Statements).(5)
    
    The adoption of SFAS 123(R) on January 1, 2006
    resulted in an additional $2.6 million of compensation
    expense in 2006 (See Note 2 to the Consolidated Financial
    Statements).(6)
    
    The adoption of SFAS 158 as of December 31, 2006
    resulted in a decrease in equity of $10.8 million. 15




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##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  Forward-Looking
    Statements
    
    statements regarding the future availability and prices of raw
    materials,
    competition in the titanium industry,
    demand for the Companys products,
    the historic cyclicality of the titanium and aerospace
    industries,
    changes in defense spending,
    the success of new market development,
    long-term supply agreements,
    legislative challenges to the Specialty Metals Clause of the
    Berry Amendment,
    labor matters,
    global economic activities,
    outcome of the pending U.S. Customs investigation,
    the successful completion of our expansion projects,
    the Companys order backlog and the conversion of that
    backlog into revenue, and
    other statements contained herein that are not historical facts.    Overview
     16




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##### Table of Contents



work-in-process,
  work-in-process,
  Executive
    Summary
      Results
    of Operations
  For
    the Year Ended December 31, 2007 Compared to the Year Ended
    December 31, 2006
  Net Sales.
  Years EndedDecember 31,


$ Increase/


% Increase/(In millions)

2007


2006


(Decrease)


(Decrease)Titanium Group

$
253.1


$
204.9


$
48.2



23.5
%Fabrication & Distribution Group


373.7



300.5



73.2



24.4
%Total consolidated net sales

$
626.8


$
505.4


$
121.4



24.0
%  17




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##### Table of Contents



Gross Profit.
  Years EndedDecember 31,


$ Increase/


% Increase/(In millions)

2007


2006


(Decrease)


(Decrease)Titanium Group

$
121.4


$
94.1


$
27.3



29.0
%Fabrication & Distribution Group


86.7



78.8



7.9



10.0
%Total consolidated gross profit

$
208.1


$
172.9


$
35.2



20.4
%       Selling, General, and Administrative
    Expenses.
  Years EndedDecember 31,


$ Increase/


% Increase/(In millions)

2007


2006


(Decrease)


(Decrease)Titanium Group

$
17.3


$
14.1


$
3.2



22.7
%Fabrication & Distribution Group


48.0



42.0



6.0



14.3
%Total consolidated SG&A

$
65.3


$
56.1


$
9.2



16.4
%     Research, Technical, and Product Development
    Expenses.
 18




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##### Table of Contents



Operating Income.
  Years EndedDecember 31,


$ Increase/


% Increase/(In millions)

2007


2006


(Decrease)


(Decrease)Titanium Group

$
102.6


$
78.5


$
24.1



30.7
%Fabrication & Distribution Group


38.6



36.8



1.8



4.8
%Total consolidated operating income

$
141.2


$
115.3


$
25.9



22.5
%       Other Income (Expense).
  Interest Income and Interest Expense.
  Provision for Income Tax.
 19




---



##### Table of Contents



For
    the Year Ended December 31, 2006 Compared to the Year Ended
    December 31, 2005
  Net Sales.
  Years EndedDecember 31,


$ Increase/


% Increase/(In millions)

2006


2005


(Decrease)


(Decrease)Titanium Group

$
204.9


$
130.2


$
74.7



57.4
%Fabrication & Distribution Group


300.5



216.7



83.8



38.7
%Total consolidated net sales

$
505.4


$
346.9


$
158.5



45.7
%       Gross Profit.
  Years EndedDecember 31,


$ Increase/


% Increase/(In millions)

2006


2005


(Decrease)


(Decrease)Titanium Group

$
94.1


$
55.0


$
39.1



71.1
%Fabrication & Distribution Group


78.8



51.6



27.2



52.7
%Total consolidated gross profit

$
172.9


$
106.6


$
66.3



62.2
%       Selling, General, and Administrative
    Expenses.
  Years EndedDecember 31,


$ Increase/


% Increase/(In millions)

2006


2005


(Decrease)


(Decrease)Titanium Group

$
14.1


$
12.7


$
1.4



11.0
%Fabrication & Distribution Group


42.0



36.1



5.9



16.3
%Total consolidated SG&A

$
56.1


$
48.8


$
7.3



14.9
%    20




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##### Table of Contents



Research, Technical, and Product Development
    Expenses.
  Operating Income.
  Years EndedDecember 31,


$ Increase/


% Increase/(In millions)

2006


2005


(Decrease)


(Decrease)Titanium Group

$
78.5


$
40.8


$
37.7



92.4
%Fabrication & Distribution Group


36.8



15.3



21.5



140.5
%Total consolidated operating income

$
115.3


$
56.1


$
59.2



105.5
%       Other Income.
  Interest Income and Interest Expense.
  Provision for Income Taxes.
  Duty
    Drawback Investigation
       21




---



##### Table of Contents



Accounting for Contingencies
    Outlook
    Backlog.
  Liquidity
    and Capital Resources
    Cash provided by (used in) operating
    activities.
   22




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##### Table of Contents



Cash provided by (used in) investing
    activities.
    Cash provided by financing activities.
    Contractual
    Obligations, Commitments and Other Post-Retirement
    Benefits
    Contractual Obligations2008


2009


2010


2011


2012


Thereafter


TotalLong-term debt(1)(7)

$
1.9


$
2.1


$
2.1


$
2.1


$
2.0


$
12.5


$
22.7Operating leases(2)


3.5



2.8



2.1



1.2



1.0



0.3



10.9Capital leases(2)


0.1



0.1



















0.2Total contractual obligations

$
5.5


$
5.0


$
4.2


$
3.3


$
3.0


$
12.8


$
33.8   23




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##### Table of Contents



Commercial CommitmentsAmount of Commitment Expiration per Period2008


2009


2010


2011


2012


Thereafter


TotalLong-term supply agreements(3)(8)

$
58.4


$
75.3


$
87.4


$
87.4


$
87.4


$
232.3


$
628.2Purchase obligations(4)


106.5



4.0



18.2















128.7Standby letters of credit(5)


1.0























1.0Total commercial commitments

$
165.9


$
79.3


$
105.6


$
87.4


$
87.4


$
232.3


$
757.9   Other Post-Retirement Benefits2008


2009


2010


2011


2012


2013-2017


TotalOther post-retirement benefits(6)

$
2.7


$
2.6


$
2.6


$
2.6


$
2.6


$
13.3


$
26.4   Tax Obligations2008


2009


2010


2011


2012


Thereafter


TotalFIN 48 tax obligations

$



$



$



$



$



$
2.5


$
2.5     (1)
    
    See Note 6 to the Companys Consolidated Financial
    Statements.(2)
    
    See Note 8 to the Companys Consolidated Financial
    Statements.(3)
    
    Amounts represent commitments for which contractual terms exceed
    twelve months.(4)
    
    Amounts primarily represent purchase commitments under purchase
    orders.(5)
    
    Amounts represent standby letters of credit primarily related to
    commercial performance and insurance guarantees.(6)
    
    The Company does not fund its other post-retirement employee
    benefits obligation but instead pays amounts when incurred.
    However, these estimates are based on current benefit plan
    coverage and are not contractual commitments in as much as the
    Company retains the right to modify, reduce, or terminate any
    such coverage in the future. Amounts shown in the years 2008
    through 2017 are based on actuarial estimates of expected future
    cash payments, and exclude the impacts of benefits associated
    with the Medicare Part D Act of 2003.(7)
    
    Amounts represent principal and interest of the Companys
    Claro Credit Agreement and Interest-Free Loan Agreement.(8)
    
    In February 2007, the Company entered into a new contract for
    the long-term supply of titanium sponge with a Japanese
    supplier. This agreement runs through 2016 and will provide the
    Company with supply of up to 13 million pounds of titanium
    sponge annually, beginning in 2009. The Company has agreed to
    purchase a minimum of 10 million pounds annually for the
    five year period commencing in 2010. During the latter years of
    the contract, quantities can be reduced by the election of
    various options by both parties. Future obligations were
    determined based on current prices as prices are negotiated
    annually.  Off-Balance
    Sheet Arrangements
    Credit
    Agreements
   24




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##### Table of Contents



15-year
    New
    Accounting Standards
  Accounting for Uncertainty in Income Taxes  an
    interpretation of FASB Statement 109
  Fair Value Measurements FAS 157-b, Effective Date of FASB Statement No. 157 SFAS 157-a, Application of FASB Statement No. 157 to FASB Statement
    No. 13 and Its Related Interpretive Accounting
    Pronouncements That Address Leasing Transactions
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities  Including an amendment of FASB Statement
    No. 115 instrument-by-instrument
  Business Combinations
 25




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##### Table of Contents



Noncontrolling Interests in Consolidated Financial
    Statements  an amendment of ARB No. 51
  Acquisitions
  and/or
  Critical
    Accounting Policies
      Inventories. last-in, first-in,
  Goodwill and Intangible Assets.
   26




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##### Table of Contents



Long-Lived Assets. Accounting for the Impairment or
    Disposal of Long-Lived Assets
  Income Taxes.
  Employee Benefit Plans.
  Corporate
    Yield Dedicated Bond Portfolio
    −.25%


+.25%Effect on total projected benefit obligation (PBO) (in millions)

$
2.9


$
(2.9
)Effect on subsequent years periodic pension expense (in millions)

$
0.2


$
(0.2
)    27




---



##### Table of Contents



2007


2006Asset category:Equity securities


56
%


59
%Debt securities


42
%


36
%Other


2
%


5
%Total


100
%


100
%     Asset category:Equity securities


56
%Debt securities


43
%Other


1
%Total


100
%       Post-Retirement


Post-RetirementPension


Benefit Plan


Benefit Plan (notBenefit


(including Plan D


including Plan DPlans


subsidy)


subsidy)2008

$
14.2


$
2.7


$
3.02009


8.3



2.6



3.02010


8.4



2.6



3.02011


8.6



2.6



3.02012


8.8



2.6



3.02013 to 2017


45.6



13.3



14.6        28




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##### Table of Contents



Environmental Liabilities. 96-1, Environmental Remediation Liabilities Accounting for Contingencies
        Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk.  Commodity
    Price Risk
    Interest
    Rate Risk
    Foreign
    Currency Exchange Risk
   29




---



##### Table of Contents



non-U.S. Dollar
 30




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data.  Index to
    Financial Statements
  PageReport of Independent Registered Public
    Accounting Firm


32Financial Statements:Consolidated Statements of Operations for the
    years ended December 31, 2007, 2006, and 2005


33Consolidated Balance Sheets at December 31,
    2007 and 2006


34Consolidated Statements of Cash Flows for the
    years ended December 31, 2007, 2006, and 2005


35Consolidated Statements of Comprehensive Income
    and Shareholders Equity for the years ended
    December 31, 2007, 2006, and 2005


36Notes to Consolidated Financial Statements


37Financial Statement Schedules:Schedule II  Valuation and
    Qualifying Accounts


S-1     31




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM    Internal Control -
    Integrated Framework
        
    32




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Consolidated Statements of Operations
  (In thousands, except share and per share amounts)
  Years Ended December 31,2007


2006


2005Net sales

$
626,799


$
505,389


$
346,906Cost and expenses:Cost of sales


418,671



332,530



240,314Selling, general, and administrative expenses


65,317



56,110



48,816Research, technical, and product development expenses


1,650



1,496



1,642Operating income


141,161



115,253



56,134Other income (expense)


(2,134
)


540



369Interest income


4,764



3,172



1,418Interest expense


(1,324
)


(674
)


(509
)Income from continuing operations before income taxes


142,467



118,291



57,412Provision for income taxes


49,836



42,591



20,068Income from continuing operations


92,631



75,700



37,344Income from discontinued operations, net of tax provision










1,591Net income

$
92,631


$
75,700


$
38,935Basic earnings per share:Continuing operations

$
4.04


$
3.34


$
1.68Discontinued operations










0.07Net income

$
4.04


$
3.34


$
1.75Diluted earnings per share:Continuing operations

$
4.00


$
3.29


$
1.66Discontinued operations










0.07Net income

$
4.00


$
3.29


$
1.73Weighted-average shares outstanding:Basic


22,930,768



22,657,225



22,186,966Diluted


23,154,194



23,037,096



22,525,570   The accompanying notes are an integral part of these
    Consolidated Financial Statements.
 33




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Consolidated Balance Sheets
  (In thousands, except share and per share amounts)
  December 31,2007


2006ASSETSCurrent assets:Cash and cash equivalents

$
107,505


$
40,026Investments






85,035Receivables, less allowance for doubtful accounts of $613 and
    $1,548


102,073



92,517Inventories, net


296,559



241,638Deferred income taxes


12,969



2,120Other current assets


2,951



5,818Total current assets


522,057



467,154Property, plant, and equipment, net


157,355



102,470Goodwill


50,769



48,622Other intangible assets, net


17,476



15,581Deferred income taxes


6,059



9,076Other noncurrent assets


1,568



1,010Total assets

$
755,284


$
643,913LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
46,666


$
34,055Accrued wages and other employee costs


22,028



17,475Billings in excess of costs and estimated earnings


21,573



21,147Income taxes payable






5,253Deferred income taxes






10,255Current portion of long-term debt


1,090



459Current liability for post-retirement benefits


2,660



2,783Current liability for pension benefits


5,962



580Other accrued liabilities


16,171



9,436Total current liabilities


116,150



101,443Long-term debt


16,506



13,270Noncurrent liability for post-retirement benefits


31,019



32,445Noncurrent liability for pension benefits


8,526



22,285Deferred income taxes


69



5,422Other noncurrent liabilities


7,230



6,867Total liabilities


179,500



181,732Commitments and ContingenciesShareholders equity:Common stock, $0.01 par value; 50,000,000 shares
    authorized; 23,610,746 and 23,444,868 shares issued;
    23,105,708 and 22,972,025 shares outstanding


236



234Additional paid-in capital


302,075



289,448Treasury stock, at cost; 505,038 and 472,843 shares


(7,801
)


(5,285
)Accumulated other comprehensive loss


(20,367
)


(31,226
)Retained earnings


301,641



209,010Total shareholders equity


575,784



462,181Total liabilities and shareholders equity

$
755,284


$
643,913   The accompanying notes are an integral part of these
    Consolidated Financial Statements.
 34




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Consolidated Statements of Cash Flows
  (In thousands)
  Years Ended December 31,2007


2006


2005OPERATING ACTIVITIES:Net income

$
92,631


$
75,700


$
38,935Net income from discontinued operations










(1,660
)Loss on disposal of discontinued operations










69Net income from continuing operations


92,631



75,700



37,344Adjustment for non-cash items included in net income:Depreciation and amortization


15,712



14,292



13,263Deferred income taxes


(27,512
)


13,090



3,681Stock-based compensation


6,686



4,606



1,192Excess tax benefits from stock-based compensation activity


(4,235
)


(5,102
)


4,592Loss (gain) on disposal of property, plant, and equipment


506



229



(26
)Other


(893
)


(38
)


455Changes in assets and liabilities:Receivables


(6,843
)


(36,639
)


(11,488
)Inventories


(50,985
)


(18,367
)


(89,664
)Accounts payable


10,659



6,356



12,368Income taxes payable


(242
)


7,300



6,055Billings in excess of costs and estimated earnings


561



7,805



8,674Other current liabilities


17,378



10,918



8,418Other assets and liabilities


(7,785
)


3,521



(7,046
)Cash provided by (used in) continuing operating activities


45,638



83,671



(12,182
)Cash provided by discontinued operating activities










1,473Cash provided by (used in) operating activities


45,638



83,671



(10,709
)INVESTING ACTIVITIES:Acquisitions, net of cash acquired










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


523



115



28Purchase of investments


(1,408
)


(85,035
)


(9,150
)Proceeds from sale of investments


86,442



2,410



6,740Capital expenditures


(64,934
)


(35,836
)


(9,486
)Cash provided by (used in) investing activities of continuing
    operations


20,623



(118,346
)


(12,158
)Cash provided by investing activities of discontinued operations










8Cash provided by (used in) investing activities


20,623



(118,346
)


(12,150
)FINANCING ACTIVITIES:Proceeds from exercise of employee stock options


1,760



3,694



13,811Borrowings on long-term debt


1,561



13,729



Repayments on long-term debt


(533
)






Excess tax benefits from stock-based compensation activity


4,235



5,102



Purchase of common stock held in treasury


(2,516
)


(896
)


(483
)Financing fees


(845
)






Cash provided by financing activities


3,662



21,629



13,328Effect of exchange rate changes on cash and cash equivalents


(2,444
)


(281
)


183Increase (decrease) in cash and cash equivalents


67,479



(13,327
)


(9,348
)Cash and cash equivalents at beginning of period


40,026



53,353



62,701Cash and cash equivalents at end of period

$
107,505


$
40,026


$
53,353Supplemental cash flow information:Cash paid for interest

$
883


$
321


$
486Cash paid for income taxes

$
80,782


$
16,450


$
12,791Non-cash investing and financing activities:Issuance of Common Stock for restricted stock awards

$
4,944


$
2,475


$
1,771Capital lease obligations incurred

$
137


$
92


$
116   The accompanying notes are an integral part of these
    Consolidated Financial Statements.
 35




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Consolidated Statements of Comprehensive Income
    and Shareholders Equity
  (In thousands, except share amounts)


Accumulated OtherComprehensive Income(Loss)Net Unrealized Gain(Loss) FromCommon Stock


Additional











Minimum


ForeignShares





Paid-In


Deferred


Treasury


Retained


Pension


CurrencyOutstanding


Amount


Capital


Comp.


Stock


Earnings


Liability


Translation


TotalBalance at December 31, 2004


21,778,305


$
221


$
258,526


$
(2,499
)

$
(3,906
)

$
94,375


$
(22,912
)

$
153


$
323,958Net income






















38,935











38,935Foreign currency translation






























2,464



2,464Adjustment to excess minimum pension liability, net of tax


























(4,817
)






(4,817
)Comprehensive income


































36,582Shares issued for directors compensation


12,036







311



(311
)


















Shares issued for restricted stock award plans


66,000



1



1,459



(1,460
)


















Stock-based compensation expense recognized














1,192



















1,192Treasury stock purchased at cost


(22,458
)














(483
)














(483
)Exercise of employee options


858,164



9



18,394























18,403Balance at December 31, 2005


22,692,047


$
231


$
278,690


$
(3,078
)

$
(4,389
)

$
133,310


$
(27,729
)

$
2,617


$
379,652Net income






















75,700











75,700Foreign currency translation






























(433
)


(433
)Adjustment to excess minimum pension liability, net of tax


























5,125







5,125Comprehensive income


































80,392Shares issued for directors compensation


5,904































Shares issued for restricted stock award plans


46,860



1



























1Stock-based compensation expense recognized










4,606























4,606Treasury stock purchased at cost


(19,871
)














(896
)














(896
)Exercise of employee options


255,985



2



3,692























3,694Forfeiture of restricted stock awards


(8,900
)






























Tax benefits from stock-based compensation activity










5,538























5,538SFAS 123(R) reclassification










(3,078
)


3,078



















SFAS 158 adjustment, net of tax


























(10,806
)






(10,806
)Balance at December 31, 2006


22,972,025


$
234


$
289,448


$



$
(5,285
)

$
209,010


$
(33,410
)

$
2,184


$
462,181Net income






















92,631











92,631Foreign currency translation






























7,821



7,821Adjustment to excess minimum pension liability, net of tax


























3,038







3,038Comprehensive income


































103,490Shares issued for directors compensation


5,279































Shares issued for restricted stock award plans


57,946



1



























1Stock-based compensation expense recognized










6,686























6,686Treasury stock purchased at cost


(32,195
)














(2,516
)














(2,516
)Exercise of employee options


102,653



1



1,759























1,760Tax benefits from stock-based compensation activity










4,182























4,182Balance at December 31, 2007


23,105,708


$
236


$
302,075


$



$
(7,801
)

$
301,641


$
(30,372
)

$
10,005


$
575,784   The accompanying notes are an integral part of these
    Consolidated Financial Statements.


36




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial
    Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
  Note 1
    ORGANIZATION
    AND OPERATIONS:      Note 2SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES:
  Principles
    of consolidation:
    Use of
    estimates:
    Fair
    value:
    Cash
    equivalents:
    Investments:
   37




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
    Receivables:
    December 31,2007


2006Trade and commercial customers

$
102,686


$
94,065Less: Allowance for doubtful accounts


(613
)


(1,548
)Total receivables

$
102,073


$
92,517   Accounting for Contingencies
  Inventories:
  last-in, first-in,
    December 31,2007


2006Raw materials and supplies

$
114,967


$
70,662Work-in-process
    and finished goods


267,462



210,629LIFO reserve


(85,870
)


(39,653
)Total inventories

$
296,559


$
241,638  38




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
    Property,
    plant, and equipment:
      December 31,2007


2006Land

$
3,241


$
3,181Buildings and improvements


64,613



46,736Machinery and equipment


188,514



183,664Computer hardware and software, furniture and fixtures, and other


45,042



40,529Construction in progress


49,196



20,762$
350,606


$
294,872Less: Accumulated depreciation


(193,251
)


(192,402
)Total property, plant, and equipment, net

$
157,355


$
102,470     Buildings and improvements


20-40 yearsMachinery and equipment


7-15 yearsFurniture and fixtures


5-10 yearsComputer hardware and software


3-10 years         No. 98-1, Accounting for the Cost of Computer Software Developed or
    Obtained for Internal Use
 39




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
    Goodwill
    and intangible assets:
    Goodwill and Other Intangible Assets
    Goodwill.
  TranslationDecember 31,


Adjustment/


December 31,2006


Other


2007Titanium Group

$
2,591


$
(43
)

$
2,548Fabrication & Distribution Group


46,031



2,190



48,221Total goodwill

$
48,622


$
2,147


$
50,769   Intangibles.
  December 31,





Translation


December 31,2006


Amortization


Adjustment


2007Titanium Group

$



$



$



$
Fabrication & Distribution Group


15,581



(948
)


2,843



17,476Total intangible assets

$
15,581


$
(948
)

$
2,843


$
17,476   Other
    long-lived assets:
  Accounting for
    the Impairment or Disposal of Long-lived Assets
 40




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
  Environmental:
  site-by-site
  Treasury
    stock:
    Revenue
    and cost recognition:
        Shipping
    and handling fees and costs:
    Research
    and development:
    Pensions:
   41




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
    Employers
    Accounting for Pensions Employers Accounting for
    Defined Benefit Pension and Other Postretirement
    Plans  an amendment of FASB Statements No. 87,
    99, 106 and 123(R)
  Other
    post-retirement benefits:
    Employers Accounting for
    Post-retirement Benefits Other than Pensions
    Income
    taxes:
    Accounting for Income Taxes
    Foreign
    currencies:
     42




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
      Derivative
    financial instruments:
    Stock-based
    compensation:
  Accounting for Stock Issued to Employees Accounting for Stock-Based Compensation Accounting for Stock-Based
    Compensation  Transition and Disclosure 
    an amendment of FASB Statement No. 123
  Share-Based Payment
     43




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
        Year EndedDecember 31,2005Net income, as reported

$
38,935Add: Stock-based compensation expense included in reported net
    income, net of related tax effects


775Deduct: Total stock-based compensation expense determined under
    fair value methods for all awards, net of tax effects


(1,384
)Pro forma net income

$
38,326Earnings per share:Basicas reported

$
1.75Basicpro forma

$
1.73Dilutedas reported

$
1.73Dilutedpro forma

$
1.70     New
    Accounting Standards
  Accounting for Uncertainty in Income Taxes  an
    interpretation of FASB Statement 109
 44




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
    Fair Value Measurements FAS 157-b, Effective Date of FASB Statement No. 157 SFAS 157-a, Application of FASB Statement No. 157 to FASB Statement
    No. 13 and Its Related Interpretive Accounting
    Pronouncements That Address Leasing Transactions
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities  Including an amendment of FASB Statement
    No. 115 instrument-by-instrument
  Business Combinations
  Noncontrolling Interests in Consolidated Financial
    Statements  an amendment of ARB No. 51
  Note 3
    EARNINGS
    PER SHARE:  Earnings Per
    Share
 45




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
    Years Ended December 31,2007


2006


2005Numerator:Income from continuing operations

$
92,631


$
75,700


$
37,344Income from discontinued operations, net of tax provision










1,591Net income

$
92,631


$
75,700


$
38,935Denominator:Basic weighted-average shares outstanding


22,930,768



22,657,225



22,186,966Effect of dilutive shares


223,426



379,871



338,604Diluted weighted-average shares outstanding


23,154,194



23,037,096



22,525,570Basic earnings per share:Continuing operations

$
4.04


$
3.34


$
1.68Discontinued operations










0.07Net income

$
4.04


$
3.34


$
1.75Diluted earnings per share:Continuing operations

$
4.00


$
3.29


$
1.66Discontinued operations










0.07Net income

$
4.00


$
3.29


$
1.73     Note 4
    INCOME
    TAXES:    December 31, 2007


December 31, 2006


December 31, 2005Current


Deferred


Total


Current


Deferred


Total


Current


Deferred


TotalFederal

$
64,873


$
(19,007
)

$
45,866


$
25,736


$
13,860


$
39,596


$
14,366


$
5,800


$
20,166State


9,460



(1,767
)


7,693



2,447



1,601



4,048



723



(1,436
)


(713
)Foreign


3,015



(6,738
)


(3,723
)


1,318



(2,371
)


(1,053
)


1,298



(683
)


615Total

$
77,348


$
(27,512
)

$
49,836


$
29,501


$
13,090


$
42,591


$
16,387


$
3,681


$
20,068  46




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
    Years Ended December 31,2007


2006


2005United States

$
157,558


$
122,813


$
57,944Foreign


(15,091
)


(4,522
)


(532
)$
142,467


$
118,291


$
57,412     Years Ended December 31,2007


2006


2005Statutory rate of 35% applied to income before income taxes

$
49,864


$
41,402


$
20,094State income taxes, net of federal tax effects


5,543



2,656



(502
)Adjustments of tax reserves and prior years income taxes


(582
)


(403
)


(95
)Effects of foreign operations


(614
)


(358
)


553Manufacturing deduction


(3,612
)


(564
)


(342
)Other


(763
)


454



306Valuation allowance






(596
)


54Total provision

$
49,836


$
42,591


$
20,068Effective tax rate


35
%


36
%


35
%        47




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
    December 31,2007


2006Deferred tax assets:Inventories

$
3,182


$
Postretirement benefit costs


13,339



13,807Employment costs


7,539



5,886Environmental related costs


743



1,282Duty drawback claims


1,605



Canadian tax loss carryforwards (expiring 2014 through 2027)


7,525



1,452Pension costs


1,400



5,681Other


839



1,475Total deferred tax assets


36,172



29,583Deferred tax liabilities:Inventories






(16,630
)Property, plant and equipment


(8,824
)


(10,638
)Intangible assets


(6,824
)


(6,336
)Unrealized foreign exchange gain


(1,202
)Other


(363
)


(460
)Total deferred tax liabilities


(17,213
)


(34,064
)Net deferred tax asset (liability)

$
18,959


$
(4,481
)    48




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
  Accounting for Uncertainty in
    Income Taxes.
  Unrecognized TaxBenefitsGross balance at January 1, 2007

$
2,075Prior period tax positionsIncreases


1Decreases


(1,175
)Current period tax positions


1,580Settlements


Expiration of statutes


Gross balance at December 31, 2007

$
2,481Amount that would affect the effective tax rate if recognized

$
2,311         Note 5
    OTHER
    INCOME (EXPENSE):   49




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
  Note 6
    LONG-TERM
    DEBT:    December 31,2007


2006Claro credit agreement

$
15,862


$
13,729Interest-free loan agreement  Canada


1,734



Total debt


17,596



13,729Less: Current portion


(1,090
)


(459
)Long-term debt

$
16,506


$
13,270     15-year
      2008

$
1,0902009


1,3792010


1,4372011


1,4372012


1,437Thereafter


10,816Total

$
17,596  50




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
  Note 7
    EMPLOYEE
    BENEFIT PLANS:      Post-RetirementPension Benefit Plans


Benefit Plan2007


2006


2007


2006Change in projected benefit obligation:Projected benefit obligation at beginning of year

$
119,603


$
121,690


$
35,228


$
29,722Service cost


2,014



2,037



484



448Interest cost


6,913



6,475



2,030



1,589Actuarial gain


(570
)


(2,611
)


(2,280
)


(2,557
)Amendment






51







8,311Benefits paid


(8,088
)


(8,039
)


(1,955
)


(2,285
)Medicare retiree drug subsidy received










172



Projected benefit obligation at end of year

$
119,872


$
119,603


$
33,679


$
35,228Change in plan assets:Fair value of plan assets at beginning of year

$
96,738


$
92,049


$



$
Actual return on plan assets


6,734



9,851







Employer contributions


10,000



2,877



1,783



2,285Medicare retiree drug subsidy received










172



Benefits paid


(8,088
)


(8,039
)


(1,955
)


(2,285
)Fair value of plan assets at end of year

$
105,384


$
96,738


$



$
Funded status

$
(14,488
)

$
(22,865
)

$
(33,679
)

$
(35,228
)Amounts recognized in the Consolidated Balance
    Sheets consisted of:Current liabilities

$
(5,962
)

$
(580
)

$
(2,660
)

$
(2,783
)Noncurrent liabilities


(8,526
)


(22,285
)


(31,019
)


(32,445
)Net amount recognized

$
(14,488
)

$
(22,865
)

$
(33,679
)

$
(35,228
)  51




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
    December 31,


December 31,2007


2006


2007


2006Net actuarial loss (gain)

$
38,338


$
39,821


$
(321
)

$
1,959Prior service cost


2,629



3,292



7,972



9,186Total, before tax effect

$
40,967


$
43,113


$
7,651


$
11,145   Post-RetirementPension Benefit Plans

Benefit Plan2007

2006

2007

2006Weighted-average assumptions used to determine benefit
    obligation at December 31:Discount rate

6.25%

6.00%

6.25%

6.00%Rate of increase to compensation levels

3.80%

3.80%

3.80%

3.80%Measurement date

12/31/2007

12/31/2006

12/31/2007

12/31/2006Weighted-average assumptions used to determine net periodic
    benefit obligation cost for the years ended December 31:Discount rate

6.00%

5.50%

6.00%

5.50%Expected long-term return on plan assets

8.50%

8.50%

N/A

N/ARate of increase to compensation levels

3.80%

3.80%

3.80%

3.80%Measurement date

12/31/2007

12/31/2006

12/31/2007

12/31/2006  52




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##### Table of Contents



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





AfterApplication of





Application ofSFAS 158


Adjustments


SFAS 158Effect of applying FASB Statement No. 158 on individual
    line items in the Consolidated Balance Sheet at
    December 31, 2006:Intangible assets

$
3,254


$
(3,254
)

$
Current deferred income tax assets


1,105



1,015



2,120Non-current deferred income tax assets


2,236



6,840



9,076Total assets


639,312



4,601



643,913Liabilities for pension benefitcurrent






580



580Liabilities for postretirement benefitcurrent






2,783



2,783Liabilities for pension benefitlong-term


18,603



3,682



22,285Liabilities for postretirement benefitlong-term


24,083



8,362



32,445Total liabilities


166,325



15,407



181,732Accumulated other comprehensive income


(20,420
)


(10,806
)


(31,226
)Total shareholders equity

$
472,987


$
(10,806
)

$
462,181       Pension Benefit Plans


Post-Retirement Benefit Plan2007


2006


2005


2007


2006


2005Service cost

$
2,014


$
2,037


$
2,273


$
484


$
448


$
384Interest cost


6,913



6,475



6,653



2,030



1,589



1,640Expected return on plan assets


(8,076
)


(8,058
)


(7,682
)










Prior service cost amortization


693



832



956



1,214



175



175Amortization of actuarial loss


2,226



2,483



2,048







386



373Net periodic benefit cost

$
3,770


$
3,769


$
4,248


$
3,728


$
2,598


$
2,572  53




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
          −0.25%


+0.25%Effect on total projected benefit obligation (PBO) (in millions)

+$
2.9


−$
2.9Effect on subsequent years periodic pension expense (in millions)

+$
0.2


−$
0.2     2007


2006Asset category:Equity securities


56
%


59
%Debt securities


42
%


36
%Other


2
%


5
%Total


100
%


100
%     Asset category:Equity securities


56
%Debt securities


43
%Other


1
%Total


100
%    54




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
    Other post-retirement benefit plans.
      Post-Retirement


Post-RetirementPension


Benefit Plan


Benefit Plan (notBenefit


(including Plan D


including Plan DPlans


subsidy)


subsidy)2008

$
14,156


$
2,660


$
2,9832009


8,341



2,632



2,9752010


8,411



2,644



3,0032011


8,611



2,649



3,0212012


8,839



2,611



3,0112013 to 2017


45,597



13,261



14,627     Supplemental pension plan.
  Excess pension plan.
    Letter agreements.
 55




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
      Note 8
    LEASES:      Operating


Capital2008


3,540



672009


2,801



632010


2,061



432011


1,180



352012


1,028



18Thereafter


303



Total lease payments

$
10,913



226Less: Interest portion






(39
)Amount recognized as capital lease obligations





$
187   Note 9
    BILLINGS
    IN EXCESS OF COSTS AND ESTIMATED EARNINGS:    Note 10
    TRANSACTIONS
    WITH RELATED PARTIES:   56




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
  Note 11
    SEGMENT
    REPORTING:      just-in-time
      Years Ended December 31,2007


2006


2005Net sales:Titanium Group

$
253,130


$
204,881


$
130,180Intersegment sales


181,200



151,983



96,079Total Titanium Group net sales


434,330



356,864



226,259Fabrication & Distribution Group


373,669



300,508



216,726Intersegment sales


8,192



5,641



4,929Total Fabrication & Distribution Group net sales


381,861



306,149



221,655Eliminations


189,392



157,624



101,008Total consolidated net sales

$
626,799


$
505,389


$
346,906Operating income:Titanium Group before corporate allocations

$
113,469


$
86,767


$
49,331Corporate allocations


(10,886
)


(8,306
)


(8,497
)Total Titanium Group operating income


102,583



78,461



40,834Fabrication & Distribution Group before corporate
    allocations


54,067



53,241



29,766Corporate allocations


(15,489
)


(16,449
)


(14,466
)Total Fabrication & Distribution Group operating income


38,578



36,792



15,300Total consolidated operating income

$
141,161


$
115,253


$
56,134Income from continuing operations before income taxes:Titanium Group

$
105,176


$
80,198


$
41,521Fabrication & Distribution Group


37,291



38,093



15,891Total consolidated income from continuing operations before
    income taxes

$
142,467


$
118,291


$
57,412   57




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
  Years Ended December 31,2007


2006


2005Revenue by Market Information:Titanium GroupCommercial aerospace

$
153,834


$
108,881


$
53,351Defense


62,937



46,189



20,581Industrial and consumer


36,359



49,811



56,248Total Titanium Group net sales


253,130



204,881



130,180Fabrication & Distribution GroupCommercial aerospace

$
159,048


$
120,782


$
93,547Defense


144,347



114,837



73,409Industrial and consumer


70,274



64,889



49,770Total Fabrication & Distribution Group net sales


373,669



300,508



216,726Total consolidated net sales

$
626,799


$
505,389


$
346,906Geographic location of trade sales:United States

$
466,307


$
395,959


$
279,703England


40,566



38,067



18,666France


43,085



32,651



14,805Germany


27,599



8,575



4,658Canada


14,896



14,653



18,978Italy


6,281



2,587



1,549Japan


5,475



334



60Spain


5,446



2,030



1,990Other countries


17,144



10,533



6,497Total trade sales

$
626,799


$
505,389


$
346,906Capital expenditures:Titanium Group

$
39,599


$
12,740


$
7,996Fabrication & Distribution Group


25,335



23,096



1,490Total capital expenditures

$
64,934


$
35,836


$
9,486Depreciation and amortization:Titanium Group

$
9,539


$
9,284


$
9,203Fabrication & Distribution Group


6,173



5,008



4,060Total depreciation and amortization

$
15,712


$
14,292


$
13,263  58




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
    December 31,2007


2006Property, plant, and equipment:United States

$
291,101


$
261,686England


3,930



3,247France


1,253



1,160Canada


54,322



28,779Less: Accumulated depreciation


(193,251
)


(192,402
)Property, plant, and equipment, net

$
157,355


$
102,470Total assets:Titanium Group

$
281,238


$
228,305Fabrication & Distribution Group


372,398



294,436General corporate assets


101,648



121,172Total consolidated assets

$
755,284


$
643,913       Note 12
    COMMITMENTS
    AND CONTINGENCIES:    Environmental
    Matters
   59




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
  96-1, Environmental Remediation Liabilities Accounting for Contingencies
          Environmental


EnvironmentalAssets


LiabilitiesBalance at December 31, 2006

$
1,252


$
(3,553
)Environmental-related income (expense)


57



(1,163
)Cash paid (received)


(446
)


1,842Balance at December 31, 2007

$
863


$
(2,874
)     Active Investigative or Cleanup Sites.
  Ashtabula River.
  Former Ashtabula Extrusion Plant.
 60




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
    Reserve Environmental Services Landfill.
  Duty
    Drawback Investigation
         61




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
    Other
    Matters
    Note 13
    STOCK
    OPTIONS AND RESTRICTED STOCK AWARD PLANS:          2007


2006


2005Risk-free interest rate


4.67
%


4.37
%


4.00
%Expected dividend yield


0.00
%


0.00
%


0.00
%Expected lives (in years)


5.0



5.0



6.0Expected volatility


42.00
%


40.00
%


45.00
%    62




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##### Table of Contents



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


Remaining


AggregateAverage


Contractual


IntrinsicStock Options

Shares


Exercise Price


Term (Years)


ValueOutstanding at December 31, 2006


350,006


$
21.68Granted


72,700



76.55Forfeited


(3,836
)


39.00Expired


(3,301
)


17.10Exercised


(102,653
)


17.15Outstanding at December 31, 2007


312,916


$
35.74



6.95


$
10,940Exercisable at December 31, 2007


168,743


$
17.87



5.66


$
8,616         Weighted-AverageGrant-DateFair ValueNonvested Restricted Stock Awards

Shares


Per ShareNonvested at December 31, 2006


166,254


$
26.17Granted


63,225



78.19Vested


(104,837
)


25.64Nonvested at December 31, 2007


124,642


$
53.01      63




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
    Note 14
    DISCONTINUED
    OPERATIONS:          Year EndedDecember 31,2005Net sales

$
3,129Income before income taxes


2,567Provision for income taxes


907Income from discontinued operations


1,660Loss on disposal


(106
)Benefit for income taxes


(37
)Gain on discontinued operations, net of tax

$
1,591   Note 15
    SUBSEQUENT
    EVENTS:   64




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Notes to Consolidated Financial Statements
  (In thousands, except share and per share amounts, unless
    otherwise indicated)
  Note 16
    SELECTED
    QUARTERLY FINANCIAL INFORMATION (UNAUDITED):    1st


2nd


3rd


4th2007

Quarter


Quarter


Quarter


QuarterNet Sales

$
145,557


$
154,046


$
163,412


$
163,784Gross profit


51,545



47,326



53,696



55,561Operating income


32,886



31,914



36,950



39,411Net income


22,073



20,950



24,692



24,916Earnings per share:Basic

$
0.97


$
0.91


$
1.08


$
1.08Diluted

$
0.95


$
0.90


$
1.06


$
1.08   1st


2nd


3rd


4th2006

Quarter


Quarter


Quarter


QuarterNet Sales

$
115,079


$
117,667


$
128,855


$
143,788Gross profit


34,227



37,189



47,743



53,700Operating income


17,134



23,305



34,193



40,621Net income


10,742



15,127



23,047



26,784Earnings per share:Basic

$
0.48


$
0.67


$
1.02


$
1.18Diluted

$
0.47


$
0.66


$
1.00


$
1.16  65




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##### Table of Contents



Item 9.
    Changes
    in and Disagreements With Accountants on Accounting and
    Financial Disclosure.    Item 9A.
    Controls
    and Procedures.  Disclosure
    controls and procedures
  Rules 13a-15(e) 15d-15(e)
  Managements
    report on internal control over financial reporting
  Rule 13a-15(f).
  Internal ControlIntegrated Framework
    Changes
    in internal control over financial reporting
    Item 9B.
    Other
    Information   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance.     66




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##### Table of Contents



Item 11.
    Executive
    Compensation.    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.    Equity
    Compensation Plan Information
  (c) Number ofSecurities RemainingAvailable for Future(a) Number of





Issuance Under EquitySecurities to be





Compensation PlansIssued upon Exercise


(b) Weighted-Average


(Excluding Securitiesof Outstanding


Exercise Price of


Reflected in ColumnPlan Category

Options


Outstanding Options


(a))Equity compensation plans approved by security holders (see
    Note(i) and Note (iii)


299,916


$
36.86



2,180,963Equity compensation plans not approved by security holders (see
    Note (ii))


13,000



9.92



312,916


$
35.74



2,180,963   Note (i): 10-year
  Note (ii):
  Note (iii):
 67




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##### Table of Contents



Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence.    Item 14.
    Principal
    Accountant Fees and Services.   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules.          Exhibits
    ExhibitNo.

Description2
.1

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. 1.3
.1

Amended and Restated Articles of Incorporation of the Company,
    effective April 29, 1999, incorporated by reference to
    Exhibit 3.1 to the Companys Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 1999.3
.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. 333-61935.3
.3

RTI International Metals, Inc. Code of Ethical Business Conduct,
    incorporated by reference to the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2003.4
.1

Credit Agreement dated September 27, 2007, incorporated by
    reference to Exhibit 10.1 to the Companys Current
    Report on
    Form 8-K
    for the event dated September 27, 2007.4
.2

Offer of loan by and among RTI-Claro, Inc., as borrower and
    Investissement Quebec, dated August 3, 2006, incorporated
    by reference to the Companys Quarterly Report on
    Form 10-Q
    for quarterly period ended September 30, 2006 .4
.3

Credit Agreement between RTI Claro, Inc., as borrower, RTI
    International Metals Inc., as guarantor, and National City Bank,
    Canada Branch, as lender, dated as of December 27, 2006,
    incorporated by reference to Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K
    for the event dated December 27, 2006.4
.4

Credit Amending Agreement dated September 27, 2007, related
    to the Credit Agreement between RTI-Claro, Inc., as borrower,
    RTI International Metals Inc., as guarantor, and National City
    Bank, Canada Branch, as lender, incorporated by reference to
    Exhibit 10.2 to the Companys Current Report on
    Form 8-K
    for the event dated September 27, 2007.10
.1*

RTI International Metals, Inc. Supplemental Pension Plan
    effective August 1, 1987, as amended and restated
    October 26, 2007, filed herewith.10
.2*

RTI International Metals, Inc. Excess Benefits Plan effective
    July 18, 1991, and restated October 26, 2007, filed
    herewith.10
.3*

RTI International Metals, Inc., 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. 68




---



##### Table of Contents



ExhibitNo.

Description10
.4*

Employment agreement, dated February 23, 2007 between the
    Company and Dawne S. Hickton, incorporated by reference to
    Exhibit 10.4 to the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended March 31, 2007.10
.5*

Employee agreement, dated February 23, 2007, between the
    Company and William T. Hull, incorporated by reference to
    Exhibit 10.5 to the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended March 31, 2007.10
.6*

Letter Agreement, dated December 3, 2003, between the
    Company and T.G. Rupert, with respect to retirement benefits,
    incorporated by reference to the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2003.10
.7*

Employment agreement, dated February 23, 2007, between the
    Company and Stephen R. Giangiordano, incorporated by reference
    to Exhibit 10.6 to the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended March, 31, 2007.10
.8*

Employment agreement, dated February 23, 2007, between the
    Company and Michael C. Wellham, incorporated by reference to
    Exhibit 10.7 to the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended March, 31, 2007.10
.9*

Employment agreement, dated February 23, 2007, between the
    Company and Chad Whalen, incorporated by reference to
    Exhibit 10.8 to the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended March, 31, 2007.10
.10*

Executive Non-Change in Control Severance Policy, dated
    February 22, 2007, incorporated by reference to
    Exhibit 10.1 to the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended March 31, 2007.10
.11*

Executive Change in Control Severance Policy, as amended
    January 25, 2008, filed herewith.10
.12*

RTI International Metals, Inc. 2004 Stock Plan effective
    January 28, 2005, as amended January 26, 2007,
    incorporated by reference to Exhibit 10.10 to the
    Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended March 31, 2007.10
.13*

Form of Non-Qualified Stock Option Grant under the RTI
    International Metals, Inc. 2004 Stock Plan, incorporated by
    reference to Exhibit 10.13 to the Companys Annual
    Report on
    Form 10-K
    filed on April 14, 2005.10
.14*

Form of Restricted Stock Grant under the RTI International
    Metals, Inc. 2004 Stock Plan, incorporated by reference to
    Exhibit 10.12 to the Companys Annual Report on
    Form-10K for the year ended December 31, 2006.10
.15*

Form of Performance Share Award under the RTI International
    Metals, Inc. 2004 Stock Plan, incorporated by reference to
    Exhibit 10.1 to the Companys Current Report on
    Form 8-K
    for the event dated January 25, 2008.10
.16*

RTI International Metals, Inc. Board of Directors Compensation
    Program, as amended, incorporated by reference to
    Exhibit 10.1 to the Companys Current Report on
    Form 8-K
    for the event dated October 31, 2006.10
.17*

Form of indemnification agreement, incorporated by reference to
    Exhibit 10.3 to the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended March 31, 2007.10
.18*

Pay philosophy and guiding principles covering officer
    compensation incorporated by reference to the Companys
    Quarterly Report on
    Form 10-Q
    for the quarterly period ended September 30, 2005.10
.19

2005 Settlement with the U.S. Department of Energy, incorporated
    by reference to the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2005.10
.20

Procurement Frame Contract between EADS Deutschland GmbH and RTI
    International Metals, Inc. dated April 26, 2006,
    incorporated by reference to the Companys Quarterly Report
    on
    Form 10-Q
    for the quarterly period ended June 30, 2006.10
.21

Long-term Titanium Sponge Supply Agreement, dated
    January 1, 2007, between the Company and Sumitomo Titanium
    Corporation and its affiliates, incorporated by reference to
    Exhibit 10.9 to the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended March 31, 2007 69




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##### Table of Contents



ExhibitNo.

Description10
.22

Amendment to Long-Term Supply Agreement, dated May 30,
    2007, between the Company and Lockheed Martin Corporation and
    its affiliates, incorporated by reference to Exhibit 10.1
    to the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended June 30, 2007.10
.23

Supplemental long-term Supply Agreement, dated
    September 17, 2007, between the Company and EADS
    Deutschland GmbH as Lead Buyer for the European Aeronautic
    Defense Space group of companies, incorporated by reference to
    Exhibit 10.1 to the Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended September 30, 2007.10
.24*

Employment agreement, dated November 19, 2007, between the
    Company and William F. Strome, filed herewith.10
.25

RTI International Metals, Inc. 2002 Non-Employee Director Stock
    Option Plan, incorporated by reference to Exhibit 4.3 to
    the Companys Registration Statement on
    Form S-8
    dated February 19, 2002.10
.26*

RTI International Metals, Inc. Board of Directors Compensation
    Program, as amended July 27, 2007, filed herewith.21
.1

Subsidiaries of the Company, filed herewith.23
.1

Consent of independent registered public accounting firm, filed
    herewith.24
.1

Powers of Attorney, filed herewith.31
.1

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

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

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

Certification of Chief Financial Officer Pursuant to
    18 U.S.C. Section 1350, as Adopted Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002, filed
    herewith.     *
    
    Denotes management contract or compensatory plan, contract or
    arrangement 70




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##### Table of Contents



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

DateCRAIG R. ANDERSSON, Director;DANIEL I. BOOKER, Director;DONALD P. FUSILLI, JR., Director,RONALD L. GALLATIN, Director;CHARLES C. GEDEON, Director;ROBERT M. HERNANDEZ, Director;DAWNE S. HICKTON, Director;EDITH E. HOLIDAY, Director;MICHAEL C. WELLHAM, Director;JAMES A. WILLIAMS, Director;/s/  Dawne
    S. HicktonDawne
    S. Hickton
    As Attorney-in-Fact

February 28, 2008/s/  Dawne
    S. HicktonDawne
    S. Hickton
    Vice Chairman and Chief Executive Officer

February 28, 2008/s/  William
    T. HullWilliam
    T. Hull
    Senior Vice President and Chief Financial Officer

February 28, 2008  71




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES



Schedule IIValuation
    and Qualifying Accounts



(In
    thousands)  (Charged)Balance at


Credited to


Writeoffs


BalanceBeginning


Costs and


Against


at EndDescription

of Year


Expenses


Allowance


of YearYear ended December 31, 2007:Allowance for doubtful accounts

$
(1,548
)

$
893


$
42


$
(613
)Valuation allowance for deferred income taxes


(35
)


35







Allowance for U.S. Customs on duty drawback


(608
)






608



Year ended December 31, 2006:Allowance for doubtful accounts


(1,604
)


16



40



(1,548
)Valuation allowance for deferred income taxes


(631
)






596



(35
)Allowance for U.S. Customs on duty drawback


(663
)


55







(608
)Year ended December 31, 2005:Allowance for doubtful accounts


(1,486
)


(544
)


426



(1,604
)Valuation allowance for deferred income taxes


(577
)


(54
)






(631
)Allowance for U.S. Customs on duty drawback


(219
)


(444
)






(663
)  S-1