##### 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, 2006
  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     Noo
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  Large accelerated
    filer þ     Accelerated
    filer o     Non-accelerated
    filer 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


11Item 2.

Properties


12Item 3.

Legal
    Proceedings


12Item 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


32Item 8.

Financial
    Statements and Supplementary Data


33Item 9.

Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


72Item 9A.

Controls and
    Procedures


72Item 9B.

Other
    Information


72PART IIIItem 10.

Directors,
    Executive Officers and Corporate Governance


72Item 11.

Executive
    Compensation


73Item 12.

Security Ownership
    of Certain Beneficial Owners and Management


73Item 13.

Certain
    Relationships and Related Transactions and Director
    Independence


73Item 14.

Principal
    Accountant Fees and Services


74PART IVItem 15.

Exhibits and
    Financial Statement Schedules


74Signatures


77EX-10.10EX-10.12EX-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
        Commercial
    Aerospace
  Aerospace Market News,
 1




---



##### Table of Contents



Aerospace Market News The Airline Monitor
      Defense
  F/A-22, F/A-18, F-15, C-17
        Industrial &
    Consumer
      difficult-to-reach
   2




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##### Table of Contents



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




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##### Table of Contents



sub-sea
      2006


2005


2004(dollars in millions)

$


%


$


%


$


%Titanium Group(1)(2)

$
204.9



40.5
%

$
130.2



37.5
%

$
48.7



23.2
%Fabrication &
    Distribution Group(2)


300.5



59.5
%


216.7



62.5
%


161.0



76.8
%Total consolidated net sales

$
505.4



100.0
%

$
346.9



100.0
%

$
209.7



100.0
%     2006


2005


2004(dollars in millions)

$


%


$


%


$


%Titanium Group(2)

$
78.5



68.1
%

$
40.8



72.8
%

$
(11.1
)


76.0
%Fabrication &
    Distribution Group(2)


36.8



31.9
%


15.3



27.2
%


(3.5
)


24.0
%Total consolidated operating
    income (loss)

$
115.3



100.0
%

$
56.1



100.0
%

$
(14.6
)


100.0
%     (in millions)

2006


2005Titanium Group

$
228.3


$
230.5Fabrication &
    Distribution Group


294.4



231.7General Corporate(3)


121.2



39.6Total consolidated assets

$
643.9


$
501.8     (1)
    
    Excludes $152 million, $96 million and
    $57 million of intercompany sales primarily to the F&D
    Group in 2006, 2005 and 2004, respectively.(2)
    
    Excludes the effect of discontinued operations in both current
    and prior years.(3)
    
    Consists primarily of unallocated cash, short term investments
    and deferred tax assets.  RTI
    Sales by Market
  2006


2005


2004Commercial Aerospace


45
%


42
%


35
%Defense


32
%


27
%


29
%Industrial and Consumer


23
%


31
%


36
%  4




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##### Table of Contents



Exports
      Backlog
    Raw
    Materials
        Competition
    and Other Market Factors
   5




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##### Table of Contents



Trade and
    Legislative Factors
       6




---



##### Table of Contents



Marketing
    and Distribution
    Research,
    Technical, and Product Development
        Patents
    and Trademarks
    Employees
     7




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##### Table of Contents



Executive
    Officers of the Registrant
    Name

Age

TitleTimothy G. Rupert


60


President and Chief Executive
    OfficerJohn H. Odle


64


Executive Vice PresidentDawne S. Hickton


49


Senior Vice President and Chief
    Administrative Officer, General Counsel and Secretary (Principal
    Financial Officer)William T. Hull


49


Vice President and Chief
    Accounting OfficerStephen R. Giangiordano


48


Senior Vice
    PresidentTitanium GroupMichael C. Wellham


41


Senior Vice
    PresidentFabrication & Distribution Group     Biographies
               8




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##### Table of Contents



Available
    Information
  Form 10-K, Form 10-Q, Form 8-K (www.sec.gov)
  Item 1A.
    Risk
    Factors    The
    ability to successfully expand our operations in a timely and
    cost effective manner
    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 aerospace and
    defense industries and a limited number of
    customers
   9




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##### Table of Contents



We may
    be subject to competitive disadvantages
    Our
    business could be harmed by strikes or work
    stoppages
      We may
    experience a lack of supply of raw materials at costs that
    provide us with acceptable margin levels
    We may
    experience a shortage in the supply of energy or an increase in
    energy costs to operate our plants
   10




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##### Table of Contents



Our
    business is subject to the risks of international
    operations
    We are
    dependent on services that are subject to price and availability
    fluctuations
    We may
    be affected by our ability or inability to obtain
    credit
    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
    We may
    not be able to sustain effective internal controls over
    financial reporting
    Item 1B.
    Unresolved
    Staff Comments   11




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##### Table of Contents



Item 2.
    Properties  Manufacturing
    Facilities
    Manufacturing
    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)


3.0Fabrication &
    Distribution GroupWashington, MO


Owned


Hot-formed and superplastically
    formed components (thousand press hours)


50.0Sullivan, MO


Leased


Cut parts (thousand man hours)


23.0Houston, TX


Leased


Extruded products (million pounds)


1.8Houston, TX


Owned


Machining & fabrication
    of oil and gas products (thousand man hours)


246.0Birmingham, England


Leased


Cut parts and components (thousand
    man hours)


45.0Villette, France


Owned


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/AMontreal, Canada


Leased


Machining and assembly of
    aerospace products (thousand man hours)


300.0      Item 3.
    Legal
    Proceedings    Environmental
   12




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##### Table of Contents



96-1,
          Active Investigative or Cleanup Sites.
  Ashtabula River.
  Former Ashtabula Extrusion Plant.
 13




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##### Table of Contents



Reserve Environmental Services Landfill.
  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  Common
    Stock Data:
      Range of
    High and Low Sales Prices of Common Stock for 2005
  Quarter:

High


LowFirst

$
27.39


$
18.72Second


32.31



19.50Third


40.31



30.76Fourth


40.80



31.29Year

$
40.80


$
18.72   Range of
    High and Low Sales Prices of Common Stock for 2006
  Quarter:

High


LowFirst

$
56.22


$
38.00Second


83.33



46.64Third


57.75



39.81Fourth


80.50



39.94Year

$
83.33


$
38.00      14




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##### Table of Contents



Item 6.
    Selected
    Financial Data      Years Ended December 31,2006


2005


2004


2003


2002Income Statement Data(5):Net sales

$
505,389


$
346,906


$
209,643


$
180,256


$
239,966Operating income (loss)


115,253
(6)


56,134



(14,566
)


(2,215
)(2)


14,178Income (loss) from continuing
    operations before income taxes


118,291



57,412



(4,996
)(1)


6,507
(3)


23,252
(4)Income (loss) from continuing
    operations


75,700



37,344



(2,319
)


4,108



14,416Income (loss) from discontinued
    operations, net of tax provision






1,591



(638
)


606



709Net income (loss)


75,700



38,935



(2,957
)


4,714



15,125Basic earnings (loss) per share:Continuing operations

$
3.34


$
1.68


$
(0.11
)

$
0.20


$
0.69Discontinued operations






0.07



(0.03
)


0.03



0.04Net income (loss)

$
3.34


$
1.75


$
(0.14
)

$
0.23


$
0.73Diluted earnings (loss) per share:Continuing operations

$
3.29


$
1.66


$
(0.11
)

$
0.19


$
0.69Discontinued operations






0.07



(0.03
)


0.03



0.03Net income (loss)

$
3.29


$
1.73


$
(0.14
)

$
0.22


$
0.72   December 31,2006


2005


2004


2003


2002Balance Sheet Data:Working capital

$
365,711


$
282,670


$
218,444


$
225,804


$
215,861Total assets


643,913



501,751



409,411



393,775



379,328Long-term debt


13,270















Total shareholders equity


462,181
(7)


379,652



323,958



317,660



311,173     (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)
    
    Includes the effect of an approximately $7 million gain
    from the settlement of a contractual claim and a
    $2.1 million gain resulting from the sale of Common Stock
    received by the Company in connection with the demutualization
    of one of its insurance carriers. 15




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##### Table of Contents



(5)
    
    All years presented have been adjusted for the impacts of the
    discontinued operations which occurred in 2005 and 2004 (see
    Note 15 of the Consolidated Financial Statements).(6)
    
    The adoption of SFAS 123R, on January 1, 2006,
    resulted in an additional $2.6 million of compensation
    expense in 2006 (see Note 2 of the Consolidated Financial
    Statements).(7)
    
    The adoption of SFAS 158, as of December 31, 2006,
    resulted in a decrease in equity of $10.8 million (see
    Note 8 of the Consolidated Financial Statements).  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,
    increased defense spending,
    the success of new market development,
    long-term supply agreements,
    legislative challenges to the Specialty Metals Clause of the
    Berry Amendment,
    global economic activities,
    the successful completion of our expansion projects,
    the Companys order backlog and the conversion of that
    backlog into revenue, and
    other statements contained herein that are not historical facts.    Overview
     16




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##### Table of Contents



sub-assemblies,
      work-in-process,
    Results
    of Operations
  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
%      17




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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
%     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
%      18




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##### Table of Contents



Other Income.
  Interest Income and Interest Expense.
  Provision for Income Tax.
  For
    the Year Ended December 31, 2005 Compared To The Year Ended
    December 31, 2004
  Review of
    accounting for employee benefit and executive compensation
    arrangements
      Net Sales.
  Years EndedDecember 31,


$ Increase/


% Increase/(In millions)

2005


2004


(Decrease)


(Decrease)Titanium Group

$
130.2


$
48.6


$
81.6



167.9
%Fabrication &
    Distribution Group


216.7



161.0



55.7



34.6
%Total consolidated net sales

$
346.9


$
209.6


$
137.3



65.5
%      19




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##### Table of Contents



Gross Profit (Loss).
  Years EndedDecember 31,


$ Increase/


% Increase/(In millions)

2005


2004


(Decrease)


(Decrease)Titanium Group

$
55.0


$
(1.1
)

$
56.1



5100.0
%Fabrication &
    Distribution Group


51.6



26.2



25.4



96.9
%Total consolidated gross profit

$
106.6


$
25.1


$
81.5



324.7
%       Selling, General, and Administrative
    Expenses.
  Years EndedDecember 31,


$ Increase/


% Increase/(In millions)

2005


2004


(Decrease)


(Decrease)Titanium Group

$
12.7


$
9.3


$
3.4



36.6
%Fabrication &
    Distribution Group


36.1



29.7



6.4



21.5
%Total consolidated SG&A

$
48.8


$
39.0


$
9.8



25.1
%        20




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##### Table of Contents



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


$ Increase/


% Increase/(In millions)

2005


2004


(Decrease)


(Decrease)Titanium Group

$
40.8


$
(11.1
)

$
51.9



467.6
%Fabrication &
    Distribution Group


15.3



(3.5
)


18.8



537.1
%Total consolidated operating income

$
56.1


$
(14.6
)

$
70.7



484.2
%       Other Income.
  Interest Income and Interest Expense.
  Provision for Income Taxes.
 21




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Discontinued Operations.
            Outlook
     22




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##### Table of Contents



10-year
      Backlog.
  Liquidity
    and Capital Resources
    Cash provided (used) by operating
    activities.
   23




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##### Table of Contents



Cash used by investing activities.
    Cash provided by financing activities.
    Contractual
    Obligations, Commitments and Other Post-Retirement
    Benefits
    Contractual Obligations2007


2008


2009


2010


2011


Thereafter


TotalLong-term debt(1)(7)

$
1.1


$
1.6


$
1.5


$
1.5


$
1.4


$
11.5


$
18.6Operating leases(2)


3.2



2.2



1.5



0.9



0.2



0.3



8.3Capital leases(2)


0.1



0.1



















0.2Total contractual obligations

$
4.4


$
3.9


$
3.0


$
2.4


$
1.6


$
11.8


$
27.1   Commercial CommitmentsAmount of Commitment Expiration per Period2007


2008


2009


2010


2011


Thereafter


TotalLong-term supply agreements(3)

$
50.8


$
22.0


$
22.0


$
22.0


$
22.0


$
22.0


$
160.8Purchase obligations(4)


94.5























94.5Standby letters of credit(5)


1.3























1.3Total commercial commitments

$
146.6


$
22.0


$
22.0


$
22.0


$
22.0


$
22.0


$
256.6   24




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##### Table of Contents



Other Post-Retirement Benefits2007


2008


2009


2010


2011


2012-2016


TotalOther post-retirement benefits(6)

$
3.1


$
3.0


$
3.0


$
3.1


$
3.1


$
14.9


$
30.2     (1)
    
    See Note 7 to the Companys Consolidated Financial
    Statements.(2)
    
    See Note 9 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 2007
    through 2016 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.    Off-Balance
    Sheet Arrangements
    Credit
    Agreement
  15-year
   25




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##### Table of Contents



Environmental
    Matters
  96-1,
          Active Investigative or Cleanup Sites.
  Ashtabula River.
 26




---



##### Table of Contents



Former Ashtabula Extrusion Plant.
  Reserve Environmental Services Landfill.
  New
    Accounting Standards
       27




---



##### Table of Contents



and/or
 28




---



##### Table of Contents



and/or
    Acquisitions
  and/or
      Critical
    Accounting Policies
     29




---



##### Table of Contents



Inventories. last-in, first-in, lower-of-cost-or-market first-in,
  Goodwill and Intangible Assets.
    Long-Lived Assets.
  Income Taxes.
  Employee Benefit Plans.
  Corporate
    Yield Dedicated Bond Portfolio
 30




---



##### Table of Contents



−.25%

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

+$
3.1


−$
3.0Effect on subsequent years
    periodic pension expense (in millions)

+$
0.2


−$
0.2       2006


2005Asset category:Equity securities


59
%


56
%Debt securities


36
%


44
%Other


5
%


0
%Total


100
%


100
%     Asset category:Equity securities


56
%Debt securities


40
%Other


4
%Total


100
%       Post-Retirement


Post-RetirementPension


Benefit Plan


Benefit Plan (notBenefit


(including Plan D


including Plan DPlans


subsidy)


subsidy)2007

$
8,766


$
2,783


$
3,1082008


9,067



2,684



3,0372009


9,038



2,652



3,0232010


9,013



2,669



3,0542011


9,033



2,671



3,0702012 to 2016


45,909



13,005



14,884  31




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##### Table of Contents



FAS 106-2.
      Environmental Liabilities.
  Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk  Commodity
    Price Risk
    Interest
    Rate Risk
    Foreign
    Currency Exchange Risk
   32




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##### Table of Contents



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


34Financial Statements:Consolidated
    Statements of Operations for the years ended December 31,
    2006, 2005, and 2004


36Consolidated
    Balance Sheets at December 31, 2006 and 2005


37Consolidated
    Statements of Cash Flows for the years ended December 31,
    2006, 2005, and 2004


38Consolidated
    Statements of Changes in Shareholders Equity for the years
    ended December 31, 2006, 2005, and 2004


39Notes to
    Consolidated Financial Statements


40Financial Statement Schedules:Schedule II 
    Valuation and Qualifying Accounts


S-1    33




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  To the Board
    of Directors and Shareholders of RTI International Metals, Inc.:
    Consolidated
    financial statements and financial statement
    schedule
      Internal
    control over financial reporting
  Internal ControlIntegrated Framework Internal ControlIntegrated
    Framework
   34




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##### Table of Contents



35




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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 31,2006


2005


2004Net sales

$
505,389


$
346,906


$
209,643Cost and expenses:Cost of sales


332,530



240,314



184,592Selling, general and
    administrative expenses


56,110



48,816



38,974Research, technical, and product
    development expenses


1,496



1,642



1,181Other operating income










538Operating income (loss)


115,253



56,134



(14,566
)Other income


540



369



9,432Interest income


3,172



1,418



817Interest expense


(674
)


(509
)


(679
)Income (loss) from continuing
    operations before income taxes


118,291



57,412



(4,996
)Provision (benefit) for income
    taxes


42,591



20,068



(2,677
)Income (loss) from continuing
    operations


75,700



37,344



(2,319
)Income (loss) from discontinued
    operations, net of tax provision






1,591



(638
)Net income (loss)

$
75,700


$
38,935


$
(2,957
)Basic earnings (loss) per share:Continuing operations

$
3.34


$
1.68


$
(0.11
)Discontinued operations






0.07



(0.03
)Net income (loss)

$
3.34


$
1.75


$
(0.14
)Diluted earnings (loss) per share:Continuing operations

$
3.29


$
1.66


$
(0.11
)Discontinued operations






0.07



(0.03
)Net income (loss)

$
3.29


$
1.73


$
(0.14
)Weighted-average shares
    outstanding:Basic


22,657,225



22,186,966



21,309,737Diluted


23,037,096



22,525,570



21,309,737   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
  Consolidated Balance Sheets
  (In thousands, except share and per share amounts)
  December 31,2006


2005ASSETSCurrent assets:Cash and cash equivalents

$
40,026


$
53,353Investments


85,035



2,410Receivables, less allowance for
    doubtful accounts of $1,548 and $1,604


92,517



54,212Inventories, net


241,638



223,394Deferred income taxes


2,120



3,778Other current assets


5,818



7,407Total current assets


467,154



344,554Property, plant and equipment, net


102,470



80,056Goodwill


48,622



48,646Other intangible assets, net


15,581



16,581Deferred income taxes


9,076



5,451Intangible pension asset






4,076Other noncurrent assets


1,010



2,387Total assets

$
643,913


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

$
34,055


$
25,620Accrued wages and other employee
    costs


17,475



10,953Billings in excess of costs and
    estimated earnings


21,147



13,352Income taxes payable


5,253



3,367Current deferred income taxes


10,255



3Current portion long-term debt


459



Current liability for
    post-retirement benefits


2,783



Current liability for pension
    benefits


580



Other accrued liabilities


9,436



8,589Total current liabilities


101,443



61,884Long-term debt


13,270



Liability for post-retirement
    benefits


32,445



21,070Liability for pension benefits


22,285



25,595Deferred income taxes


5,422



6,516Other noncurrent liabilities


6,867



7,034Total liabilities


181,732



122,099Commitment and ContingenciesShareholders equity:Common stock, $0.01 par
    value; 50,000,000 shares authorized; 23,440,127 and
    23,131,378 shares issued; 22,967,284 and
    22,687,306 shares outstanding


234



231Additional paid-in capital


289,448



278,690Deferred compensation






(3,078
)Treasury stock, at cost; 472,843
    and 444,072 shares


(5,285
)


(4,389
)Accumulated other comprehensive
    loss


(31,226
)


(25,112
)Retained earnings


209,010



133,310Total shareholders equity


462,181



379,652Total liabilities and
    shareholders equity

$
643,913


$
501,751   The accompanying notes are an integral part of these
    Consolidated Financial Statements.
 37




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Consolidated Statements of Cash Flows
  (In thousands)
  Years Ended December 31,2006


2005


2004OPERATING ACTIVITIES:Net income (loss)

$
75,700


$
38,935


$
(2,957
)Net income from discontinued
    operations






(1,660
)


(54
)Loss on disposal of discontinued
    operations






69



692Net income (loss) from continuing
    operations


75,700



37,344



(2,319
)Adjustment for non-cash items
    included in net income:Depreciation and amortization


14,292



13,263



12,448Deferred income taxes


13,090



3,681



2,565Stock-based compensation and other


4,568



1,647



1,123Excess tax benefits from
    stock-based compensation activity


(5,102
)


4,592



1,336Loss (gain) on sale of property,
    plant and equipment


229



(26
)


(349
)Changes in assets and liabilities:Receivables


(36,639
)


(11,488
)


(10,742
)Inventories


(18,367
)


(89,664
)


19,868Accounts payable


6,356



12,368



(839
)Income taxes payable


7,300



6,055



(9,623
)Billings in excess of costs and
    estimated earnings


7,805



8,674



(2,794
)Other current liabilities


10,918



8,418



4,341Other assets and liabilities


3,521



(7,046
)


2,180Cash provided (used) by continuing
    operating activities


83,671



(12,182
)


17,195Cash provided by discontinued
    operating activities






1,473



3,487Cash provided (used) by operating
    activities


83,671



(10,709
)


20,682INVESTING ACTIVITIES:Acquisitions, net of cash acquired,
    and other investing






(290
)


(24,225
)Proceeds from disposal of property,
    plant and equipment


115



28



595Purchase of investments


(85,035
)


(9,150
)


Proceeds from sale of investments


2,410



6,740



Capital expenditures


(35,836
)


(9,486
)


(5,771
)Cash used by investing activities
    of continuing operations


(118,346
)


(12,158
)


(29,401
)Cash from investing activities of
    discontinued operations






8



Cash used in investing activities


(118,346
)


(12,150
)


(29,401
)FINANCING ACTIVITIES:Proceeds from exercise of employee
    stock options


3,694



13,811



4,023Net borrowings under credit
    agreement


13,729







Excess tax benefits from
    stock-based compensation activity


5,102







Purchase of common stock held in
    treasury


(896
)


(483
)


(288
)Deferred charges related to credit
    facility










(285
)Cash provided by financing
    activities


21,629



13,328



3,450Effect of exchange rate changes on
    cash and cash equivalents


(281
)


183



Decrease in cash and cash
    equivalents


(13,327
)


(9,348
)


(5,269
)Cash and cash equivalents at
    beginning of period


53,353



62,701



67,970Cash and cash equivalents at end of
    period

$
40,026


$
53,353


$
62,701Supplemental cash flow information:Cash paid for interest (net of
    amount capitalized)

$
321


$
486


$
426Cash paid for income taxes

$
16,450


$
12,791


$
6,086Non-cash investing and financing
    activities:Issuance of Common Stock for
    restricted stock awards

$
2,475


$
1,771


$
1,301Capital lease obligations incurred

$
92


$
116


$
6Common Stock issued in acquisition

$



$



$
7,014   The accompanying notes are an integral part of these
    Consolidated Financial Statements.
 38




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIES
  Consolidated Statements of Changes In
    Shareholders Equity
  (In thousands, except share amounts)
 Accum.Shares of

















OtherCommon





Additional











CompStock


Common


Paid-in


Deferred


Treasury


Retained


Income/





ComprehensiveOutstanding


Stock


Capital


Compensation


Stock


Earnings


(Loss)


Total


Income (Loss)Balance at December 31, 2003


20,935,497


$
213


$
244,860


$
(2,009
)

$
(3,618
)

$
97,332


$
(19,118
)

$
317,660Shares issued for directors
    compensation


18,179







265



(265
)














Shares issued for restricted stock
    award plans


69,250



1



1,035



(1,036
)














Compensation expense recognized














811















811Treasury stock purchased at cost


(19,275
)














(288
)










(288
)Exercise of employee Options
    including tax benefits


411,005



3



5,356



















5,359Net loss






















(2,957
)






(2,957
)

$
(2,957
)Stock issued in Claro purchase


358,908



4



7,010



















7,014Adjustment to excess minimum
    pension liability(a)


























(3,794
)


(3,794
)


(3,794
)Foreign currency translation


























153



153



153Comprehensive loss

































$
(6,598
)Balance at December 31, 2004


21,773,564


$
221


$
258,526


$
(2,499
)

$
(3,906
)

$
94,375


$
(22,759
)

$
323,958Shares issued for directors
    compensation


12,036







311



(311
)














Shares issued for restricted stock
    award plans


66,000



1



1,459



(1,460
)














Compensation expense recognized














1,192















1,192Treasury stock purchased at cost


(22,458
)














(483
)










(483
)Exercise of employee Options
    including tax benefits


858,164



9



18,394



















18,403Net loss






















38,935







38,935


$
38,935Adjustment to excess minimum
    pension liability(a)


























(4,817
)


(4,817
)


(4,817
)Foreign currency translation


























2,464



2,464



2,464Comprehensive income

































$
36,582Balance at December 31, 2005


22,687,306


$
231


$
278,690


$
(3,078
)

$
(4,389
)

$
133,310


$
(25,112
)

$
379,652Shares issued for directors
    compensation


5,904



























Shares issued for restricted stock
    award plans


46,860



1























1Compensation expense recognized










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 123R reclassification










(3,078
)


3,078















Net income






















75,700







75,700


$
75,700Adjustment to excess minimum
    pension liability(a)


























5,125



5,125



5,125Adjustment to initially apply
    SFAS 158, net of tax


























(10,806
)


(10,806
)Foreign currency translation


























(433
)


(433
)


(433
)Comprehensive income

































$
80,392Balance at December 31, 2006


22,967,284


$
234


$
289,448


$



$
(5,285
)

$
209,010


$
(31,226
)

$
462,181     (a)
    
    Minimum pension liability adjustments in 2006, 2005, and 2004
    are net of tax benefits (losses) of ($1,956), $2,562, and
    $2,042, respectively.  The accompanying notes are an integral part of these
    Consolidated Financial Statements.
 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)
 Note 1ORGANIZATION
    AND OPERATIONS:      Review
    of accounting for employee benefit and executive compensation
    arrangements
      Note 2SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES:
  Principles
    of consolidation:
    Use of
    estimates:
   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)
    Fair
    value:
    Cash
    equivalents:
    Investments:
  available-for-sale
  Receivables:
    December 31,2006


2005Trade and commercial customers

$
94,065


$
55,816Less: Allowance for doubtful
    accounts


(1,548
)


(1,604
)Total receivables

$
92,517


$
54,212   Inventories:
  last-in, first-in, lower-of-cost-or-market
 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)
      December 31,2006


2005Raw materials and supplies

$
70,662


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


210,629



195,870LIFO reserve


(39,653
)


(39,009
)Total inventories

$
241,638


$
223,394     U.S. customs
    recoveryother current assets:
      December 31,2006


2005Receivable from U.S. Customs
    for recovery of import duties, less allowance for uncollectible
    accounts of $608 and $663, respectively

$
2,825


$
2,254Miscellaneous non-trade receivable


485



284Prepaid insurance


1,141



815Deposits


836



2,865Other prepayments


531



1,189Total other current assets

$
5,818


$
7,407   Property,
    plant and equipment:
   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)
     December 31,2006


2005Land

$
3,181


$
967Building and improvements


46,736



46,398Machinery and equipment


177,974



173,410Computer hardware and software,
    furniture, and fixtures, and other


46,219



39,486Construction in progress


20,762



2,431$
294,872


$
262,692Less: Accumulated depreciation


(192,402
)


(182,636
)Total property, plant and
    equipment, net

$
102,470


$
80,056     Building and improvements


20-40 yearsMachinery and equipment


7-15 yearsFurniture and fixtures


5-10 yearsComputer hardware and software


3-10 years         No. 98-1,
  Goodwill
    and intangible assets:
     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)
      Goodwill.
  December 31,


Translation


December 31,2005


Adjustment


2006Titanium Group

$
2,591


$



$
2,591Fabrication &
    Distribution Group


46,055



(24
)


46,031Total goodwill

$
48,646


$
(24
)

$
48,622   Intangibles.
  December 31,





Translation


December 31,2005


Amortization


Adjustment


2006Titanium Group

$



$



$



$
Fabrication &
    Distribution Group


16,581



(991
)


(9
)


15,581Total intangible assets

$
16,581


$
(991
)

$
(9
)

$
15,581   Other
    long-lived assets:
    Environmental:
    Treasury
    stock:
   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)
   Revenue
    and cost recognition:
        Shipping
    and handling fees and costs:
    Research
    and development:
    Pensions:
      Other
    post-retirement benefits:
     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)
      Income
    taxes:
      Foreign
    currencies:
        Derivative
    financial instruments:
    Stock-based
    compensation:
   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)
            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)
      Years Ended December 31,2005


2004Net income (loss), as reported

$
38,935


$
(2,957
)Add: Stock-based employee
    compensation expense included in reported net income (loss), net
    of related tax effects


775



365Deduct: Total stock-based employee
    compensation expense determined under fair value methods for all
    awards, net of related tax effects


(1,384
)


(761
)Pro forma net income (loss)

$
38,326


$
(3,353
)Earnings per share:Basicas reported

$
1.75


$
(0.14
)Basicpro forma

$
1.73


$
(0.16
)Dilutedas reported

$
1.73


$
(0.14
)Dilutedpro forma

$
1.70


$
(0.16
)     New
    Accounting Standards
       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)
        and/or and/or
    Note 3ACQUISITIONS:
     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)
        AllocatedPurchasePriceAcquired assets:Accounts receivable

$
2,802Inventories


4,328Other assets


46Property, plant &
    equipment


3,836Goodwill


11,090Intangible assets


16,200Total assets


38,302Acquired liabilities:Accounts payable


1,010Income taxes payable


1,543Current deferred income taxes
    liability


1,145Other accrued liabilities


160Noncurrent deferred income taxes


5,414Total liabilities


9,272Net assets acquired

$
29,030Purchase price:Cash, net of cash acquired

$
22,016RTI Common Stock


7,014$
29,030  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)
    Pro Forma2004Net sales

$
235,999Income from continuing operations


434Income from continuing operations
    per share:Basic


0.02Diluted


0.02Net loss

$
(533
)Net loss per share:Basic


(0.03
)Diluted


(0.03
)   stepped-up
    Note 4EARNINGS
    PER SHARE:
   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)
     Years Ended December 31,2006


2005


2004Numerator:Income (loss) from continuing
    operations

$
75,700


$
37,344


$
(2,319
)Income (loss) from discontinued
    operations, net of tax provision






1,591



(638
)Net income

$
75,700


$
38,935


$
(2,957
)Denominator:Basic weighted-average shares
    outstanding


22,657,225



22,186,966



21,309,737Effect of dilutive shares


379,871



338,604



Diluted weighted-average shares
    outstanding


23,037,096



22,525,570



21,309,737Basic earnings per share:Continuing operations

$
3.34


$
1.68


$
(0.11
)Discontinued operations






0.07



(0.03
)Net income (loss)

$
3.34


$
1.75


$
(0.14
)Diluted earnings per share:Continuing operations

$
3.29


$
1.66


$
(0.11
)Discontinued operations






0.07



(0.03
)Net income (loss)

$
3.29


$
1.73


$
(0.14
)     Note 5INCOME
    TAXES:
    December 31, 2006


December 31, 2005


December 31, 2004Current


Deferred


Total


Current


Deferred


Total


Current


Deferred


TotalFederal

$
25,736


$
13,860


$
39,596


$
14,366


$
5,800


$
20,166


$
(6,201
)

$
3,008


$
(3,193
)State


2,447



1,601



4,048



723



(1,436
)


(713
)


116



(249
)


(133
)Foreign


1,318



(2,371
)


(1,053
)


1,298



(683
)


615



630



19



649Total

$
29,501


$
13,090


$
42,591


$
16,387


$
3,681


$
20,068


$
(5,455
)

$
2,778


$
(2,677
)  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)
    Years Ended December 31,2006


2005


2004United States

$
122,813


$
57,944


$
(4,488
)Foreign


(4,522
)


(532
)


(508
)$
118,291


$
57,412


$
(4,996
)     Years Ended December 31,2006


2005


2004Statutory rate of 35% applied to
    income before income taxes

$
41,402


$
20,094


$
(1,749
)State income taxes, net of federal
    tax effects


2,656



(502
)


(127
)Adjustments of tax reserves and
    prior years income taxes


(403
)


(95
)


(850
)Effects on foreign operations


(358
)


553



(604
)Other


(110
)


(36
)


76Valuation allowance


(596
)


54



577Total provision

$
42,591


$
20,068


$
(2,677
)Effective tax rate


36
%


35
%


54
%      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)
     December 31,2006


2005Deferred tax assets:Inventories

$



$
948Postretirement benefit costs


13,807



7,623Employment costs


5,886



2,454Foreign tax credits






847Environmental related costs


1,282



1,263Foreign tax loss carryforwards


1,043



507Pension costs


5,681



7,188State tax credit & net
    operating loss carryforwards (Expire 2008 through 2024)


575



629Other


1,344



1,157Gross deferred tax assets


29,618



22,616Valuation allowance


(35
)


(631
)Total deferred tax assets


29,583



21,985Deferred tax liabilities:Inventories


(16,630
)


Property, plant and equipment


(10,638
)


(12,147
)Intangible assets


(6,336
)


(6,340
)Other


(460
)


(788
)Total deferred tax liabilities


(34,064
)


(19,275
)Net deferred tax asset (liability)

$
(4,481
)

$
2,710   Note 6OTHER
    OPERATING INCOME AND OTHER INCOME:
    Years Ended December 31,2006


2005


2004Other operating income:Gain on disposal of plant sites

$



$



$
441
(1)Other miscellaneous










97Total consolidated operating income

$



$



$
538Other Income:Gain on receipt of liquidated
    damages

$



$



$
9,139
(2)Foreign exchange gains and other


540



369



293Total consolidated other income

$
540


$
369


$
9,432  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)
  (1)
    
    Other operating income in 2004 included the gain on the sale of
    the Companys RMI Metals (MICRON) site in Salt
    Lake City, Utah, of $441 and the income from a deferred gain on
    a sale/leaseback of one of the Companys Ashtabula, Ohio
    facilities previously used for storage of $97.(2)
    
    These gains were financial settlements from Boeing Commercial
    Airplane Group relating to Boeings failure to meet minimum
    order requirements under terms of a long-term agreement between
    RTI and Boeing. The long-term agreement between RTI and Boeing
    expired December 31, 2003.  Note 7LONG-TERM
    DEBT:
  15-year
         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)
     December 31,2006RTI Claro Credit Agreement

$
13,729Less: Current portion


(459
)Total long-term debt

$
13,270Future maturities of long-term
    debt at December 31, 2006:2007

$
4592008


9172009


9172010


9172011


917Thereafter


9,602Total

$
13,729   Note 8EMPLOYEE
    BENEFIT PLANS:
       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)
       Post-RetirementPension Benefit Plans


Benefit Plan2006


2005


2006


2005Change in projected benefit
    obligation:Projected benefit obligation at
    beginning of year

$
121,690


$
113,989


$
29,722


$
29,462Service Cost


2,037



2,273



448



384Interest Cost


6,475



6,653



1,589



1,640Actuarial (gain) loss


(2,611
)


6,691



(2,557
)


549Amendment


51







8,311



Benefits paid


(8,039
)


(7,916
)


(2,285
)


(2,313
)Projected benefit obligation at
    end of year

$
119,603


$
121,690


$
35,228


$
29,722Change in plan assets:Fair value of plan assets at
    beginning of year

$
92,049


$
88,889


$



$
Actual return on plan assets


9,851



2,076







Employer contributions


2,877



9,000







Benefits paid


(8,039
)


(7,916
)






Fair value of plan assets at end
    of year

$
96,738


$
92,049


$



$
Funded status

$
(22,865
)

$
(29,642
)

$
(35,228
)

$
(29,722
)Unrecognized actuarial loss






46,709







7,602Unrecognized prior service cost






4,073







1,050Net amount recognized





$
21,140






$
(21,070
)Amounts recognized in the
    Consolidated BalanceSheet consist of:Intangible assets

$



$
4,076


$



$
Current liabilities


(580
)






(2,783
)Noncurrent liabilities


(22,285
)


(25,595
)


(32,445
)


(21,070
)Accumulated other comprehensive
    income






42,659







Net amount recognized

$
(22,865
)

$
21,140


$
(35,228
)

$
(21,070
)Amounts recognized in accumulated
    other comprehensive income consists of:Net actuarial loss

$
25,286






$
1,244Prior service cost


2,090







5,833Total

$
27,376






$
7,077   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)
  Before





AfterApplication of





Application ofStatement 158


Adjustments


Statement 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   Post-RetirementPension Benefit Plans

Benefit Plan2006

2005

2006

2005Weighted-average assumptions used
    to determine benefit obligation at December 31:Discount rate

6.00%

5.50%

6.00%

5.50%Rate of increase to compensation
    levels

3.80%

3.80%

3.80%

3.80%Measurement date

12/31/2006

12/31/2005

12/31/2006

12/31/2005Weighted-average assumptions used
    to determine net periodic benefit obligation cost for the years
    ended December 31:Discount rate

5.50%

5.75%

5.50%

5.75%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

12/31/2006

12/31/2005

12/31/2006

12/31/2005    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)
     Pension Benefit Plans


Post-Retirement Benefit Plan2006


2005


2004


2006


2005


2004Service Cost

$
2,037


$
2,273


$
2,289


$
448


$
384


$
381Interest Cost


6,475



6,653



6,338



1,589



1,640



1,626Expected return on plan assets


(8,058
)


(7,682
)


(8,023
)










Prior service cost amortization


832



956



572



386



175



193Amortization of actuarial loss


2,483



2,048



1,418



175



373



373Net periodic benefit cost

$
3,769


$
4,248


$
2,594


$
2,598


$
2,572


$
2,573           .25%


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

+$
3.1


−$
3.0Effect on subsequent years
    periodic pension expense (in millions)

+$
0.2


−$
0.2     2006


2005Asset category:Equity securities


59
%


56
%Debt securities


36
%


44
%Other


5
%


0
%Total


100
%


100
%  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)
    Asset category:Equity securities


56
%Debt securities


40
%Other


4
%Total


100
%       Other post-retirement benefit plans. out-of-pocket
  FAS 106-2.
   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)
     Pension


Post-Retirement Benefit


Post-Retirement BenefitBenefit


Plan (including


Plan (not includingPlans


Plan D subsidy)


Plan D subsidy)2007

$
8,766


$
2,783


$
3,1082008


9,067



2,684



3,0372009


9,038



2,652



3,0232010


9,013



2,669



3,0542011


9,033



2,671



3,0702012 to 2016


45,909



13,005



14,884     Supplemental pension plan.
  Excess pension plan.
    Letter agreements.
      Note 9LEASES:
   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)
     Operating


Capital2007

$
3,165


$
572008


2,201



442009


1,537



372010


920



152011


212



12Thereafter


242



4Total lease payments

$
8,277



169Less: Interest portion






(32
)Amount recognized as capital lease
    obligations





$
137   Note 10BILLINGS
    IN EXCESS OF COSTS AND ESTIMATED EARNINGS:
    Note 11TRANSACTIONS
    WITH RELATED PARTIES:
    Note 12SEGMENT
    REPORTING:
      cut-to-size, just-in-time
   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)
     Years Ended December 31,2006


2005


2004Net sales:Titanium Group

$
204,881


$
130,180


$
48,669Intersegment sales


151,983



96,079



56,920Total Titanium Group net sales


356,864



226,259



105,589Fabrication &
    Distribution Group


300,508



216,726



160,974Intersegment sales


5,641



4,929



1,470Total Fabrication &
    Distribution Group net sales


306,149



221,655



162,444Eliminations


157,624



101,008



58,390Total consolidated net sales

$
505,389


$
346,906


$
209,643Operating income (loss):Titanium Group before corporate
    allocations

$
86,767


$
49,331


$
(5,817
)Corporate allocations


(8,306
)


(8,497
)


(5,227
)Total Titanium Group operating
    income


78,461



40,834



(11,044
)Fabrication &
    Distribution Group before corporate allocations


53,241



29,766



8,935Corporate allocations


(16,449
)


(14,466
)


(12,457
)Total Fabrication &
    Distribution Group operating income (loss)


36,792



15,300



(3,522
)Total consolidated operating
    income (loss)

$
115,253


$
56,134


$
(14,566
)Income (loss) from continuing
    operations before income taxes:Titanium Group

$
80,198


$
41,521


$
(1,491
)Fabrication &
    Distribution Group


38,093



15,891



(3,505
)Total consolidated income (loss)
    from continuing operations before income taxes

$
118,291


$
57,412


$
(4,996
)   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)
  Years Ended December 31,2006


2005


2004Revenue by Market Information:Titanium GroupCommercial aerospace

$
108,881


$
53,351


$
14,391Defense


46,189



20,581



7,319Industrial and consumer


49,811



56,248



26,959Total Titanium Group net sales


204,881



130,180



48,669Fabrication &
    Distribution GroupCommercial aerospace


120,782



93,547



60,025Defense


114,837



73,409



54,299Industrial and consumer


64,889



49,770



46,650Total Fabrication &
    Distribution Group net sales


300,508



216,726



160,974Total consolidated net sales

$
505,389


$
346,906


$
209,643Geographic location of trade sales:United States

$
395,960


$
279,703


$
166,377England


38,067



18,666



11,726France


32,651



14,805



13,099Canada


14,653



18,978



6,854Germany


8,575



4,658



3,158Korea


1,482



503



Other countries


14,002



9,593



8,429Total trade sales

$
505,389


$
346,906


$
209,643Capital Expenditures:Titanium Group

$
12,740


$
7,996


$
3,555Fabrication &
    Distribution Group


23,096



1,490



2,216Total capital expenditures

$
35,836


$
9,486


$
5,771Depreciation and Amortization:Titanium Group

$
9,284


$
9,203


$
9,113Fabrication &
    Distribution Group


5,008



4,060



3,335Total depreciation and amortization

$
14,292


$
13,263


$
12,448  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)
    December 31,2006


2005Property, plant and equipment:United States

$
261,686


$
248,298England


3,247



2,997France


1,160



839Canada


28,779



10,558Less: Accumulated depreciation


(192,402
)


(182,636
)Property, plant and equipment, net

$
102,470


$
80,056Total Assets:Titanium Group

$
228,305


$
230,477Fabrication &
    Distribution Group


294,436



231,658General corporate assets


121,172



39,616Total consolidated assets

$
643,913


$
501,751       Note 13COMMITMENTS
    AND CONTINGENCIES:
    Environmental
    Matters
  96-1,
 65




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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)
           Active Investigative or Cleanup Sites.
  Ashtabula River.
  Former Ashtabula Extrusion Plant.
 66




---



##### 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.
  Gain
    Contingency
      Other
    Note 14STOCK
    OPTIONS AND RESTRICTED STOCK AWARD PLANS:
         67




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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)
      2006


2005


2004Risk-free interest rate


4.37
%


4.00
%


3.00
%Expected dividend yield


0.00
%


0.00
%


0.00
%Expected lives (in years)


5.0



6.0



5.0Expected volatility


40.00
%


45.00
%


38.00
%     Weighted-AverageWeighted-


Remaining


AggregateAverage


Contractual


IntrinsicStock Options

Shares


Exercise Price


Term (Years)


ValueOutstanding at December 31,
    2005


601,969


$
15.04Granted


71,300



45.09Forfeited


(11,024
)


24.28Expired


(3,066
)


12.17Exercised


(255,985
)


14.43Outstanding at December 31,
    2006


403,194


$
20.56



6.77


$
23,249Exercisable at December 31,
    2006


219,786


$
13.61



5.59


$
14,200      68




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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-AverageGrant-DateFair ValueNonvested Restricted Stock Awards

Shares


Per ShareNonvested at December 31, 2005


199,636


$
16.49Granted


52,764



46.91Vested


(77,246
)


16.38Forfeited


(8,900
)


16.86Nonvested at December 31, 2006


166,254


$
26.17     SFAS 123R-3
  Note 15DISCONTINUED
    OPERATIONS:
       69




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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 31,2005


2004Net sales

$
3,129


$
19,375Income before income taxes


2,567



74Provision for income taxes


907



20Income from discontinued operations


1,660



54Loss on disposal


(106
)


(1,064
)Benefit for income taxes


(37
)


(372
)Gain (loss) on discontinued
    operations, net of tax

$
1,591


$
(638
)   Note 16SUBSEQUENT
    EVENTS:
    Note 17SELECTED
    QUARTERLY FINANCIAL INFORMATION (UNAUDITED):
    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   70




---



##### 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)
  1st


2nd


3rd


4th2005

Quarter


Quarter


Quarter


QuarterNet sales

$
72,612


$
94,120


$
80,324


$
99,850Gross profit


24,397



25,767



26,643



29,785Operating income


12,992



15,000



13,537



14,605Net income


8,399



10,580



8,662



11,294Basic earnings per share:Continuing operations

$
0.38


$
0.47


$
0.38


$
0.43Discontinued operations






0.01







0.07Net Income

$
0.38


$
0.48


$
0.38


$
0.50Diluted earnings per share:Continuing operations

$
0.37


$
0.47


$
0.38


$
0.43Discontinued operations














0.07Net Income

$
0.37


$
0.47


$
0.38


$
0.50  71




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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
    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     72




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##### Table of Contents



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





Issuance UnderSecurities to be





Equity CompensationIssued upon Exercise


(b) Weighted-Average


Plans (Excludingof Outstanding


Exercise Price of


Securities Reflected inPlan Category

Options


Outstanding Options


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


383,194


$
21.12



3,375,730Equity compensation plans not
    approved by security holders (see Note (ii))


20,000



9.93



−0−403,194


$
20.56



3,375,730   Note (i): 10-year
  Note (ii):
  Note (iii):
  Item 13.
    Certain
    Relationships, Related Transactions and Director
    Independence   73




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##### Table of Contents



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. 1.2
.2

Claro purchase agreement,
    incorporated by reference to Exhibit 2.1 to the
    Companys Quarterly Report on
    Form 10-Q
    for the quarter ended
    9/30/04.3
.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 between RTI
    International Metals, Inc. and PNC Bank, National Association,
    as agent; U.S. Bank, National City Bank of Pennsylvania and
    Lasalle Bank, National Association as co-agents, dated as of
    April 12, 2002, incorporated by reference to the
    Companys Quarterly Report on
    Form 10-Q
    for the quarterly period ended June 30, 2002.4
.2

First Amendment to Revolving
    Credit and Letter of Credit Issuance Agreement by and among RTI
    International Metals, Inc., as borrower and PNC Bank, National
    Association as administrative agent; National City Bank of
    Pennsylvania and Comerica Bank as documentation co-agents, dated
    June 4, 2004, incorporated by reference to the
    Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2005.4
.3

Second Amendment to Revolving
    Credit and Letter of Credit Issuance Agreement by and among RTI
    International Metals, Inc., as borrower and PNC Bank, National
    Association as administrative agent; National City Bank of
    Pennsylvania and Comerica Bank as documentation co-agents, dated
    July 25, 2006, incorporated by reference to the
    Companys Quarterly Report on
    Form 10-Q
    for quarterly period ended September 30, 2006.4
.4

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. 74




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##### Table of Contents



ExhibitNo.

Description4
.5

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
    the Companys Current Report on
    Form 8-K
    for the event dated December 27, 2006.10
.1*

RTI International Metals, Inc.
    Supplemental Pension Plan effective August 1, 1987, amended
    January 28, 2000 and further amended January 30, 2004,
    incorporated by reference to Exhibit 10.12 to the
    Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2003.10
.2*

RTI International Metals, Inc.
    Excess Benefits Plan effective July 18, 1991, as amended
    January 28, 2000, incorporated by reference to Exhibit 10.6
    to the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2000.10
.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, 1995.10
.4*

Employment agreement, dated
    August 1, 1999, between the Company and John H. Odle,
    incorporated by reference to Exhibit 10.10 to the
    Companys Annual Report on
    Form 10-K
    for the year ended December 31, 1999.10
.5*

Employment agreement, dated
    August 1, 1999, between the Company and T. G. Rupert,
    incorporated by reference to Exhibit 10.11 to the
    Companys Annual Report on
    Form 10-K
    for the year ended December 31, 1999.10
.6*

Employment agreement, dated
    August 1, 1999 between the Company and Dawne S. Hickton,
    incorporated by reference to Exhibit 10.12 to the
    Companys Annual Report on
    Form 10-K
    for the year ended December 31, 1999.10
.7*

Employment agreement, dated
    November 1, 1999, between the Company and Gordon L.
    Berkstresser, incorporated by reference to Exhibit 10.14 to
    the Companys Annual Report on
    Form 10-K
    for the year ended December 31, 1999.10
.8*

Employee agreement, dated
    July 29, 2005, between the Company and William T. Hull,
    incorporated by reference to Exhibit 99.3 to the
    Companys Current Report on
    Form 8-K
    for the event dated July 29, 2005.10
.9*

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
.10*

RTI International Metals, Inc.
    2004 Stock Plan effective January 28, 2005, as amended
    January 26, 2007, filed herewith.10
.11*

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
.12*

Form of Restricted Stock Grant
    under the RTI International Metals, Inc. 2004 Stock Plan, filed
    herewith.10
.13*

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
.14*

Form of indemnification agreement,
    incorporated by reference to Exhibit 10.1 to the Companys
    Quarterly Report on
    Form 10-Q
    for the quarterly period ended September 30, 2005.10
.15*

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
.17

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
.18

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. 75




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##### Table of Contents



ExhibitNo.

Description21
.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.      76




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##### Table of Contents



SIGNATURES      By
    /s/  William
    T. Hull   Vice President and Chief Accounting 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;EDITH E. HOLIDAY, Director;JOHN H. ODLE, Director;JAMES A. WILLIAMS, Director;/s/  Timothy
    G. RupertTimothy
    G. Rupert
    As
    Attorney-in-Fact

February 28, 2007/s/  Timothy
    G. RupertTimothy
    G. Rupert
    Director and President and Chief Executive Officer
    (Principal Executive Officer)

February 28, 2007/s/  Dawne
    S. HicktonDawne
    S. Hickton
    Senior Vice President and Chief Administrative Officer,
    General Counsel and Secretary
    (Principal Financial Officer)

February 28, 2007/s/  William
    T. HullWilliam
    T. Hull
    Vice President and Chief Accounting Officer

February 28, 2007  77




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##### Table of Contents



RTI
    INTERNATIONAL METALS, INC. AND SUBSIDIARIESSchedule IIValuation and Qualifying
    Accounts 
    (In thousands)
  (Charged)Balance at


Credited to


Writeoffs





BalanceBeginning


Costs and


Against





at EndDescription

of Year


Expenses


Allowance


Other


of YearYear 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
)Year ended December 31, 2004:Allowance for doubtful accounts


(1,378
)


(518
)


419



(9
)


(1,486
)Valuation allowance for deferred
    income taxes






(577
)










(577
)Allowance for U.S. Customs on
    Duty Drawback


(381
)


162











(219
)  S-1