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               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                         WASHINGTON, D.C.  20549-1004

                                  FORM 10-K
(Mark One)
  X   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
----- EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the fiscal year ended December 31, 1998
                          -----------------

                                      OR

      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
----- EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the transition period from            to           
                               ----------    ----------

                       Commission File Number 33-63274
                                              --------

                             CHATWINS GROUP, INC.
            ------------------------------------------------------
            (Exact name of Registrant as specified in its charter)

        DELAWARE                                       74-2156829
------------------------                  ------------------------------------
(State of Incorporation)                  (I.R.S. Employer Identification No.)

                         300 WEYMAN PLAZA, SUITE 340
                        PITTSBURGH, PENNSYLVANIA 15236
         ------------------------------------------------------------
         (Address of principal executive offices, including zip code)

                                (412) 885-5501
             ----------------------------------------------------
             (Registrant's telephone number, including area code)

      Securities registered pursuant to Section 12(b) of the Act:  None
      Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.    Yes   X   No
                                                      -----    -----

The capital stock of the Registrant is not traded in public markets. 
Accordingly, the aggregate market value of the voting stock of the Registrant
cannot be determined.

At March 1, 1999, 289,677 shares of common stock, par value $.01 per share,
were outstanding.

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                             CHATWINS GROUP, INC.

                              TABLE OF CONTENTS


                                                                      Page No.
                                                                      --------
                                    PART I


Item 1.   Business                                                        1

Item 2.   Properties                                                     15

Item 3.   Legal Proceedings                                              16

Item 4.   Submission of Matters to a Vote of Security Holders            16


                                   PART II


Item 5.   Market for the Registrant's Common Stock and 
            Related Stockholder Matters                                  17

Item 6.   Selected Financial Data                                        18

Item 7.   Management's Discussion and Analysis of 
            Financial Condition and Results of Operations                21

Item 8.   Financial Statements and Supplementary Data                    38

Item 9.   Changes in and Disagreements With Accountants 
            on Accounting and Financial Disclosures                      38


                                   PART III


Item 10.  Directors and Executive Officers of the Registrant             38

Item 11.  Executive Compensation                                         41

Item 12.  Security Ownership of Certain Beneficial 
            Owners and Management                                        43

Item 13.  Certain Relationships and Related Transactions                 45


                                   PART IV


Item 14.  Exhibits, Financial Statements Schedules, 
            and Reports on Form 8-K                                      49
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<PAGE>     1
                                    PART I


Item 1.   Business.
          ---------

GENERAL

     Chatwins Group, Inc. (referred to herein as the "Company", "Chatwins" or
"Registrant"), through its six manufacturing divisions, designs, manufactures
and markets a broad range of fabricated and machined industrial parts and
products, primarily for sale to original equipment manufacturers in a variety
of industries.  The Company's principal fabricated and machined products, and
the divisions that produce them, include large, seamless pressure vessels for
highly pressurized gases produced by the CP Industries division (CPI), high
quality steel and aluminum grating produced by the Klemp division (Klemp),
industrial hydraulic and pneumatic cylinders produced by the Hanna division
(Hanna), industrial cranes and large mill equipment produced by the Alliance
Machine Company division (Alliance), cold-rolled steel leaf springs produced
by the Steelcraft division (Steelcraft) and high quality roll formed and
structural storage racks produced by the Auto-Lok division (Auto-Lok).  The
Company also has a small oil and gas division (Europa).

     The Company emphasizes internal development of products, enhancement of
manufacturing capabilities, market development and cost control.  Although its
manufacturing divisions share common characteristics as basic metal
fabrication concerns, the Company believes that the variety of market niches
served by these divisions lessens the impact of adverse economic conditions on
the Company.


FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS

     This Annual Report on Form 10-K contains or incorporates by reference
certain forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act which are intended to be
covered by the safe harbors created thereby.  Those statements include, but
may not be limited to, the discussions of the Company's expectations
concerning growth strategies and penetrations of new markets, mergers and
joint ventures, financings and/or refinancings, transactions with affiliates,
the effects of the year 2000 (Y2K) on electronic technology on which the
Company is directly or indirectly dependent and assumptions regarding certain
matters.  Also, when the words "believes," "expects," "anticipates,"
"intends," "estimates," "plans," or similar terms or expressions are used in
this Annual Report on Form 10-K, forward-looking statements are being made. 
Note that all forward-looking statements involve risks and uncertainties,
including, without limitation, factors which could cause the future results
and shareholder values to differ materially from those expressed in the
forward-looking statements.  Although the Company believes that the
assumptions underlying the forward-looking statements contained in this Annual
Report on Form 10-K are reasonable, any of the assumptions could be inaccurate
and, therefore, there can be no assurances that the forward-looking statements
included or incorporated by reference in this report will prove to be
accurate.  In light of the significant uncertainties inherent in the forward-
looking statements included or incorporated by reference herein, the inclusion
of such information should not be regarded as a representation by the Company
or any other person that the Company's objectives and plans will be achieved. 
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<PAGE>     2
In addition, the Company does not intend to, and is not obligated to, update
these forward-looking statements after filing and distribution of this Annual
Report on Form 10-K, even if new information, future events or other
circumstances have made them incorrect or misleading as of any future date.



RECENT DEVELOPMENTS

New Credit Facility

     On October 30, 1998, the Company and NationsBank, N.A. (NationsBank), a
national banking association, executed a financing and security agreement
(Financing Agreement) wherein NationsBank has provided the Company with a
revolving credit facility (NationsBank Facility) of up to a maximum principal
amount of $40.0 million, including a letter of credit facility of up to $5.0
million.

     The NationsBank Facility includes a Special Availability Amount, as
defined in the Financing Agreement, of $6.0 million.  The Special Availability
Amount is required to be reduced in $750,000 increments on each of February 1,
May 1, August 1 and November 1 in each of the years 1999 and 2000.  Once
reduced, the Special Availability Amount may not be reborrowed.  Availability
under the NationsBank Facility is subject to a borrowing base limitation
calculated as the aggregate of 85% of eligible accounts receivable plus the
lesser of $15.0 million or the sum of 60% of finished goods and raw materials,
50% of supplies and stores, a percentage, determined from time to time by
NationsBank, of work-in-process and the Special Availability Amount in effect
at the time of the calculation, all of the above as defined in the Financing
Agreement.  Interest under the NationsBank Facility is determined by reference
to various rates including the NationsBank prime rate, the Federal Funds rate
or LIBOR, each plus an applicable margin.  The Company may elect the rates
upon notification to NationsBank with applicable margins ranging from zero to
0.5% when using either the NationsBank prime rate or the Federal Funds rate
and from 2.0% to 2.75% when using LIBOR.

     The NationsBank Facility is secured by a lien in favor of NationsBank on
the Company's accounts receivable, inventory and certain other property and
accounts to the extent necessary to permit foreclosure on the accounts
receivable and inventory.  The Financing Agreement expires on October 31, 2001
and is renewable annually thereafter, subject to the approval of NationsBank,
but not beyond October 31, 2005.

     Contemporaneously with the execution of the Financing Agreement on
October 30, 1998, the Company borrowed a total of $28.9 million under the
NationsBank Facility, $28.1 million of which was used to repay, in total,
borrowings, interest and fees under the Company's then existing revolving
credit facility (Congress Facility) with Congress Financial Corporation
(Congress) and $0.8 million of which was placed on deposit with Congress as
cash collateral for unexpired letters of credit.  Such cash collateral will be
returned to the Company upon the expirations of the related letters of credit. 
The Company and Congress agreed to terminate the Congress Facility upon
execution of the Financing Agreement.  On November 2, 1998, the Company
borrowed an additional $3.25 million under the NationsBank Facility to fund
its semiannual interest payment on the Senior Notes.

     The NationsBank Facility includes various representations, warranties and
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<PAGE>     3
affirmative and negative covenants by the Company and provides NationsBank
with certain rights and remedies including, but not limited to, acceleration,
both in the event of default or subjectively, of all amounts borrowed under
the NationsBank Facility.

Exercise of Warrants

     Pursuant to a Warrant Agreement dated as of May 1, 1993 (Warrant
Agreement), the Company issued 50,000 warrants (Warrants), each of which
entitles the holder thereof to purchase one share of the common stock of the
Company at an exercise price of $.01 per share.  The Warrants were issued in a
transaction pursuant to which the Company issued $50 million of 13% senior
notes (Senior Notes).  The Warrants were not exercisable except upon the
occurrence of certain trigger events as defined in the Warrant Agreement or,
if no trigger event had occurred prior to May 3, 1998, upon the Company's
failure to consummate a repurchase offer due to a payment blockage, both as
defined in the Warrant Agreement.  No trigger event had occurred through May
3, 1998 and a payment blockage existed on such date, resulting in the Warrants
becoming exercisable as of May 3, 1998.  Consistent with the Warrant
Agreement, the Company notified holders of the Warrants of the existence of a
payment blockage within 30 days of such date.  Due to the then existing
prospective merger with Reunion Industries, Inc., an affiliated company in
which the Company has an approximate 38% ownership and voting interest
(Reunion), the Company simultaneously gave holders of the Warrants a Bring
Along Notice (as defined in the Warrant Agreement) notifying them that their
Warrants would lapse if not exercised within thirty days.  The thirty-day
period was subsequently extended indefinitely when the then existing
prospective merger with Reunion was delayed.  In a press release dated October
20, 1998, the Company announced that the May 31, 1998 merger agreement (Merger
Agreement) with Reunion was terminated by mutual agreement.  See "Possible
Merger With Reunion and Reunion Acqusitions of King-Way and NAPTech."  Through
the date of this Annual Report on Form 10-K, 46,790 Warrants have been
exercised at $.01 per share resulting in the issuance of 46,790 shares of the
Company's common stock.  Remaining warrants which have not been exercised
remain exercisable.  See "Liquidity and Capital Resources."

     The Company had previously notified its warrantholders that its
registration statement on Form S-1 filed with the Securities and Exchange
Commission (SEC) could not be used in connection with any resale of its
Warrants or shares of its common stock underlying the Warrants.  Therefore,
any transactions in the Company's warrants or common stock into which the
Warrants are convertible continue to require compliance with Rule 144A or
another exemption from the registration requirements of the Securities Act of
1933.

Defaults Under Indenture

     In May of 1998, the Company executed a joint venture agreement pursuant
to which it contributed $100,000 to Suzhou Grating, Ltd. (Suzhou), a
fiberglass reinforced plastic grating manufacturer in China.  The investment
constitutes a default under the indenture dated as of May 1, 1993 (Indenture)
pursuant to which the Company issued the Senior Notes.
 
     In May of 1998, Mr. Charles E. Bradley, Sr., Chairman of the Boards of
both the Company and Reunion and shareholder of the Company (Mr. Bradley)
transferred all of his shares of the Company's common stock to the Charles E.
Bradley, Sr. Family Limited Partnership (Bradley FLP) for estate planning 
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<PAGE>     4
purposes.  The Bradley FLP has granted voting control over such shares to
Stanwich Partners, Inc. (SPI), which in turn has granted voting control over
such shares to Mr. John G. Poole, a director and beneficial shareholder of the
Company (Mr. Poole).  Because Mr. Bradley no longer has voting control over
such shares of the Company's common stock, a breach has occurred under the
Securities Pledge Agreement (as defined in the Indenture).  Because the
Securities Pledge Agreement is cross-covenanted to the Indenture, such breach
creates a default under the Indenture. 

     The Indenture provides that neither of the aforementioned defaults will
mature into an Event of Default (as defined in the Indenture) subject under
the remedies therein provided, including acceleration of the Senior Notes,
until State Street Bank and Trust Company (Trustee), as successor trustee
under the Indenture or the holders of at least 25% of the Senior Notes notify
the Company of the default and the default remains unremedied for 30 days
after said notice.  As of the date of this Annual Report on Form 10-K, the
Company had not received notice from either the Trustee or any Senior Note
holders.  In the event notice is received, the Company currently has
agreements in place that it believes would remedy each such default within the
30 day remedy period.  However, there can be no assurance that an Event of
Default will not result from these defaults.

Purchase Offer

     In connection with the acquisition of the Reunion common stock, on June
20, 1995, the Company and the Trustee agreed to a first supplemental indenture
and waiver of covenants of the Indenture under which the Senior Notes are
issued.  Pursuant to this supplemental indenture, the Company agreed to offer
to purchase $25.0 of million Senior Notes (representing 50% of the originally
issued principal amount of the Senior Notes) from Senior Notes holders on each
of June 1, 1999 and 2000 at an amount equal to 100% of the aggregate
outstanding principal amount thereof, plus unpaid interest to the purchase
date.  The Company has classified the maximum potential principal amount of
the first purchase offer as current maturities of long-term debt in its
consolidated balance sheet at December 31, 1998 included herein.  The
Company's failure to fulfill its obligations under this purchase offer would
constitute a failure to pay principal under the Indenture and result in an
Event of Default.  An Event of Default due to a failure to pay principal
would, pursuant to the Securities Pledge Agreement, result in a Realization
Event causing the immediate vesting in the Collateral Agent of the voting
rights of approximately 43% of the Company's common stock subject to the
pledge under the Securities Pledge Agreement, as well as the immediate vesting
of all rights to receive dividends and distributions with respect to the
pledged shares of common stock.  In addition, upon an Event of Default, the
Trustee or the holders of at least 25% of the Senior Notes may, by written
notice to the Company, declare an acceleration of the Senior Notes.  In the
event the possible merger with Reunion occurs, the Company intends to redeem
all of the Senior Notes.  Because there can be no assurances that the possible
merger and refinancing will occur, or that they will occur before the June 1,
1999 repurchase date, the Company has obtained a commitment from a national
financial institution that, pursuant to certain actions, it will fund the
Company's obligation to purchase Senior Notes, if any, on the June 1, 1999
purchase date should the Company's then available liquidity be insufficient to
do so.  As of the date of this report, no reasonable estimate exists as to the
amount of Senior Notes which the Company may be required to purchase, if any,
on the June 1, 1999 offer date.  Absent the refinancing contemplated by the
possible merger with Reunion or the funding contemplated by the commitment, 
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<PAGE>     5
there can be no assurances that a Realization Event or Event of Default will
not occur.  See "Possible Merger With Reunion and Reunion Acquisitions of
King-Way and NAPTech", "Liquidity and Capital Resources" and "Factors
Potentially Affecting Future Liquidity."

Chicago Plant Strike

     On May 1, 1998, approximately 75 employees of the Company's Klemp
division in Chicago, IL represented by the International Association of
Bridge, Structural and Ornamental Iron Workers (Union) went on strike citing
differences over wage increases and other benefits.  Such employees had been
working under a collective bargaining agreement which expired on April 30,
1998.  By a vote of the Union's membership on May 19, 1998, a new contract was
ratified and the strike ended on May 22, 1998.  The new contract expires on
April 30, 2002.  This strike adversely affected the second quarter 1998
results of operations of the Company's Klemp division.  See "Results of
Operations."

Affiliate Litigation Provision

     As previously reported by Reunion, on April 24, 1998, a jury in state
district court in Harris County, Texas returned jury verdict findings against
Reunion related to a November 1995 contract for the sale of all outstanding
shares of capital stock of Reunion's wholly owned oil and gas subsidiary to
Bargo Energy Company (Bargo).  The jury found that Bargo had a right to
terminate the November 1995 stock purchase agreement with Reunion and that
Reunion fraudulently induced Bargo into entering into the agreement.  In July
1998, the court entered judgement affirming the $5.0 million punitive damages
jury verdict and awarded approximately $3.0 million in attorneys' fees and
costs.  Reunion maintained at trial and continues to maintain that all
requirements to closing under the contract were met, and that Bargo was
required to close the transaction.  Reunion's management continues to maintain
that no evidence sufficient to support a jury finding of fraud or related
punitive damages was presented at trial.  Reunion has filed a bond which
suspends execution on the judgment while it appeals.  Reunion has filed a
formal notice of appeal and intends to file its appeal as soon as possible. 
However, Reunion's management has informed the Company that although it
believes, based on consultation with counsel, that it is more likely than not
that the judgment will be overturned on appeal, Reunion has recorded an
accrual of $8.8 million for the amount of the judgment by a charge to its
continuing operations for 1998 in accordance with generally accepted
accounting principles.  In addition, according to Reunion's financial advisor,
its Bargo legal liability is a deduction of $8.8 million to Reunion's equity
value.  The Company's results of operations for the second quarter of and year
ended December 31, 1998 and the carrying value of the Company's investment in
Reunion common stock on the equity method of accounting were adversely
affected by this action.  Reunion has indicated that, if the judgment is not
overturned on appeal, and the possible merger with The Company and related
refinancing do not occur, Reunion would be obligated to seek alternative
funding sources, possibly including a sale of assets.  See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Recent Developments - Affiliate Litigation Provision" and "- Results of
Operations."

Possible Merger With Reunion and Reunion Acquisitions of King-Way and NAPTech

     The Company and Reunion entered into the Merger Agreement on May 31, 
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<PAGE>     6
1998.  In a press release on October 20, 1998, the Company announced that the
May 31, 1998 Merger Agreement between the Company and Reunion was terminated
by mutual agreement.  The Company reported that this decision was made as a
result of Reunion's inability to arrange sufficient refinancing of all of the
debt of the combined companies under then existing market conditions.  On
February 26, 1999, the Company announced that it has reinstituted merger
discussions with Reunion and that the managements of both Chatwins and Reunion
currently believe that additional identified financing sources would provide
adequate funds for operations of the combined companies, including redemption
of the Senior Notes.  The possible merger of Chatwins and Reunion is subject
to, among other conditions, approval by the Boards of Directors and
stockholders of both companies.  If the companies reach mutually agreeable
terms for the merger, and other conditions are met, the merger could occur
during the second quarter of 1999.  There can be no assurances that the
possible merger will be agreed to, approved or consummated.  See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources" and "- Factors Potentially Affecting Future
Liquidity."

     Reunion announced that it has also had discussions regarding the possible
acquisitions of Stanwich Acquisition Corp. (SAC), doing business as King-Way
Material Handling Company (King-Way) and of NPS Acquisition Corp. (NPSAC),
doing business as NAPTech Pressure Systems (NAPTech), at the same time as the
possible merger with the Company.  SAC and NPSAC are affiliates of the Company
and Reunion.  Reunion also announced that it has engaged legal and financial
advisors in connection with these transaction and that discussions have been
held with prospective lenders.  See "King-Way" and "NAPTech" below.

King-Way

     On November 3, 1997, SAC acquired King-Way from the Kingston-Warren
Corporation for a purchase price of $18.1 million.  SAC is a privately-held
company whose common stock is owned 42.5% by Mr. Bradley, 42.5% by Mr. Kimball
J. Bradley (Senior Vice President and shareholder of Chatwins and son of Mr.
Bradley) (Mr. K.J. Bradley) and 15% by Mr. Richard L. Evans (Executive Vice
President, Chief Financial Officer and Secretary of Reunion) (Mr. Evans). 
Similar to Auto-Lok, King-way is in the business of producing industrial and
commercial storage racks and materials handling systems.

     At the time King-Way was available for purchase, the Company's management
was desirous of acquiring King-Way as a strategic acquisition by its Auto-Lok
division as King-Way's computerized systems were thought to be an important
line extension to Auto-Lok's more traditional storage and materials handling
systems.  The Company was not, however, able to consummate the acquisition
because of restrictions under its existing financing documents.  Mr. Bradley
therefore organized and capitalized SAC to acquire and hold King-Way until
such time as it could be acquired by the Company.

     Because King-Way had been operating as a division of Kingston-Warren
Corporation, it was necessary to establish King-Way's business in new
facilities with appropriate overhead support.  Meanwhile, Auto-Lok possessed
surplus floor space, production workforce, administrative organization and
equipment that could be utilized to continue King-Way's operations. 
Accordingly, SAC and Auto-Lok entered into a service agreement pursuant to
which King-Way would utilize Auto-Lok's surplus capacity in exchange for fees
approximately equal to Auto-Lok's costs of providing the surplus capacity plus
a right of first negotiation to acquire King-Way from SAC.  This right of 
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<PAGE>     7
first negotiation has since expired.  The integration of King-Way's business
into Auto-Lok's facility took place primarily during the second quarter of
1998.  Through December 31, 1998, costs totaling $1,298,631 have been charged
to King-Way under this agreement.  At December 31, 1998, the Company had
receivables totaling $780,000 from King-Way.  See "Certain Relationships and
related Transactions - King-Way Service Agreement."

NAPTech

     On August 25, 1998, NPSAC acquired NAPTech from the Shaw Group for a
purchase price of $8.4 million.  NPSAC is wholly owned by Mr. Bradley.  Like
the Company's CPI division, NAPTech manufactures steel seamless pressure
vessels.  At the time NAPTech was available for purchase, the Company's
management wanted to acquire it as a strategic acquisition by its CPI
division.  The Company was not, however, able to consummate the acquisition
because of restrictions under its existing financing documents.  Mr. Bradley
therefore organized and capitalized NPSAC to acquire and hold NAPTech until
such time as it could be acquired by the Company.

     In August 1998, CPI and NPSAC entered into a services agreement pursuant
to which CPI would provide certain administrative services to NAPTech for cash
fees which approximate $29,000 per month.  The NAPTech services agreement is
for one year and may be renewed annually upon agreement by both the Company
and NAPTech.  On August 25, 1998 the Company purchased from NAPTech $1.0
million of inventory usable by its CPI division in its normal course of
business.  At December 31, 1998, the Company had receivables totaling $148,000
from NAPTech.


STRATEGY

     The Company's strategy is the establishment of large market share
positions in well established niche markets.  In this regard, the Company
intends to continue to consider acquisitions that enhance its existing
capabilities and profitability, or that are otherwise compatible with its
strategies and management expertise.  Since 1989, the Company has consummated
nine such acquisitions.  Additionally, the Company has undertaken efforts to
expand export and international sales by exploring the potential for increased
marketing of certain products in targeted foreign countries and joint
venturing with selected international partners.  The Company and Reunion are
considering the possible merger of the Company with and into Reunion.  See
"Possible Merger With Reunion and Reunion Acquisitions of King-Way and
NAPTech" above.


INVESTMENTS

Reunion - On June 20, 1995, the Company acquired 1,450,000 shares, or
approximately 38%, of the then issued and outstanding shares of common stock
of Reunion, a publicly traded company, and purchased 75,000 warrants to
purchase shares of Reunion common stock, both from unrelated parties. 
Reunion's common stock is listed for quotation on the NASDAQ Small-Cap. Market
under the symbol "RUNI" and on the Pacific Stock Exchange under the symbol
"RUN".  

     The aggregate purchase price of the common stock consisted of $5.8
million paid in cash and a $5.8 million promissory note (Parkdale Note).  The 
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aggregate purchase of the warrants consisted of $0.3 million paid in cash and
a $0.2 million two-year promissory note (Gesterkamp Note).  The Parkdale Note
was subsequently purchased by Mr. Bradley.  The Gesterkamp Note was
subsequently purchased by Mr. Franklin Myers (Mr. Myers), a director of
Reunion.  Both the Parkdale Note and Gesterkamp Note have been fully repaid by
the Company in accordance with contractual terms.

     Reunion is primarily engaged in the manufacture of high volume, precision
plastics products, providing engineered plastics services and compounding and
molding thermoset polyester resins.  Reunion also has real estate development
and wine grape agricultural operations in Napa County, California.

     The Company's investment in Reunion is being accounted for under the
equity method of accounting.  The Company's share of Reunion's operating
results is included in the accompanying consolidated statement of income for
the years ended December 31, 1998, 1997 and 1996 as equity income (loss) from
operations of affiliate.  See "Affiliate Litigation Provision" above.

     See "Management's Discussion and Analysis of Results of Operations",
"Certain Relationships and Related Transactions."  Also, see "Possible Merger
With Reunion " above.

CGII - The Company owns 49% of CGI Investment Corp. (CGII), which owned 100%
of the outstanding preferred stock and fully diluted common stock of Rostone,
Inc. (Rostone).  Rostone compounds and molds thermoplastic polyester resin
(bulk and sheet molding compound) primarily for the electrical distribution
market and business machine market.

     On December 22, 1995, Rostone and Oneida entered into a merger agreement
whereby Rostone was subsequently merged into Oneida Molded Plastics Corp.
(Oneida), the Company's former plastics division which was sold to Reunion in
September 1995, and, as the surviving corporation, Oneida's name was changed
to ORC.  In the merger, ORC acquired from CGII all of the issued and
outstanding preferred and common stock of Rostone.  The merger agreement
provided for the payment of deferred merger proceeds of up to $4.0 million
($2.0 million in 1997 and $2.0 million in 1998) to CGII contingent upon
Rostone's achieving specified levels of earnings before interest and taxes in
1996 and 1997.  Rostone did not achieve the level of earnings before interest
and taxes in either 1996 or 1997 as specified in the merger agreement for the
payment of deferred merger proceeds in 1997 or 1998.  As such, CGII will not
receive any merger proceeds pursuant to the merger agreement.

     The Company made three loans to CGII; $1.5 million in December 1990,
$1.35 million in December 1993 and $0.3 million in February 1994.  Rostone's
preferred stock was previously pledged by CGII to the Company to secure the
Company's December 1993 loan of $1.35 million.  As such, any merger proceeds
were to be paid to the Company until the debt and related interest was paid in
full.  Over time, the Company had provided reserves for a substantial portion
of the principal on its notes receivable from CGII and at December 31, 1997,
the net carrying value of the Company's investment in CGII common stock and
net notes receivable was $0.6 million.

     CGII's primary assets remaining after the sale of Rostone were two notes
receivable, one of which was from Rostone, and a minimal amount of cash, the
sum of which totaled $0.7 million at December 31, 1997.  During 1998, the
Company and CGII agreed that CGII's liabilities significantly exceeded its
assets and it would not be able to repay its obligations to the Company.  As a
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<PAGE>     9
result, the Company agreed to exchanged its notes receivable from CGII for
CGII's note receivable from Rostone which, plus accrued interest, totaled $0.5
million at December 31, 1998.  See "Certain Relationships and Related
Transactions - Rostone and CGII."

Klemp de Mexico - In 1993, the Company entered into a joint venture with a
Mexican company for the purpose of manufacturing, selling and distributing
metal bar grating in Mexico.  This affiliate, Acervalco-Klemp, S.A. de C.V.,
was 49% owned by the Company.  During May 1994, the Company increased its
ownership in Acervalco-Klemp, S.A. de C.V., to 85% and has consolidated the
results since such date.  In January 1995, the subsidiary's name was changed
to Klemp de Mexico.

CFI-Klemp de Mexico - During 1996, Klemp de Mexico entered into a joint
venture agreement with Consolidated Fabricators, Inc., a Massachusetts
company, to form CFI-Klemp de Mexico (CFI-Klemp), a Mexican corporation.  CFI-
Klemp is in the business of metal fabrications.  As Klemp de Mexico has a
50.1% interest in CFI-Klemp, CFI-Klemp is consolidated with Klemp de Mexico
for financial reporting purposes.

Shanghai Klemp - In December 1995, the Company entered into a joint venture
agreement with China Metallurgical Import & Export Shanghai Company (CMIESC)
and Wanggang Township Economic Development Corporation (Wanggang) to form
Shanghai Klemp Metal Products Co. Ltd., (Shanghai Klemp).  CMIESC is a state-
owned foreign trade enterprise which trades in steel and equipment used in the
manufacture of steel products.  Wanggang is an independently owned, industrial
development corporation focusing on economic growth in the Pudong New Area of
Shanghai.  As the Company has a 65% interest in Shanghai Klemp, Shanghai Klemp
is consolidated for financial reporting purposes.

Suzhou Grating Co. Ltd. - In May 1998, the Company entered into a joint
venture agreement with Nantong Grating Composite Materials Co. Ltd. (Nantong)
and American Grating, Inc. (American Grating) to create a sino-foreign equity
joint venture known as Suzhou Grating Co., Ltd. (Suzhou).  Nantong is an
independently owned manufacturing company organized under the laws of the PRC. 
American Grating is a privately held U.S. corporation incorporated in the
state of California.  The Company's 10% investment in Suzhou is being
accounted for under the cost method.

CGI Sales - The Company also had a wholly-owned subsidiary, CGI Sales
Corporation (CGI Sales), which was a Barbados corporation that functioned as
the Company's foreign sales corporation.  In 1998, approximately $5.0 million
of the Company's sales passed-through CGI Sales.  CGI Sales was dissolved
during 1998.


INDIVIDUAL OPERATING DIVISIONS

CPI - Founded in 1897, CPI, the former Christy Park division of USX
Corporation, specializes in manufacturing large, seamless pressure vessels for
the above ground storage and transportation of highly pressurized gases such
as natural gas, hydrogen, nitrogen, oxygen and helium.  These pressure vessels
are provided to customers such as industrial gas producers and suppliers, the
alternative fueled vehicle compressed natural gas fuel industry, chemical and
petrochemical processing facilities, shipbuilders, NASA, public utilities and
gas transportation companies.
<PAGE>
<PAGE>     10
Klemp - Founded in 1901, Klemp is a geographically diversified manufacturer of
metal grating products.  Klemp manufactures quality steel and aluminum bar
grating products in a variety of sizes, configurations and finishes, and also
custom fabricates bar grating products for specialized applications.  Klemp
products are sold for use in many industrial applications where a combination
of strength, light weight, access and a free flow of air, heat, water or light
is desired.  Its products are used in water and wastewater treatment plants,
railroad tank cars, petroleum storage facilities, aircraft, mines, roads,
bridge decks and general manufacturing facilities.  For financial reporting
purposes, operations of Klemp de Mexico and Shanghai Klemp are reported as
part of the Klemp division.

Alliance - Founded in 1901, Alliance designs, engineers and manufactures
cranes used in a wide range of steel and aluminum mill applications and large
special purpose cranes used in marine and aerospace applications and heavy
industrial plants.  Alliance also manufactures lighter duty cranes for various
industrial applications, coke oven machinery and other large steel-related
fabrications.  In recent years, Alliance has expanded and diversified its
engineering and manufacturing capabilities to offer a variety of equipment and
related engineering, fabrication, maintenance and repair services.

Hanna - Founded in 1901, Hanna designs and manufactures a broad line of 
hydraulic and pneumatic cylinders, actuators, accumulators and manifolds. 
These products are used in a wide variety of industrial and mobile machinery
and equipment requiring the application of force in a controlled and
repetitive process.  Hanna's specialty is custom cylinders in both small
quantities packaged by its distributors with valves, pumps and controls as
complete fluid power systems and large quantities sold directly to equipment
manufacturers.

Steelcraft - Founded in 1972, Steelcraft manufactures and sells cold-rolled
steel leaf springs.  Its principal customers are manufacturers of trailers for
boats, small utility vehicles and golf carts and makers of recreational
vehicle and agricultural trailers.

Europa - The Company was originally incorporated as Europa Petroleum, Inc. in
1980.  The Europa division continues the Company's original oil and gas
business, holding interests in a small number of leases for oil and gas
properties, investing in low-risk gas exploration and managing a portfolio of
oil and gas participations.

Auto-Lok - Founded in 1946, Auto-Lok manufactures high quality roll formed and
structural steel fabricated storage racks for industrial and commercial
handling systems and general storage applications.  In addition, Auto-Lok
participates on larger contracts in the sale of total material handling
systems through purchasing and reselling related components such as decking
and carton flow devices, and subcontracting of rack erection.
<PAGE>
<PAGE>     11
     The following represents net sales, EBITDA (as defined), and total assets
by division and subsidiary at and for the years ended December 31, 1998, 1997
and 1996 (in thousands, including notes hereto, unless otherwise indicated):

                                                                      Total
                                    Net Sales        EBITDA(1)       Assets(2)
                                 --------------      ---------       ---------
  At and for the year ended
    December 31, 1998:
Alliance                            $ 41,982          $ 2,485        $ 18,111
Auto-Lok                              25,794            1,775          10,645
CPI                                   28,284            6,003          20,117
Europa                                   105               62           1,106
Hanna                                 34,458            5,714          17,544
Klemp                                 57,003            2,627          32,439
Steelcraft                             3,960              644           1,651
                                    --------          -------        --------
  Totals                            $191,586          $19,310        $101,613
                                    ========          =======        ========
  At and for the year ended
    December 31, 1997:
Alliance                            $ 43,791          $ 3,817        $ 14,872
Auto-Lok                              26,524              899          10,054
CPI                                   28,171            5,882          17,071
Europa                                   135               29           1,326
Hanna                                 33,420            4,721          15,916
Klemp                                 52,501            2,952          29,545
Steelcraft                             4,378              889           1,705
                                    --------          -------        --------
  Totals                            $188,920          $19,189        $ 90,489
                                    ========          =======        ========
  At and for the year ended
    December 31, 1996:
Alliance                            $ 28,091          $ 1,546        $ 12,662
Auto-Lok                              16,864             (154)          7,860
CPI                                   25,107            5,377          16,236
Europa                                   148               94           1,433
Hanna                                 29,617            3,127          15,972
Klemp                                 49,643            4,012          25,115
Steelcraft                             4,010              771           1,766
                                    --------          -------        --------
  Totals                            $153,480          $14,773        $ 81,044
                                    ========          =======        ========

(1)  Excludes Headquarters expenses in the years ended December 31, 1998, 1997
and 1996 of $2,007, $2,398 and $1,558, respectively.  See Item 6 for operating
income and a definition of EBITDA.

(2)  Excludes Headquarters assets at December 31, 1998, 1997 and 1996 of
$15,753, $20,780 and $20,286, respectively.
<PAGE>
<PAGE>     12
GENERAL ASPECTS APPLICABLE TO THE DIVISIONS

Raw Materials - The major raw materials used by the Company in its fabricated
and machined products manufacturing divisions include steel hot- and cold-
rolled bands, structural bars, stainless steel coils, welded and seamless
steel tubing and pipe, steel alloy bars, steel plates, brass tubing and bars
and aluminum extrusions, all of which are supplied by various domestic
sources.  Prices for most of these raw materials used by the Company remained
relatively constant during 1998.  There can be no assurance that prices for
these and other raw materials used by the Company will not increase in the
future.

Competition - Most of the Company's products are sold in highly competitive
markets both in the U.S. and internationally.  The Company competes with a
significant number of companies of varying sizes, including divisions or
subsidiaries of larger companies, on the basis of price, service, quality and
the ability to supply customers in a timely manner.  A number of the Company's
competitors have financial and other resources that are substantially greater
than those of the Company.  Competitive pressures or other factors could cause
the Company's products to lose market share or result in significant price
erosion which would have a material effect on the Company's results of
operations.

Export Sales - The Company's export sales for 1998 were approximately 6% of
total sales.  Export sales were primarily made in four major areas during 1998
- the Far East, Mexico and South America, the United Kingdom and Canada.  CPI
accounted for approximately 4% of export sales during 1998, recording sales in
all four areas, but primarily in Taiwan and the United Kingdom.  Alliance
represented almost all of the remainder, primarily in Mexico and Brazil. 
Hanna also had a small amount of export sales, primarily to Canada.  Export
sales of the remaining divisions were insignificant.  The Company does not
consider the domestic sales of its foreign subsidiaries as export sales.

Backlog - The Company's consolidated backlog at December 31, 1998 and 1997 was
approximately $49.7 million and $63.4 million.  Except for Alliance, all
backlog orders at December 31, 1998 are expected to ship within a year.  Due
to the nature of its business, Alliance's backlog, which represented 25% and
45% of consolidated backlog at December 31, 1998 and 1997, respectively, is
expected to ship within two years.

Research and Development - The Company operates in relatively mature markets
and the majority of its research and development work is related to improving
the quality and performance of its existing products, meeting design
requirements and specifications of its customers that require customized
products and developing greater production efficiencies.  To meet these
objectives, the Company has engineering departments at all of its major
manufacturing divisions.

Major Customers - During 1998, no customer accounted for more than 10% of the
net sales of the Company.  Individual divisions of the Company have had
customers in certain calendar years that have accounted for in excess of 10%
of that division's net sales.  This occurs principally at CPI, Alliance, the
Brooks operation of Hanna and Auto-Lok due to the large contract nature of
their businesses, and commonly occurs for different customers from one year to
the next.

Patents and Trademarks - The Company owns a number of patents and trademarks 
<PAGE>
<PAGE>     13
that are registered in the United States Patent and Trademark Office and
internationally.  The Company does not believe that any of its registered
trademarks or patents are material to the Company's business or that such
business is dependent on any trademark or patent.

Marketing and Distribution - The Company markets and distributes its products
in a variety of ways including in-house marketing and sales personnel at all
of its divisions, domestic independent and manufacturer representatives,
domestic and international agents and North American networks of independent
distributors that specialize in a product of the Company's various divisions.

Employees - As of December 31, 1998, the Company had a total of 1,297 people
in manufacturing, sales and administrative positions.  The Company believes
its relations with its employees are good.  However, on May 1, 1998, the
employees of the Company's Klemp division in Chicago, IL represented by the
Union went on strike citing differences over wage increases and other
benefits.  Such employees had been working under a collective bargaining
agreement which expired on April 30, 1998.  By a vote of the Union's
membership on May 19, 1998, a new contract was ratified and the strike ended
on May 22, 1998.  The new contract expires on April 30, 2002.

     During late 1998 and early 1999, the Company relocated its Klemp Chicago,
IL administrative and manufacturing operations to Libertyville, IL.  All
employees of the Chicago facility were offered their existing positions at the
new location.  A significant majority of the employees elected to continue
employment with the Company.  

     A breakdown of the Company's workforce by location and function at
December 31, 1998 follows.

                                                    General and
Division   Location             Manufacturing      Administrative      Total
--------   --------           -----------------   -----------------    -----
                              Union   Non-Union   Union   Non-Union
                              -----   ---------   -----   ---------
Alliance - Alliance, OH       174(5)      60                  26         260
Auto-Lok - Acworth, GA                   153                  45         198
CPI -      McKeesport, PA      90(1)       7       8(2)       26         131
Hanna -    Chicago, IL                    85                  31         116
           Milwaukee, WI                  72                  10          82
Klemp -    Oak Brook, IL                                      12          12
           Libertyville, IL    58(3)       4                  24          86
           Orem, UT                      106                  28         134
           Dayton, TX                     58                  22          80
           Liberty, MO         48(4)       5                  18          71
           Dallas, TX                     11                   3          14
           McKeesport, PA                  7                   7          14
           Lerma, State of
             Mexico (KDM)                 17                  30          47
Steelcraft-Miami, OK                      29                   4          33
Hdqtrs. -  Pittsburgh, PA                                     19          19
                              ---        ---       -         ---       -----
  Totals                      370        614       8         305       1,297
                              ===        ===       =         ===       =====
<PAGE>
<PAGE>     14
(1)  United Steelworkers of America - Contract expires May 31, 2001.
(2)  United Steelworkers of America - Contract expires May 31, 2001.
(3)  International Association of Bridge, Structural and Ornamental Iron
Workers - Contract expires April 30, 2002.
(4)  International Union of Operating Engineers - Contract Expires December 8,
2001.
(5)  United Steelworkers of America - Contract expires June 14, 1999.

Insurance - The Company maintains general liability, product liability,
property, workers' compensation, and other insurance in amounts and on terms
that it believes are customary for companies similarly situated.

Environmental - Since 1988, the Company has followed procedures and maintained
strict policies designed to protect the environmental welfare of its employees
and the communities surrounding its various locations.

     As a part of refinancing efforts by the Company in 1990 and 1998,
environmental audits were performed at the Company's various locations by
independent environmental engineering companies.  Recommendations contained in
those audits were implemented by the Company.  Each facility is monitored as
part of the Company's internal environmental and hazardous materials
management program.  The Company has also completed a compliance program for
polychlorinated biphenyls and to remove or encapsulate asbestos at all of its
facilities.  A policy of seeking substitutes for hazardous materials has been
established and many potentially hazardous substances have been replaced by
environmentally safe items.  The Company's employees have been trained to work
properly with potentially hazardous substances and to read and understand
Material Safety Data Sheets.

     As a result of these efforts, the Company believes that its business,
operations and facilities are being operated in substantial compliance with
applicable environmental and health and safety laws and regulations.  In
addition, the Company is aware of no environmental claims that have been or
could be asserted against the Company, other than those claims that the
Company believes have been resolved or are the subject of indemnification
agreements with former owners of the Company's properties.

     In September 1988, U.S. Metalsource Corp. (Metalsource), the owner of the
Company's former Ipsen Heat Treating facility prior to the Company, removed
substantial quantities of solvent contaminated soil from the Ipsen facility to
a licensed landfill.  While almost all of the contaminated soil was removed,
isolated areas could not be removed due to building safety concerns.  A
residual groundwater contamination problem remains.  Alco Standard Corporation
(Alco), the owner of the Ipsen facility during the time when the vast majority
of the contamination occurred, has agreed to perform, pay for and assume
direct responsibility and liability for and hold the Company harmless in
respect of the remediation of the remaining contamination including an ongoing
groundwater remediation plan which has been approved by the Illinois
Environmental Protection Agency.  Concurrent with its sale of the Ipsen
assets, the Company assigned to the purchaser the Company's rights to this
agreement with Alco.  The Company also covenanted with the purchaser to
complete or cause to be completed the remediation of the remaining
contamination if Alco should fail to honor its agreement.  As of December 31,
1998, the Company had received no notice that Alco was not performing under
the approved groundwater remediation plan.
<PAGE>
<PAGE>     15
Item 2.   Properties.
          -----------

     The Company has a total of 89.7 acres and 1,776,705 square feet being
used for ongoing operations throughout the United States, China and Mexico. 
Except Klemp's headquarters in Oak Brook, IL, CPI's sales office in Beijing,
China, Klemp de Mexico's sales offices as discussed below, and the Company's
corporate headquarters in Pittsburgh, PA, which is administrative, all
locations are both manufacturing and administrative facilities:

                                                                 Lease
                                 Square      Land              Expiration
Division      Location            Feet      Acres     Title       Date
--------      --------          -------     -----     -----    ----------
CPI           McKeesport, PA    602,772      37.0     Owned         -
              Beijing, China        808        -      Leased    10/31/00

Klemp         Oak Brook, IL       4,871        -      Leased     4/30/02
              Libertyville, IL  149,200        -      Leased    12/31/13
              Orem, UT           90,000       5.0     Owned         -
              Dayton, TX         41,250       7.8     Owned         -
              Dallas, TX         21,600        -      Leased     1/31/02
              Liberty, MO        55,551       5.7     Owned         -
              Lerma, State of
                Mexico (KDM)     25,000        -      Leased     3/20/02

Alliance      Alliance, OH      383,865      14.8     Owned         -

Hanna         Chicago, IL        85,283       2.7     Owned         -
              Milwaukee, WI      48,000       3.2     Owned         -

Steelcraft    Miami, OK          39,120      13.5     Owned         -

Headquarters  Pittsburgh, PA      6,485        -      Leased     8/31/01

Auto-Lok      Acworth, GA       222,900        -      Leased     3/12/08


     In addition to the above facilities, Klemp de Mexico has sales offices
rented under informal arrangements throughout Mexico in the cities of
Coatzacoalcos, Guadalajara, Mexico City, Monterrey, Tampico and Villahermosa.

     Hanna's location in Milwaukee, WI includes two buildings; one of
approximately 41,000 square feet and the other of approximately 7,000 square
feet.  During 1998, the Company undertook a project to expand the smaller
building by 20,000 square feet as the result of a sole-source supply agreement
for double welded hydraulic cylinders executed with one of Brooks' major
customers located in Horicon, WI.  See "Business - Hanna."

     In October 1998, the Company entered into a lease agreement for a
manufacturing and administrative facility located in Libertyville, IL and,
beginning in late 1998 and early 1999, relocated its Klemp Chicago, IL
manufacturing and administrative operations to Libertyville, IL.  The new
facility has a total of 149,200 square feet of space and includes options for
more square footage, if needed.  The Company's Klemp Chicago, IL facility is
currently under a contract of sale which is scheduled to close in the second
quarter of 1999.  The Atlanta location of the Company's Klemp division was 
<PAGE>
<PAGE>     16
closed during 1998.

     The Company believes that all of its facilities have been in operation
for a sufficient period of time to demonstrate their suitability for their
individual purposes.  The production capacities of the Company's facilities,
subject to the completion of the expansion of Hanna's Milwaukee, WI facility
and relocation of Klemp's Chicago operations, both discussed above, are
believed by the Company to be sufficient for the Company's anticipated future
needs.

     In addition to the property listed above, the Company owns 92.7 acres of
idle farm land adjacent to its former Ipsen facility, in Boone County, IL,
which were retained by the Company after the Ipsen sale.


Item 3.   Legal Proceedings.
          ------------------

     In June 1993, the U.S. Customs Service (Customs) made a demand on the
Company's former industrial rubber distribution division for $612,948.30 in
marking duties pursuant to 19 U.S.C. Sec. 1592.  The duties are claimed on
importations of "unmarked" hose products from 1982 to 1986.  Following the
Company's initial response raising various arguments in defense,including
expired statute of limitations, Customs responded in January 1997 by reducing
its demand to $370,968.00 and reiterating that demand in October 1997.  The
Company restated its position and continues to decline payment of the claim. 
Should the claim not be resolved, Customs threatens suit in the International
Court of Claims.  The Company continues to believe, based on consultation with
counsel, that there are facts which raise a number of procedural and
substantive defenses to this claim, which will be vigorously defended.  There
is no applicable insurance coverage.

     In addition to the aforementioned Customs claim, the Company is involved
in other various legal proceedings and product liability claims and believes
that none of these individually or in the aggregate will have a material
effect on the financial condition or results of operations of the Company.


Item 4.   Submission of Matters to a Vote of Security Holders.
          ----------------------------------------------------

     During 1998, one matter was submitted to a vote of the Company's security
holders.  The vote was conducted through unanimous written consent.  The
matter submitted included approval of the merger with Reunion, pursuant to
which the Company and Reunion entered into the May 31, 1998 Merger Agreement. 
This matter was unanimously consented to by security holders effective May 31,
1998.  See Item 1. "Business - Recent Developments - Possible Merger With
Reunion and Reunion Acquisitions of King-Way and NAPTech" and Item 7.
"Management's Discussion and Analysis of Financial Condition and Results of
Operation - Recent Developments - Possible Merger With Reunion and Reunion
Acquisitions of King-Way and NAPTech."
<PAGE>
<PAGE>     17
                                   PART II

Item 5.   Market for the Registrant's Common Stock and 
          --------------------------------------------
            Related Stockholder Matters.
            ----------------------------

     The common stock of the Registrant (Common Stock), par value $0.01 (whole
dollars) per share, is not traded in public markets.  As of March 1, 1999,
there were 13 holders of record of the Common Stock.  The Company has not
paid, and does not expect to pay in the foreseeable future, dividends on the
Common Stock.  The Company intends to retain its earnings for the future
operation and expansion of the business.  In addition, the Indenture and the
Financing Agreement place restrictions on the Company's ability to declare or
pay dividends on, or make any distribution in respect of, the Company's
capital stock, or purchase, redeem or otherwise acquire or retire for value
any shares of the Company's capital stock.
<PAGE>
<PAGE>     18
Item 6.   Selected Financial Data.
          ------------------------

                      SELECTED HISTORICAL FINANCIAL DATA
                    (in thousands, including notes hereto,
              except for share and per share amounts and ratios)

Year Ended December 31,          1998      1997     1996      1995     1994
                               --------  -------- --------  -------- --------
EARNINGS DATA(1):

Net sales                      $191,586  $188,920 $153,480  $183,408 $154,710
Cost of sales                   154,980   153,394  123,722   146,698  125,135
                               --------  -------- --------  -------- --------
Gross profit                     36,606    35,526   29,758    36,710   29,575
Selling, general and 
  administrative expenses        23,217    22,283   19,899    21,169   19,653
Other (income) expense, net         629       436      275       407     (176)
Minority interests                  (57)     (141)       -         -        -
                               --------  -------- --------  -------- --------
Operating profit                 12,817    12,948    9,584    15,134   10,098
Interest expense, net(2)         10,099     9,776    9,559     9,800    8,567
                               --------  -------- --------  -------- --------
Income before income taxes
  from continuing operations      2,718     3,172       25     5,334    1,531
Provision for income taxes(3)     1,083       851        8       909      276
                               --------  -------- --------  -------- --------
Income from continuing
  operations                   $  1,635  $  2,321 $     17  $  4,425 $  1,255
                               ========  ======== ========  ======== ========
Income (loss) from continuing
  operations applicable to
  common stock(4)              $  1,179  $  1,865 $   (439) $  3,969 $    805
                               ========  ======== ========  ======== ========
Average equivalent common 
  shares outstanding(11)        292,887   292,887  292,887   292,887  293,242
                               ========  ======== ========  ======== ========
Income (loss) from continuing 
  operations per common 
  share(11)                    $   4.03  $   6.37 $  (1.49) $  13.55 $   2.74
                               ========  ======== ========  ======== ========
Ratio of earnings to 
  fixed charges(5)                1.25x     1.30x    1.00x     1.52x    1.16x
                               ========  ======== ========  ======== ========
OPERATING AND OTHER DATA:

EBITDA(6)                      $ 17,303  $ 16,791 $ 13,215  $ 18,619 $ 12,546
                               ========  ======== ========  ======== ========
Cash flow from (used in) 
  operating activities           (3,094)    3,616    3,761     2,472   (1,432)
                               ========  ======== ========  ======== ========
Cash flow from (used in) 
  investing activities           (5,195)   (5,044)  (1,190)   (6,866)  (4,321)
                               ========  ======== ========  ======== ========
Cash flow from (used in) 
  financing activities            7,896     1,806    (2,303)   4,725    5,271
                               ========  ======== ========  ======== ========
<PAGE>
<PAGE>     19
Depreciation and 
  amortization(7)                 4,486     3,843    3,631     3,974    3,900
                               ========  ======== ========  ======== ========
Capital expenditures              5,095     5,044    4,704     4,852    5,085
                               ========  ======== ========  ======== ========
Ratio of EBITDA to interest 
  expense(6)                      1.84x     1.82x    1.48x     2.02x    1.54x
                               ========  ======== ========  ======== ========

At December 31,                  1998      1997     1996      1995     1994
                               --------  -------- --------  -------- --------
BALANCE SHEET DATA:

Working capital(10)            $ 32,627  $ 28,280 $ 25,042  $ 24,786 $ 22,804
                               ========  ======== ========  ======== ========
Total assets                    117,366   111,269  101,330   106,290   94,491
                               ========  ======== ========  ======== ========
Total long-term debt(9)          50,699    50,723   50,746    50,770   51,646
                               ========  ======== ========  ======== ========
Redeemable preferred stock        8,482     8,026    7,570     7,114    6,658
                               ========  ======== ========  ======== ========
Stockholders' equity(8)          (9,948)   (7,551)  (9,354)   (8,190) (11,608)
                               ========  ======== ========  ======== ========

(1)  The Company holds a minority voting interest in Reunion which it accounts
for under the equity method.  On September 14, 1995, the Company sold Oneida
to Reunion.  Such transaction was treated as the disposal of a portion of a
line of business with Oneida's historical operating results and resulting gain
on sale classified within continuing operations through September 14, 1995.

(2)  Includes amortization of debt issuance expenses of the following amounts
for the following years:  1998: $671; 1997: $550; 1996: $632; 1995: $564 and
1994: $444.

(3)  See Note 17 to the consolidated financial statements of the Company for
the year ended December 31, 1998.  Due primarily to the use of net operating
loss carryforwards, the Company's actual cash payments, net of refunds,
relating to state and federal income taxes for the years ended December 31,
1994 through December 31, 1997 have been approximately $533, $20, $53 and
$205, respectively.  In 1998, the Company had a net refund of $139.

(4)  In determining income (loss) from continuing operations applicable to
common stock, income from continuing operations is reduced by accretions of
dividends on preferred stock as follows:  1998: $456; 1997: $456; 1996: $456;
1995: $456 and 1994: $450.

(5)  See Item 14, Exhibit 12.1.
<PAGE>
<PAGE>     20
(6)  EBITDA is calculated as follows:

                                  1998     1997     1996     1995     1994
                                -------- -------- -------- -------- --------
Income from continuing 
  operations                    $  2,718 $  3,172 $     25 $  5,334 $  1,531
Interest expense, net(2)          10,099    9,776    9,559    9,800    8,567
Depreciation and amortization(7)   4,486    3,843    3,631    3,974    3,900
Gain on sale of business               -        -        -   (1,190)  (1,452)
Loss on notes receivable               -        -        -      701        -
                                -------- -------- -------- -------- --------
     EBITDA                     $ 17,303 $ 16,791 $ 13,215 $ 18,619 $ 12,546
                                ======== ======== ======== ======== ========

The Company has included EBITDA and the ratio of EBITDA to interest expense in
the Selected Historical Financial Data due to the close relationship of these 
line items to the Company's financial covenants benefitting the Senior Notes.

(7)  Excludes amortization of debt issuance expenses.  See footnote (2) above.

(8)  Stockholders' equity has been reduced by accretions for redemption value
of and dividends on preferred stock of $14.5 million through 1998.

(9)  Excludes borrowings under revolving credit facilities and includes
current maturities of Senior Notes.

(10) Represents current assets less current liabilities excluding borrowings
under revolving credit facilities and current maturities of Senior Notes.

(11) Includes the dilutive effect of the Warrants.
<PAGE>
<PAGE>     21
Item 7.   Management's Discussion and Analysis of 
            Financial Condition and Results of Operations

GENERAL

     During 1998, the Company's organizational structure included six
divisions that design, manufacture and market metal products, two majority-
owned foreign joint ventures which manufacture and fabricate metal grating, an
oil and gas division and an equity investment in Reunion.  Substantially all
of the Company's operations relate to metal products.

     On June 20, 1995, the Company acquired 1,450,000 shares of Reunion common
stock constituting approximately 38% of the then outstanding common stock of
Reunion.  Reunion is primarily engaged in the manufacture of high volume,
precision plastics products, providing engineered plastics services and
compounding and molding thermoset polyester resins.  Reunion also has wine
grape agricultural operations in Napa County, California.  The Company's
investment in Reunion is being accounted for under the equity method of
accounting.  The Company's share of Reunion's operating results is included in
the accompanying consolidated statement of income for the three years ended
December 31, 1998 as equity income (loss) from operations of affiliate.  See
"Recent Developments - Affiliate Litigation Provision", "Possible Merger With
Reunion and Reunion Acquisitions of King-Way and NAPTech" and "Results of
Operations" below.

     In connection with the acquisition of the Reunion common stock, on June
20, 1995, the Company and the Trustee agreed to a first supplemental indenture
and waiver of covenants of the Indenture under which the Senior Notes are
issued.  Pursuant to this supplemental indenture, the Company agreed to offer
to purchase $25.0 million of Senior Notes (representing 50% of the originally
issued principal amount of the Senior Notes) from Senior Notes holders on each
of June 1, 1999 and 2000 at an amount equal to 100% of the aggregate
outstanding principal amount thereof, plus unpaid interest to the purchase
date.  The Company has classified the maximum potential principal amount of
the first purchase offer as current maturities of long-term debt in its
consolidated balance sheet at December 31, 1998 included herein.  The
Company's failure to fulfill its obligations under this purchase offer would
constitute a failure to pay principal under the Indenture and result in an
Event of Default.  An Event of Default due to a failure to pay principal
would, pursuant to the Securities Pledge Agreement, result in a Realization
Event causing the immediate vesting in the Collateral Agent of the voting
rights of approximately 43% of the Company's common stock subject to the
pledge under the Securities Pledge Agreement, as well as the immediate vesting
of all rights to receive dividends and distributions with respect to the
pledged shares of common stock.  In addition, upon an Event of Default, the
Trustee or the holders of at least 25% of the Senior Notes may, by written
notice to the Company, declare an acceleration of the Senior Notes.  In the
event the possible merger with Reunion occurs, the Company intends to redeem
all of the Senior Notes.  Because there can be no assurances that the possible
merger and refinancing will occur, or that they will occur before the June 1,
1999 repurchase date, the Company has obtained a commitment from a national
financial institution that, pursuant to certain actions, it will fund the
Company's obligation to purchase Senior Notes, if any, on the June 1, 1999
purchase date should the Company's then available liquidity be insufficient to
do so.  As of the date of this report, no reasonable estimate exists as to the
amount of Senior Notes which the Company may be required to purchase, if any,
on the June 1, 1999 offer date.  Absent the refinancing contemplated by the 
<PAGE>
<PAGE>     22
possible merger with Reunion or the funding contemplated by the commitment,
there can be no assurances that a Realization Event or Event of Default will
not occur.  See "Possible Merger With Reunion and Reunion Acquisitions of
King-Way and NAPTech", "Liquidity and Capital Resources" and "Factors
Potentially Affecting Future Liquidity."


RECENT DEVELOPMENTS

New Credit Facility

     On October 30, 1998, the Company and NationsBank executed the Financing
Agreement wherein NationsBank has provided the Company with the NationsBank
Facility.

     The NationsBank Facility includes a Special Availability Amount, as
defined in the Financing Agreement, of $6.0 million.  The Special Availability
Amount is required to be reduced in $750,000 increments on each of February 1,
May 1, August 1 and November 1 in each of the years 1999 and 2000.  Once
reduced, the Special Availability Amount may not be reborrowed.  Availability
under the NationsBank Facility is subject to a borrowing base limitation
calculated as the aggregate of 85% of eligible accounts receivable plus the
lesser of $15.0 million or the sum of 60% of finished goods and raw materials,
50% of supplies and stores, a percentage, determined from time to time by
NationsBank, of work-in-process and the Special Availability Amount in effect
at the time of the calculation, all of the above as defined in the Financing
Agreement.  Interest under the NationsBank Facility is determined by reference
to various rates including the NationsBank prime rate, the Federal Funds rate
or LIBOR, each plus an applicable margin.  The Company may elect the rates
upon notification to NationsBank with applicable margins ranging from zero to
0.5% when using either the NationsBank prime rate or the Federal Funds rate
and from 2.0% to 2.75% when using LIBOR.

     The NationsBank Facility is secured by a lien in favor of NationsBank on
the Company's accounts receivable, inventory and certain other property and
accounts to the extent necessary to permit foreclosure on the accounts
receivable and inventory.  The Financing Agreement expires on October 31, 2001
and is renewable annually thereafter, subject to the approval of NationsBank,
but not beyond October 31, 2005.

     Contemporaneously with the execution of the Financing Agreement on
October 30, 1998, the Company borrowed a total of $28.9 million under the
NationsBank Facility, $28.1 million of which was used to repay, in total,
borrowings, interest and fees under the Congress Facility and $0.8 million of
which was placed on deposit with Congress as cash collateral for unexpired
letters of credit.  Such cash collateral will be returned to the Company upon
the expirations of the related letters of credit.  The Company and Congress
agreed to terminate the Congress Facility upon execution of the Financing
Agreement.  On November 2, 1998, the Company borrowed an additional $3.25
million under the NationsBank Facility to fund its semiannual interest payment
on the Senior Notes.

     The NationsBank Facility includes various representations, warranties and
affirmative and negative covenants by the Company and provides NationsBank
with certain rights and remedies including, but not limited to, acceleration,
both in the event of default or subjectively, of all amounts borrowed under
the NationsBank Facility.
<PAGE>
<PAGE>     23
Exercise of Warrants

     Pursuant to the Warrant Agreement the Company issued the Warrants.  The
Warrants were issued in a transaction pursuant to which the Company issued the
Senior Notes.  The Warrants were not exercisable except upon the occurrence of
certain trigger events as defined in the Warrant Agreement or, if no trigger
event had occurred prior to May 3, 1998, upon the Company's failure to
consummate a repurchase offer due to a payment blockage, both as defined in
the Warrant Agreement.  No trigger event had occurred through May 3, 1998 and
a payment blockage existed on such date, resulting in the Warrants becoming
exercisable as of May 3, 1998.  Consistent with the Warrant Agreement, the
Company notified holders of the Warrants of the existence of a payment
blockage within 30 days of such date.  Due to the then existing prospective
merger with Reunion, the Company simultaneously gave holders of the Warrants a
Bring Along Notice (as defined in the Warrant Agreement) notifying them that
their Warrants would lapse if not exercised within thirty days.  The thirty-
day period was subsequently extended indefinitely when the then existing
prospective merger with Reunion was delayed.  In a press release dated October
20, 1998, the Company announced that the Merger Agreement with Reunion was
terminated by mutual agreement.  See "Possible Merger With Reunion and Reunion
Acquisitions of King-Way and NAPTech."  Through the date of this Annual Report
on Form 10-K, 46,790 Warrants have been exercised at $.01 per share resulting
in the issuance of 46,790 shares of the Company's common stock outstanding. 
Remaining Warrants which have not been exercised remain exercisable.  See
"Liquidity and Capital Resources."

     The Company had previously notified its warrantholders that its
registration statement on Form S-1 filed with the SEC could not be used in
connection with any resale of its Warrants or shares of its common stock
underlying the Warrants.  Any transactions in the Company's Warrants or common
stock into which the Warrants are convertible continue to require compliance
with Rule 144A or another exemption from the registration requirements of the
Securities Act of 1933.

Defaults Under Indenture

     In May of 1998, the Company executed a joint venture agreement pursuant
to which it contributed $100,000 to Suzhou.  The investment constitutes a
default under the Indenture.
 
     In May of 1998, Mr. Bradley transferred all of his shares of the
Company's common stock to the Bradley FLP for estate planning purposes.  The
Bradley FLP has granted voting control over such shares to SPI, which in turn
has granted voting control over such shares to Mr. Poole.  Because Mr. Bradley
no longer has voting control over such shares of the Company's common stock, a
breach has occurred under the Securities Pledge Agreement.  Because the
Securities Pledge Agreement is cross-covenanted to the Indenture, such breach
creates a default under the Indenture.
 
     The Indenture provides that neither of the aforementioned defaults will
mature into an Event of Default subject to the remedies therein provided,
including acceleration of the Senior Notes, until the Trustee under the
Indenture or the holders of at least twenty-five percent (25%) of the Senior
Notes notify the Company of the default and the default remains unremedied for
thirty (30) days after said notice.  As of the date of this Annual Report on
Form 10-K, the Company had not received notice from either the Trustee or any
Senior Note holders.  In the event notice is received, the Company currently 
<PAGE>
<PAGE>     24
has agreements in place that it believes would remedy each such default within
the 30 day remedy period should it become necessary.  However, there can be no
assurance that an Event of Default will not result from these defaults.

Chicago Plant Strike

     On May 1, 1998, approximately 75 employees of the Company's Klemp
division in Chicago, IL represented by the Union went on strike citing
differences over wage increases and other benefits.  Such employees had been
working under a collective bargaining agreement which expired on April 30,
1998.  By a vote of the Union's membership on May 19, 1998, a new contract was
ratified and the strike ended on May 22, 1998.  The new contract expires on
April 30, 2002.  This strike adversely affected the second quarter 1998
results of operations of the Company's Klemp division.  See "Results of
Operations."

Affiliate Litigation Provision

     As previously reported by Reunion, on April 24, 1998, a jury in state
district court in Harris County, Texas returned jury verdict findings against
Reunion related to a November 1995 contract for the sale of all outstanding
shares of capital stock of Reunion's wholly owned oil and gas subsidiary to
Bargo.  The jury found that Bargo had a right to terminate the November 1995
stock purchase agreement with Reunion and that Reunion fraudulently induced
Bargo into entering into the agreement.  In July 1998, the court entered
judgement affirming the $5.0 million punitive damages jury verdict and awarded
approximately $3.0 million in attorneys' fees and costs.  Reunion maintained
at trial and continues to maintain that all requirements to closing under the
contract were met, and that Bargo was required to close the transaction. 
Reunion's management continues to maintain that no evidence sufficient to
support a jury finding of fraud or related punitive damages was presented at
trial.  Reunion has filed a bond which suspends execution on the judgment
while it appeals.  Reunion has filed a formal notice of appeal and intends to
file its appeal as soon as possible.  However, although Reunion's management
believes, based on consultation with counsel, that it is more likely than not
that the judgment will be overturned on appeal, Reunion recorded an accrual of
$8.8 million for the amount of the judgment by a charge to its continuing
operations for 1998 in accordance with generally accepted accounting
principles.  In addition, according to Reunion's financial advisor, its Bargo
legal liability is a deduction of $8.8 million to Reunion's equity value.  The
Company's results of operations for the second quarter of and year ended
December 31, 1998 and the carrying value of the Company's investment in
Reunion common stock on the equity method of accounting were adversely
affected by this action.  Reunion has indicated that, if the judgment is not
overturned on appeal, and the possible merger with the Company and related
refinancing do not occur, Reunion would be obligated to seek alternative
funding sources, possibly including a sale of assets.  See "Results of
Operations."

Possible Merger With Reunion and Reunion Acquisitions of King-Way and NAPTech

     The Company and Reunion entered into the Merger Agreement on May 31,
1998.  In a press release on October 20, 1998, the Company announced that the
May 31, 1998 Merger Agreement between the Company and Reunion was terminated
by mutual agreement.  The Company reported that this decision was made as a
result of Reunion's inability to arrange sufficient refinancing of all of the
debt of the combined companies under then existing market conditions.  On 
<PAGE>
<PAGE>     25
February 26, 1999, the Company announced that it has reinstituted merger
discussions with Reunion and that the managements of both Chatwins and Reunion
currently believe that additional identified financing sources would provide
adequate funds for operations of the combined companies, including the
redemption of the Senior Notes.  The possible merger of Chatwins and Reunion
is subject to, among other conditions, approval by the Boards of Directors and
stockholders of both companies.  If the companies reach mutually agreeable
terms for the merger, and other conditions are met, the merger could occur
during the second quarter of 1999.  There can be no assurances that the
possible merger will be agreed to, approved or consummated.

     Reunion announced that it has also had discussions regarding the possible
acquisitions of Stanwich Acquisition Corp. (SAC), doing business as King-Way
Material Handling Company (King-Way) and of NPS Acquisition Corp. (NPSAC),
doing business as NAPTech Pressure Systems (NAPTech), at the same time as the
possible merger with the Company.  SAC and NPSAC are affiliates of the Company
and Reunion.  Reunion also announced that it has engaged legal and financial
advisors in connection with these transaction and that discussions have been
held with prospective lenders.  See "King-Way" and "NAPTech" below.

King-Way

     On November 3, 1997, SAC acquired the King-Way from the Kingston-
Warren Corporation for a purchase price of $18.1 million.  SAC is a privately-
held company whose common stock is owned 42.5% by Mr. Bradley, 42.5% by Mr.
K.J. Bradley and 15% by Mr. Evans.  Similar to Auto-Lok, King-way is in the
business of producing industrial and commercial storage racks and materials
handling systems.

     At the time King-Way was available for purchase, the Company's management
was desirous of acquiring King-Way as a strategic acquisition by its Auto-Lok
division as King-Way's computerized systems were thought to be an important
line extension to Auto-Lok's more traditional storage and materials handling
systems.  The Company was not, however, able to consummate the acquisition
because of restrictions under its existing financing documents.  Mr. Bradley
therefore organized and capitalized SAC to acquire and hold King-Way until
such time as it could be acquired by the Company.

     Because King-Way had been operating as a division of Kingston-Warren
Corporation, it was necessary to establish King-Way's business in new
facilities with appropriate overhead support.  Meanwhile, Auto-Lok possessed
surplus floor space, production workforce, administrative organization and
equipment that could be utilized to continue King-Way's operations. 
Accordingly, SAC and Auto-Lok entered into a service agreement pursuant to
which King-Way would utilize Auto-Lok's surplus capacity in exchange for fees
approximately equal to Auto-Lok's costs of providing the surplus capacity plus
a right of first negotiation to acquire King-Way from SAC.  This right of
first negotiation has since expired.  The integration of King-Way's business
into Auto-Lok's facility took place primarily during the second quarter of
1998.  Through December 31, 1998, costs totaling $1,298,631 have been charged
to King-Way under this agreement.

NAPTech

     On August 25, 1998, NPSAC acquired NAPTech from the Shaw Group for a
purchase price of $8.4 million.  NPSAC is wholly owned by Mr. Bradley.  Like
CPI, NAPTech manufactures steel seamless pressure vessels.  At the time 
<PAGE>
<PAGE>     26
NAPTech was available for purchase, the Company's management wanted to acquire
it as a strategic acquisition by its CPI division.  The Company was not,
however, able to consummate the acquisition because of restrictions under its
existing financing documents.  Mr. Bradley therefore organized and capitalized
NPSAC to acquire and hold NAPTech until such time as it could be acquired by
the Company.

     In August 1998, CPI and NPSAC entered into a services agreement pursuant
to which CPI would provide certain administrative services to NAPTech for cash
fees which approximate $29,000 per month.  The NAPTech services agreement is
for one year and may be renewed annually upon agreement by both the Company
and NAPTech.  On August 25, 1998 the Company purchased from NAPTech $1.0
million of inventory usable by its CPI division in its normal course of
business.  At December 31, 1998, the Company had receivables totaling $148,000
from NAPTech.


THE YEAR 2000

     The Company, like most companies, utilizes electronic technology which
includes computer hardware and software systems that process information and
perform calculations that are date- and time-dependent.  The Company is aware
that the coming of Y2K poses pervasive and complex problems in that virtually
every computer operation (including manufacturing equipment and other non-
information systems equipment), unless it is Y2K compliant, will be affected
in some way by the rollover of the two-digit year value from "99" to "00" and
the inadvertent recognition by the electronic technology of "00" as the year
1900 rather than Y2K.  The Company is also aware that it may not only be
negatively affected by the failure of its own systems to be Y2K compliant, but
may also be negatively affected by the Y2K non-compliance of its vendors,
customers, lenders and any other party with which the Company transacts
business.

     In 1995, the Company undertook a project to invest in and install a time-
critical manufacturing and management information system at certain of its
significant divisions in an effort to save costs and improved information flow
by substantially improving all operational processes.  Y2K compliant
technology is part of this system and the Company anticipates no material
adverse effects to its new operating systems from Y2K.

     In addition to this new system, the Company has completed its assessment
of all other systems and software in place at all locations and has identified
hardware replacements and software upgrades necessary to achieve Y2K
compliance.  The identified hardware replacements and software upgrades are
scheduled to be completed and tested by the end of 1999 and will be provided
by vendors whose hardware and software have achieved Y2K certification.  The
cost of the identified hardware replacements and software upgrades are not
expected to be material and, absent the need to achieve Y2K compliance, would
be a normal part of the Company's ongoing program for maintaining up-to-date
information technology.  The Company has incurred and expects to continue to
incur internal staff and other costs as a result of modifying existing systems
to be Y2K compliant.  Such costs will continue to be expensed as incurred and
funded through internally generated cash while costs to acquire new equipment
and software will be capitalized and depreciated over their useful lives. 
Management does not expect the incremental cost to the Company of enterprise-
wide Y2K compliance to be material to its operations.
<PAGE>
<PAGE>     27
     In addition to internal Y2K compliance, the Company has surveyed all
significant vendors, customers, lenders and other outside parties with which
it transacts business in an effort to identify Y2K non-compliance by such
parties.  Results indicate that those important parties with which the Company
does business either have already achieved Y2K readiness or will be Y2K
compliant during 1999.  The most significant third parties with which the
Company contracts for services are its payroll services provider, its local
bank of record and its revolving credit lender, NationsBank.  The Company has
received certification that its provider of payroll services is Y2K compliant.
Regarding its bank and revolving credit facility lender, the Company funds its
day-to-day operations through a series of wire transfers between its revolving
credit facility lender and its local bank of record.  The wire transfers are
initiated at the Company's headquarters via dial-up phone line connections. 
Both the Company's local bank of record and NationsBank have indicated
publicly that they are Y2K compliant.  However, any disruption in phone
service as a result of Y2K could result in the Company's inability to fund its
operations and have a significant adverse impact on the financial position and
results of operation of the Company.

     Management recognizes that the failure of the Company or any party with
which the Company conducts business to be Y2K compliant in a timely manner
could have a material adverse impact on the operations of the Company.  If the
Company's systems or the systems of its significant vendors, customers,
lenders and other outside parties with which it transacts business were to
fail because they were not Y2K compliant, the Company would incur significant
costs and inefficiencies.  Manual systems for manufacturing and financial
controls would have to be implemented and staffed.  Significant customers
might decide to cease doing business with the Company.  Disruptions in
electrical power, phone service and/or delivery of materials could cause
significant business interruptions.  Similarly, business interruptions at
significant customers could result in deferred or canceled orders.

     The dates on which the Company believes Y2K compliance will be completed
are based on management's best estimates, which were derived utilizing
numerous assumptions of future events, including the continued availability of
certain resources, third party modification plans and other factors.  However,
there can be no guarantees that these estimates will be achieved, or that
there will not be delays in, or increased costs associated with, achieving
enterprise-wide Y2K compliance.  Specific factors that might cause differences
between the estimates and actual results include, but are not limited to, the
availability and cost of personnel trained in these areas, timely responses to
and corrections by third-parties and suppliers, the ability to implement
interfaces between the new systems and the systems not being replaced, and
similar uncertainties.  Due to general uncertainty inherent in the Y2K
problem, resulting in part from the uncertainty of the Y2K compliance of
third-parties, the Company cannot ensure its ability to resolve problems
associated with the Y2K issue that may affect its operations and business, or
expose it to third-party liability in a timely and cost-effective manner.


RESULTS OF OPERATION
                                      
1998 compared to 1997

     Net sales for 1998 totaled $191.6 million, compared to $188.9 million for
1997.  Sales for 1998 increased $2.7 million, or 2%.  The increase in sales
was primarily at Klemp and Hanna, partially offset by decreases or flat 
<PAGE>
<PAGE>     28
revenues at the remaining divisions.  Klemp's sales, including its
international entities, increased $4.5 million and Hanna's sales increased
$1.0 million.  Sales decreased $1.8 million at Alliance, $0.7 million at Auto-
Lok and $0.4 million at Steelcraft.  CPI reported flat revenues in 1998
compared to 1997.  The increase in sales at Klemp reflects an improving
domestic market trend over the softening in its markets which began in 1996
and continued through much of 1997 and the ramp-up in operations at Shanghai
Klemp which had an increase in sales of $1.8 million.  Additionally, Klemp de
Mexico's sales increased $1.0 million.  The increase in sales at Hanna in 1998
compared to 1997 occurred in the fourth quarter of 1998 and was the result of
a series of large shipments to one of Hanna's largest customers.  The decrease
in sales at Alliance was primarily due to a slight decrease in the level of
material inputs to large projects during 1998 compared to 1997.  Decreases at
Auto-Lok and Steelcraft were general in nature and not indicative of adverse
trends.

     Gross profit for 1998 was $36.6 million, compared to $35.5 million for
1997.  1998 gross profit increased $1.1 million, or 3%.  Gross profit margin
was 19.1% in 1998, compared to 18.8% in 1997.  Gross profit during 1998
compared to 1997 improved $1.1 million at Hanna, $0.8 million at Auto-Lok,
$0.5 million at CPI and $0.3 million at Klemp, all of which was at the foreign
subsidiaries primarily due to increases in their volumes.  These gross profit
improvements were partially offset by decreases of $1.3 million at Alliance
and $0.2 million at Steelcraft.  Gross profit margin was also up at Hanna,
Auto-Lok and CPI, but down at Klemp, Alliance and Steelcraft.  The increase in
gross profit and margin at Hanna was primarily due to the efficiencies of
increased volume and a shift in product mix towards its industrial cylinder
line, which has higher margin products than its mobile cylinder line. 
Although Auto-Lok's overall volume decreased in 1998 compared to 1997, the
increase in gross profit and margin at Auto-Lok was primarily due to the
efficiencies of a higher operating level at Auto-Lok's facility due to the
ability to absorb fixed and semi-variable overhead costs by the integration of
King-Way's operations.  See "Recent Developments - King-Way."  Although
Klemp's overall domestic volume increased in 1998 compared to 1997, domestic
gross profit and margin were down primarily due to inefficiencies caused by
the relocation during the fourth quarter of 1998 of its Chicago operations to
Libertyville, IL and the three week strike at its Chicago plant and the
resulting inability to absorb fixed costs.  See "Recent Developments - Chicago
Plant Strike."  CPI's profits and margin both improved in 1998 compared to
1997 due to a higher margin product mix while Alliance's profits and margin
were negatively impacted by cost overruns on a large project.  The decrease in
Steelcraft's profits and margin were directly related to the decrease in
volume in 1998 compared to 1997.

     Selling, general and administrative (SGA) expenses for 1998 were $23.2
million, compared to $22.3 million for 1997, an increase of $0.9 million.  SGA
expenses as a percentage of sales increased to 12.1% for 1998 compared to
11.8% in 1997.  The increase in SGA and SGA as a percentage of sales occurred
during the first half of 1998 and was due to an overall increase in
administrative spending at certain significant divisions due to increased
domestic and international marketing efforts.

     There was other expense in 1998 of $0.6 million, compared to other
expense of $0.4 million for 1997, a net increase of $0.2 million.  Other than
the foreign currency translation loss of $150,000 in 1998, there were no
individually significant or offsetting items in either 1998 or 1997.  See Item
7A. "Quantitative and Qualitative Disclosures About Market Risk."
<PAGE>
<PAGE>     29
     Minority interests of approximately $0.1 million in both 1998 and 1997
represent results during 1998 and 1997 allocated to the minority ownerships of
the Company's CFI-Klemp and Shanghai Klemp joint ventures.  Minority interests
are calculated based on the percentage of minority ownership.

     Interest expense, net, for 1998 was $10.1 million, compared to $9.8
million for 1997, an increase of $0.3 million.  In general, average borrowing
levels under the Company's revolving credit facilities increased during 1998
when compared to 1997 as a result of an increase in net working capital
(defined as receivables and inventories less trade payables).

     There was a tax provision of $1.1 million in 1998, compared to $0.9
million in 1997, an increase of $0.2 million.  The increase in the tax
provision for 1998 compared to 1997 was primarily due to a $0.3 million
reduction in the valuation allowance for deferred tax assets during 1997
compared to no change in the valuation allowance during 1998.

     The Company's investment in Reunion is being accounted for under the
equity method of accounting.  The Company's results of operation for 1998 and
the carrying value of the Company's investment in Reunion common stock on the
equity method of accounting were adversely affected by Reunion's results of
operation for 1998, which included an $8.8 million charge to continuing
operations resulting from an adverse litigation judgment entered against
Reunion (see "Recent Developments - Affiliate Litigation Provision") and a
$1.7 million charge to discontinued operations related to environmental
remediation costs for certain Louisiana oil and gas properties it owns.  See
"Recent Developments - Possible Merger With Reunion and Reunion Acquisitions
of King-Way and NAPTech."  The equity losses from continuing operations of
affiliate of $2.7 million in 1998 and $0.2 million in 1997 represent the
Company's share of Reunion's results from continuing operations for each
period.  The equity loss from discontinued operations of affiliate of $0.4
million in 1998 and equity income from discontinued operations of affiliate
$0.2 million in 1997 represent the Company's share of Reunion's results from
discontinued operations.

1997 compared to 1996

     Net sales for 1997 totaled $188.9 million, compared to $153.5 million for
1996, increasing $35.4 million, or 23%.  Sales increased at all divisions of
the Company.  Sales increased $15.7 million at Alliance, $9.6 million at Auto-
Lok, $3.8 million at Hanna, $3.1 million at CPI, $2.8 million at Klemp and
$0.4 million at Steelcraft.  Included in Klemp's sales increase was $0.6
million at Shanghai Klemp and $0.4 million at Klemp de Mexico.  The increase
in sales at CPI was primarily due to an increase in orders from and shipments
to one of CPI's largest domestic customers.  The increases at Auto-Lok and
Hanna are primarily due to a general increase in demand for their products,
which has resulted in higher levels of orders and shipments.  The increase in
sales at Alliance is primarily due to a significant increase in orders
associated with the steel industry that began in the fourth quarter of 1996
and continued into 1997.  The sales increase at Klemp was achieved in the
fourth quarter of 1997 reflecting an improving market trend over the softening
market that began in 1996.

     Gross profit for 1997 was $35.5 million, compared to $29.8 million for
1996.  Gross profit for 1997 increased $5.8 million, or 19%.  Gross profit
margin was 18.8% in 1997, compared to 19.4% in 1996.  Gross profit during 1997
compared to 1996 improved at all divisions of the Company except for Klemp.  
<PAGE>
<PAGE>     30
Excluding Klemp, the increases in gross profit were due to higher volumes in
1997 while Klemp's gross profit was negatively affected by competitive pricing
pressures in the markets it serves, primarily the Midwest, and non-cash
charges to 1997 and 1996 earnings for provisions for losses on inventories. 
Gross profit margin improved significantly at Hanna due to the efficiencies of
increased volume and cost savings programs and, except for Klemp, increased at
the Company's other divisions, all related to volume increases as well. 
Profit margin at Klemp was negatively affected by competitive pricing
pressures in the markets it serves, primarily the Midwest, and the non-cash
inventory charge discussed above.

     SGA expenses for 1997 were $22.3 million, compared to $19.9 million for
1996.  However, SGA expenses as a percentage of sales decreased to 11.8% for
1997 compared to 13.0% in 1996.  The decrease in SGA expenses as a percentage
of sales was primarily due to the 23% increase in sales while SGA expenses
increased only 12% as a result of the fixed and semi-variable nature of
certain expenses.  

     Other expense for 1997 was $0.4 million compared to $0.3 million in 1996. 
There were no individually significant or offsetting items in either 1997 or
1996.

     Minority interests of $0.1 million represent losses during 1997 allocated
to the minority ownerships of the Company's CFI-Klemp de Mexico and Shanghai
Klemp joint ventures.  Minority interests are calculated based on the
percentage of minority ownership.

     Interest expense, net, for 1997 was $9.8 million, compared to almost $9.6
million for 1996.  A slightly higher level of interest expense under the
Revolving Credit Facility in 1997 compared to 1996 was offset by a lower level
of interest expense on related party indebtedness.  The increase in interest
expense on the Revolving Credit Facility was due to a .25% increase in the
prime lending rate (as defined) and a higher level of average borrowings.  The
decrease in interest expense on related party indebtedness was due to the full
repayments of the Parkdale Note and Gesterkamp Note during the first half of
1997.

     There was a tax provision of $0.9 million in 1997 compared to less than
$0.1 million in 1996.  The increase in the provision for income taxes was due
to the increase in pre-tax earnings, partially offset by the $360,000
reduction in the valuation allowance for deferred tax assets.  See "Liquidity
and Capital Resources."

     The Company's investment in Reunion is being accounted for under the
equity method of accounting.  The Company's share of Reunion's operating
results for 1997, 1996 and 1995 is included in the accompanying consolidated
statement of income for each of the three years ended December 31, 1997 as
equity income (loss) from operations of affiliate.

     The equity losses from continuing operations of affiliate of $0.2 million
in 1997 and $0.5 million in 1996 represent the Company's share of Reunion's
results from continuing operations for each period.

     The equity income from discontinued operations of affiliate of $0.2
million in 1997 and $0.1 million in 1996 represent the Company's share of
Reunion's results from discontinued operations.
<PAGE>
<PAGE>     31
     The classification of Mexico as a highly-inflationary economy effective
January 1, 1997 pursuant to paragraph 11 of SFAS No. 52, "Foreign Currency
Translation" had an insignificant impact on the Company's results of
operations for 1997.


LIQUIDITY AND CAPITAL RESOURCES

General

     Except for its foreign subsidiaries, the Company manages its liquidity as
a consolidated enterprise.  The operating divisions of the Company carry
minimal cash balances.  Cash generated from the divisions' operating
activities generally is used to repay borrowings under revolving credit
arrangements, as well as other uses (e.g. corporate headquarters expenses,
debt service, capital expenditures, etc.).  Conversely, cash required for the
divisions' operating activities generally is provided from funds available
under the same revolving credit arrangements.  The Company's foreign
subsidiaries are self-sustaining and operate almost exclusively within the
countries they are located.  Their cash flows are devoted to and obligations
paid by their own operations.  The Company does not provide funds to the
foreign operations nor does the Company guarantee any foreign indebtedness.

     Although the Company operates in relatively mature markets, it intends to
continue to invest in and grow its businesses through selected capital
expenditures as cash generation permits.  Management believes that all
required principal and interest payments, as well as capital expenditures,
will be met by cash flows from operations and/or borrowings under the
NationsBank Facility or other financing or refinancing arrangements, if
necessary.

     On October 30, 1998, the Company and NationsBank executed the Financing
Agreement wherein NationsBank has provided the Company with the NationsBank
Facility of up to a maximum principal amount of $40.0 million, including a
letter of credit facility of up to $5.0 million.

     The NationsBank Facility includes a Special Availability Amount, as
defined in the Financing Agreement, of $6.0 million.  The Special Availability
Amount is required to be reduced in $750,000 increments on each of February 1,
May 1, August 1 and November 1 in each of the years 1999 and 2000.  Once
reduced, the Special Availability Amount may not be reborrowed.  Availability
under the NationsBank Facility is subject to a borrowing base limitation
calculated as the aggregate of 85% of eligible accounts receivable plus the
lesser of $15.0 million or the sum of 60% of finished goods and raw materials,
50% of supplies and stores, a percentage, determined from time to time by
NationsBank, of work-in-process and the Special Availability Amount in effect
at the time of the calculation, all of the above as defined in the Financing
Agreement.  Interest under the NationsBank Facility is determined by reference
to various rates including the NationsBank prime rate, the Federal Funds rate
or LIBOR, each plus an applicable margin.  The Company may elect the rates
upon notification to NationsBank with applicable margins ranging from zero to
0.5% when using either the NationsBank prime rate or the Federal Funds rate
and from 2.0% to 2.75% when using LIBOR.  The NationsBank Facility also
includes an unused line fee and a monthly service charge.

     The NationsBank Facility is secured by a lien in favor of NationsBank on
the Company's accounts receivable, inventory and certain other property and 
<PAGE>
<PAGE>     32
accounts to the extent necessary to permit foreclosure on the accounts
receivable and inventory.  The Financing Agreement expires on October 31, 2001
and is renewable annually thereafter, subject to the approval of NationsBank,
but not beyond October 31, 2005.

     Contemporaneously with the execution of the Financing Agreement on
October 30, 1998, the Company borrowed a total of $28.9 million under the
NationsBank Facility, $28.1 million of which was used to repay, in total,
borrowings, interest and fees under the Congress Facility and $0.8 million of
which was placed on deposit with Congress as cash collateral for unexpired
letters of credit.  Such cash collateral will be returned to the Company upon
the expirations of the related letters of credit.  The Company and Congress
agreed to terminate the Congress Facility upon execution of the Financing
Agreement.  On November 2, 1998, the Company borrowed an additional $3.25
million under the NationsBank Facility to fund its semiannual interest payment
on the Senior Notes.

     The NationsBank Facility includes various representations, warranties and
affirmative and negative covenants by the Company and provides NationsBank
with certain rights and remedies including, but not limited to, acceleration,
both in the event of default or subjectively, of all amounts borrowed under
the NationsBank Facility.  Financial covenants in the NationsBank Facility
include an adjusted earnings before interest, taxes, depreciation and
amortization (NationsBank EBITDA) to fixed charge coverage ratio and an
indebtedness to cash flow ratio, calculations of which are defined in the
Financing Agreement.  Generally all amounts for calculation of the ratios are
derived from domestic operations and NationsBank EBITDA is adjusted for
domestic capital expenditures.  Beginning on December 31, 1998, these
covenants require the Company to maintain a rolling twelve-month minimum
adjusted NationsBank EBITDA to fixed charge coverage ratio of 1.2:1 and a
maximum indebtedness to cash flow ratio of 5.0:1.  At December 31, 1998 such
ratios were 1.3:1 and 4.9:1, respectively, and complied with the Financing
Agreement.  The Company was also in compliance with all other representations,
warranties and covenants at December 31, 1998.  Borrowings outstanding under
the NationsBank Facility at December 31, 1998 totaled $34.0 million and the
weighted average rate for borrowing was 7.5%.

     Prior to the NationsBank Facility the Company had the $28.0 million
Congress Facility.  On April 28, 1998, the Congress Facility was amended to
provide a temporary increase in the Maximum Credit to $30.0 million from $28.0
million and a temporary $3.0 million overadvance availability.  The proceeds
from this $3.0 million overadvance were used for various purposes, including
the Company's May 1, 1998 $3.25 million interest payment on its Senior Notes. 
Additionally, as part of this amendment, the expiration date of the Congress
Facility was extended to August 31, 1998.  On August 18, 1998, the Congress
Facility was further amended to extend the Maximum Credit temporary increase
period and further extend the expiration date of the Congress Facility to
October 31, 1998.  Effective with the execution of the Financing Agreement
with NationsBank and the repayment of all borrowings, interest and fees under
the Congress Facility, effective October 30, 1998, the Company and Congress
agreed to terminate the Congress Facility.

     Borrowings under the Congress Facility bore interest at an annual rate of
the Philadelphia National Bank Prime Rate plus 1.5% which, at the time of its
termination, was 10.0%.  The facility also contained an unused line fee of
0.5% and a $5,000 monthly servicing fee.
<PAGE>
<PAGE>     33
     In May of 1998, the Company executed a joint venture agreement pursuant
to which it contributed $100,000 to Suzhou.  The investment constitutes a
default under the Indenture. 

     In May of 1998, Mr. Bradley transferred all of his shares of the
Company's common stock to the Bradley FLP for estate planning purposes.  The
Bradley FLP has granted voting control over such shares to SPI, which in turn
has granted voting control over such shares to Mr. Poole.  Because Mr. Bradley
no longer has voting control over such shares of the Company's common stock, a
breach has occurred under the Securities Pledge Agreement.  Because the
Indenture is cross-covenanted to the Securities Pledge Agreement, such breach
creates a default under the Indenture.
 
     The Indenture provides that neither of the aforementioned defaults will
mature into an Event of Default subject to the remedies, including
acceleration of the Senior Notes, therein provided until the Trustee under the
Indenture or the holders of at least twenty-five percent (25%) of the Senior
Notes notify the Company of the default and the default remains unremedied for
thirty (30) days after said notice.  As of the date of this Annual Report on
Form 10-K, the Company had not received notice from either the Trustee or any
Senior Note holders.  In the event notice is received, the Company currently
has agreements in place that it believes would remedy each such default within
the 30 day remedy period should it become necessary.  However, there can be no
assurance that an Event of Default will not result from these defaults.

     In connection with the acquisition of the Reunion common stock, on June
20, 1995, the Company and Trustee agreed to a first supplemental indenture and
waiver of covenants of the Indenture under which the Senior Notes are issued. 
Pursuant to this supplemental indenture, the Company agreed to offer to
purchase $25.0 million of Senior Notes (representing 50% of the originally
issued principal amount of the Senior Notes) from Senior Notes holders on each
of June 1, 1999 and 2000 at an amount equal to 100% of the aggregate
outstanding principal amount thereof, plus unpaid interest to the purchase
date.  The Company has classified the maximum potential principal amount of
the first purchase offer as current maturities of long-term debt in its
consolidated balance sheet at December 31, 1998 included herein.  The
Company's failure to fulfill its obligations under this purchase offer would
constitute a failure to pay principal under the Indenture and result in an
Event of Default.  An Event of Default due to a failure to pay principal
would, pursuant to the Securities Pledge Agreement, result in a Realization
Event causing the immediate vesting in the Collateral Agent of the voting
rights of approximately 43% of the Company's common stock subject to the
pledge under the Securities Pledge Agreement, as well as the immediate vesting
of all rights to receive dividends and distributions with respect to the
pledged shares of common stock.  In addition, upon an Event of Default, the
Trustee or the holders of at least 25% of the Senior Notes may, by written
notice to the Company, declare an acceleration of the Senior Notes.  In the
event the possible merger with Reunion occurs, the Company intends to redeem
all of the Senior Notes.  Because there can be no assurances that the possible
merger and refinancing will occur, or that they will occur before the June 1,
1999 repurchase date, the Company has obtained a commitment from a national
financial institution that, pursuant to certain actions, it will fund the
Company's obligation to purchase Senior Notes, if any, on the June 1, 1999
purchase date should the Company's then available liquidity be insufficient to
do so.  As of the date of this report, no reasonable estimate exists as to the
amount of Senior Notes which the Company may be required to purchase, if any,
on the June 1, 1999 offer date.  Absent the refinancing contemplated by the 
<PAGE>
<PAGE>     34
possible merger with Reunion or the funding contemplated by the commitment,
there can be no assurances that a Realization Event or Event of Default will
not occur.

     At December 31, 1998, the Company had net operating loss carryforwards
for tax return reporting purposes of approximately $5.8 million, of which $1.4
million expires in 2008, $1.2 million expires in 2011 and $3.2 million expires
in 2018.  The availability of these carryforwards may be subject to
limitations imposed by the Internal Revenue Code.  A U.S. federal corporate
income tax return examination has been completed for the Company's 1995 tax
year.  The Company believes adequate provisions for income taxes have been
recorded for all years.

     SFAS 109 requires that deferred tax assets be reduced by a valuation
allowance if it is more likely than not that some portion or all of the
deferred tax assets will not be realized.  The Company periodically reviews
the adequacy of the valuation allowance as a result of changes in its
profitability and other factors.  Based on reviews during 1997, the Company
reduced the valuation allowance by $0.3 million in the first nine months of
1997.  The valuation allowance was not changed during 1998.

Operating Activities

     Operating activities used $3.1 million of cash during 1998, compared to
cash provided of $3.6 million in 1997, a decrease of $6.7 million.  Cash
generated from earnings before depreciation, amortization and equity in net
loss of affiliate was almost the same in 1998 and 1997.  A decrease of $0.7
million in cash used during 1998 compared to 1997 as the result of changes in
net working capital (defined as receivables, inventories and trade payables
for cash flow purposes) was more than offset by a use of cash of $6.1 million
from net changes in other assets and liabilities in 1998 compared to cash used
of $0.7 million in 1997.  The increase in cash used in 1998 from net changes
in other assets and liabilities in 1998 was the result of increases in prepaid
expenses and deferred taxes and reductions of liabilities, primarily at the
Company's headquarters.

     Operating activities provided $3.6 million of cash during 1997, compared
to cash provided of $3.5 million in 1996, an increase of $0.1 million.  An
increase in income before depreciation, amortization and provision for losses
on inventories of $2.6 million in 1997 compared to 1996 and a net increase in
cash provided of $2.7 million from changes in other assets and liabilities,
primarily from an increase in other current liabilities, were more than offset
by an increase of $5.2 million in cash used during 1997 compared to 1996 to
fund increases in net working capital (defined as receivables, inventories and
trade payables for cash flow purposes), primarily an increase in cash used of
$11.4 million to fund changes in receivables as a result of the increase in
sales volume only partially offset by an increase of $6.6 million in cash
provided from changes in trade payables.  The increase in other current
liabilities is primarily due to increases in certain accruals at corporate
headquarters and an increase in customer deposits at Hanna related to a supply
agreement with one of its customers.

Investing Activities

     Investing activities used $5.2 million of cash during 1998, compared to
cash used of $5.0 million during 1997, an increase in cash used of $0.2
million, primarily related to the Company's $0.1 million investment in a 
<PAGE>
<PAGE>     35
fiberglass grating joint venture in China.  See "Recent Developments -
Defaults Under Indenture."  Capital expenditures of approximately $5.0 million
in each of 1998 and 1997 were essentially equal.

     Investing activities used over $5.0 million of cash during 1997, compared
to cash used of $1.2 million during 1996, an increase in cash used of $3.8
million.  During 1996, the Company received $3.7 million in cash in repayment
of previous advances made to Oneida and made a $0.2 million investment in
Shanghai Klemp, none of which recurred in 1997.  Additionally, there was a
$0.3 million increase in capital expenditures, from $4.7 million in 1996 to
over $5.0 million during 1997.

Financing Activities

     Financing activities during 1998 provided $7.9 million in cash, compared
to $1.8 million of cash provided during 1997, an increase in cash provided of
$6.1 million.  This increase in cash provided is the result of an increase of
$7.9 million in the level of net borrowings under revolving credit
arrangements during 1998 compared to an increase of only $2.4 million in 1997. 
Additionally, repayments of related party indebtedness decreased $0.6 million. 
Borrowings, interest and fees under the Congress Facility were repaid and the
Congress Facility was terminated effective October 30, 1998.  See "Recent
Developments - New Credit Facility" and "Liquidity and Capital Resources -
General."

     Financing activities during 1997 provided $1.8 million in cash, compared
to $2.3 million of cash used from financing activities during 1996, an
increase in cash provided of $4.1 million.  This increase in cash provided is
primarily the result of an increase of $2.4 million in the level of net
borrowings under the Revolving Credit Facility during 1997 compared to an
increase of only $0.5 million in 1996, as well as a decrease of $2.1 million
in repayments to related parties, from $2.7 million in 1996 to $0.6 million in
1997.


FACTORS POTENTIALLY AFFECTING FUTURE LIQUIDITY

     The Company has $50 million of Senior Notes due May 3, 2003 outstanding
at December 31, 1998.  As recently announced by each of the Company and
Reunion, the Company and Reunion have reinstituted merger discussions as the
managements of the companies believe that additional identified financing
sources would provide adequate funds for operations of the combined companies,
including the redemption of the Senior Notes.  The possible merger of Chatwins
and Reunion is subject to, among other conditions, approval by the Boards of
Directors and stockholders of both companies.  If the companies reach mutually
agreeable terms for the merger, and other conditions are met, the merger could
occur during the second quarter of 1999.  There can be no assurances that the
possible merger will be agreed to, approved or consummated.

     When the Company acquired the 1,450,000 shares of Reunion common stock on
June 20, 1995, it contemporaneously agreed with the Trustee to a first
supplemental indenture and waiver of covenants of the Indenture under which
the Senior notes are issued.  Pursuant to this supplemental indenture and
waiver of covenants, the Company agreed to offer to purchase $25 million, or
half, of the outstanding Senior notes from Noteholders on each of June 1, 1999
and 2000 at par value plus unpaid interest to the purchase date.  The full
principal amount of the first purchase offer is classified as current 
<PAGE>
<PAGE>     36
maturities of long-term debt in the Company's consolidated balance sheet at
December 31, 1998.  The Company's failure to fulfill its obligations under
this purchase offer would constitute a failure to pay principal under the
Indenture and result in an Event of Default.  An Event of Default due to a
failure to pay principal would, pursuant to the Securities Pledge Agreement,
result in a Realization Event causing the immediate vesting in the Collateral
Agent of the voting rights of approximately 43% of the Company's common stock
subject to the pledge under the Securities Pledge Agreement, as well as the
immediate vesting of all rights to receive dividends and distributions with
respect to the pledged shares of common stock.  In addition, upon an Event of
Default, the Trustee or the holders of at least 25% of the Senior Notes may,
by written notice to the Company, declare an acceleration of the Senior Notes. 
In the event the possible merger with Reunion occurs, the Company intends to
redeem all of the Senior Notes.  Because there can be no assurances that the
possible merger and refinancing will occur, or that they will occur before the
June 1, 1999 repurchase date, the Company has obtained a commitment from a
national financial institution that, pursuant to certain actions, it will fund
the Company's obligation to purchase Senior Notes, if any, on the June 1, 1999
purchase date should the Company's then available liquidity be insufficient to
do so.  As of the date of this report, no reasonable estimate exists as to the
amount of Senior Notes which the Company may be required to purchase, if any,
on the June 1, 1999 offer date.  Absent the refinancing contemplated by the
possible merger with Reunion or the funding contemplated by the commitment,
there can be no assurances that a Realization Event or Event of Default will
not occur.


Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

     In conducting business, the Company has market risk exposures to foreign
currency exchange rates, interest rates and raw material prices.  See Item 1.
"Business - General Aspects Applicable to the Divisions."

Foreign Currency Exchange Rate Risk

     The Company manufactures its products in the United States (U.S.), Mexico
and China.  Of the Company's $191.6 million of consolidated net sales for
1998, $184.5 million (96%) were sales from the production of U.S. locations,
$4.7 million (3%) were from the Company's Mexican subsidiary, Klemp de Mexico,
and $2.4 million (1%) were from the Company's Chinese subsidiary, Shanghai
Klemp.  Products manufactured in the U.S. are primarily sold in the U.S. 
However, of the $184.5 million of net sales from domestic locations, $12.0
million were export sales to other countries.  Amounts and locations of such
sales are set forth in Item 1. "Business - General Aspects Applicable to the
Divisions."

     Export sales to foreign countries from the Company's U.S. locations are
denominated in U.S. dollars, the Company's reporting currency.  Accordingly,
transaction loss exposures due to fluctuations in the functional currencies of
the countries to which the Company's domestic locations export, which vary
significantly from year to year, are minimal.

     Sales of Klemp de Mexico and Shanghai Klemp are almost entirely within
the countries in which they are located and are denominated in each location's
functional currency; the peso in Mexico and the renminbi (RMB) in China. 
Accordingly, transaction loss exposure to the Company from fluctuations in
each location's functional currency are minimal.
<PAGE>
<PAGE>     37
     The Company's exposure to foreign currency rate fluctuations arise from
the translation effects on the Company's investments in its international
subsidiaries from potential fluctuations in each subsidiary's functional
currency.  At December 31, 1998, the Company had approximately $3.6 million
invested in Klemp de Mexico and approximately $1.9 million invested in
Shanghai Klemp.  The Company considers its investments in these international
subsidiaries to be long-term in nature.

     Effective January 1, 1997, Mexico's economy was classified as highly
inflationary as defined in SFAS 52 due primarily to the substantial inflation
in Mexico over 1995 and 1996, which was approximately 60% and 30%,
respectively.  During 1997, inflation in Mexico subsided substantially and the
peso devalued minimally; from 7.84 pesos/$1.00 at December 31, 1996 to 8.07
pesos/$1.00 at December 31, 1997.  However, during 1998, even though inflation
remained relatively stable, the peso devalued almost 25% against the U.S.
dollar; from 8.07 pesos/$1.00 at December 31, 1997 to almost 10.00 pesos/$1.00
at December 31, 1998.  This devaluation of the peso had a significant impact
on the Company's investment in Klemp de Mexico, resulting in translation
losses charged to earnings during 1998 of $150,000 and an increase in the
cumulative translation adjustment account in accumulated other comprehensive
losses in equity of $666,000.  On a sensitivity basis, additional devaluations
of the peso, if any, of the magnitude seen during 1998 can be expected to have
a similar impact on the future financial position and operating results,
including comprehensive earnings, of the Company.  Effective January 1, 1999,
Mexico emerged from highly inflationary status.  As such, future fluctuations
in the value of the peso against the U.S. dollar will be recorded as
adjustments to comprehensive earnings and the cumulative translation
adjustment account in equity.

     Impacts on the Company due to foreign currency rate fluctuations in China
have been insignificant.  Since establishing the joint venture, the RMB has
remained stable at approximately 8.3 RMB/$1.00.  However, fluctuations in the
RMB against the U.S. dollar could have a significant impact on the financial
position, operating results and comprehensive earnings of the Company,
primarily in the form of translation effects.  On a sensitivity basis, a 10%
devaluation in the value of the RMB at December 31, 1998 would be estimated by
the Company to have an approximate $200,000 negative impact on the cumulative
translation adjustment in equity.

     The Company's foreign subsidiaries are self-sustaining and operate almost
exclusively within the countries they are located.  Their cash flows are
devoted to and obligations paid by their own operations.  The Company does not
provide day-to-day operating funds to the foreign operations nor does the
Company guarantee any foreign indebtedness.

Interest Rate Risk

     The Company's exposure to interest rate risk arises primarily from
borrowing under the NationsBank Facility.  Interest under the NationsBank
Facility is determined by reference to various rates including the NationsBank
prime rate, the Federal Funds rate or LIBOR, each plus an applicable margin. 
The Company may elect the rates upon notification to NationsBank with
applicable margins ranging from zero to 0.5% when using either the NationsBank
prime rate or the Federal Funds rate and from 2.0% to 2.75% when using LIBOR. 
At December 31, 1998, the weighted average rate for borrowing under the
NationsBank Facility was 7.5% and borrowings outstanding totaled $34.0 
<PAGE>
<PAGE>     38
million.  All else remaining equal, on a sensitivity basis a 100 basis-point
increase in the borrowing rate would be estimated by the Company to have an
approximate $340,000 increase in annual interest expense.

     The Company does not hedge against interest rate fluctuations using
derivative financial instruments.


Item 8.   Financial Statements and Supplementary Data.
          --------------------------------------------

          The Company's consolidated financial statements are set forth
          beginning on page F-1.


Item 9.   Changes in and Disagreements With Accountants 
          ---------------------------------------------
            on Accounting and Financial Disclosures.
            ----------------------------------------

          None.


                                   PART III

Item 10.  Directors and Executive Officers of the Registrant.
          ---------------------------------------------------

     The following sets forth the names and ages of the Company's directors
and executive officers and certain executive officers of its operating
divisions and the positions they hold.

Name                   Age  Position
----                   ---  --------
Charles E. Bradley      69  Chairman of the Board and Director
Joseph C. Lawyer        53  President, Chief Executive Officer and Director
John G. Poole           56  Director
Charles E. Bradley, Jr. 39  Director
Kimball J. Bradley      33  Senior Vice President
John M. Froehlich       56  Vice President, Chief Financial Officer 
                              and Treasurer
Russell S. Carolus      48  Vice President and Secretary
Jack T. Croushore       53  Vice President and Division President - CPI
Christopher Sause       49  Vice President and Division President - Alliance
Alan S. Wippman         56  Vice President and Division President - Steelcraft
Robert L. Rakstang      52  Vice President and Division President - Hanna
Tony Stewart            47  Division President - Auto-Lok
Alan J. Konieczka       32  Division President - Klemp
Thomas J. Vogel         48  Division President - Europa

     CHARLES E. BRADLEY has been a Director of the Company since shortly after
its acquisition by SPI, a company engaged in consulting services within the
field of financial planning and reporting, in 1986 and Chairman of the Board
since 1988.  Mr. Bradley is the father of Charles E. Bradley, Jr. and Kimball
J. Bradley.  Mr. Bradley was a co-founder of SPI in 1982 and has served as its
President since that time.  Mr. Bradley is a director of DeVlieg-Bullard, Inc.
(DBI), a machine tools parts and services company, General Housewares Corp., a
<PAGE>
<PAGE>     39
manufacturer and distributor of housewares, Consumer Portfolio Services, Inc.
(CPS), engaged in the business of purchasing, selling and servicing retail
automobile installment sales contracts, Zydeco Energy, Inc., engaged in oil
and gas exploration and development, NAB Asset Corporation (NAB), a
diversified financial services holding company, and Audits and Surveys
Worldwide, Inc., an international marketing research firm.  Mr. Bradley is
currently the Chairman of the Board of DBI, and President and acting Chief
Financial Officer and a director of Sanitas, Inc. and Texon Energy Corporation
(Texon), both currently inactive companies.  Mr. Bradley has been a director
of Reunion since June 20, 1995 and was appointed Reunion's President and Chief
Financial Officer on October 26, 1995.

     JOSEPH C. LAWYER has been President, Chief Executive Officer and a
director of the Company since 1988.  Prior to purchasing CP Industries, Inc.,
the corporate predecessor of the Company's CPI division, with SPI in 1986, Mr.
Lawyer was General Manager of USX's Specialty Steel Products division, where
he was employed for over 17 years.  Mr. Lawyer has been a director of
Respironics, Inc., a company engaged in design, manufacture and sale of home
and hospital respiratory medical products, since November 16, 1994.

     KIMBALL J. BRADLEY has been a Senior Vice President of the Company since
August 1998 and a Vice President since January 1996.  Until August 1998, Mr.
Bradley was Division President of Auto-Lok beginning in November 1995 after
having served as acting President of Auto-Lok beginning in August 1995.  Prior
to assuming that position, Mr. Bradley managed various special projects at the
Company's corporate office beginning in November 1993 and at CPI from February
1993 to November 1993.  Mr. Bradley was employed by Metalsource, a company
engaged in the steel service center business, from 1990 to 1993, completing
the executive training program and holding various sales and purchasing
positions.  Mr. Bradley is the son of Charles E. Bradley, Sr. and the brother
of Charles E. Bradley, Jr.

     JOHN G. POOLE has been a director of the Company since 1988.  Mr. Poole
was a co-founder of SPI in 1982 and has served as its Vice President since
that time.  Mr. Poole is a director of Reunion, DBI, CPS and Sanitas, Inc. 
Mr. Poole has also been a Vice Chairman of CPS since January 1996.

     CHARLES E. BRADLEY, JR. was elected a director of the Company on
September 22, 1993.  Mr. Bradley has been the President and a director of CPS
since CPS' formation in March 1991.  In January 1992, Mr. Bradley was
appointed to the additional office of Chief Executive Officer of CPS.  From
January 1991 through March 1992, Mr. Bradley also was an employee of SPI. 
From April 1989 to November 1990, he served as Chief Operating Officer of
Barnard and Company, a private investment firm.  Mr. Bradley is the son of
Charles E. Bradley and the brother of Kimball J. Bradley.  Mr. Bradley is also
a director of NAB, Texon and Thomas Nix Distributor, Inc.

     JOHN M. FROEHLICH has been a Vice President of the Company since 1989 and
its Chief Financial Officer and Treasurer since 1988.  Mr. Froehlich was
Assistant Treasurer and Director of Accounting for Incom International, Inc.
from 1975 to 1988.

     RUSSELL S. CAROLUS has been a Vice President of the Company since 1989
and its Secretary since 1988.  Mr. Carolus was Director of Business
Development and Acquisitions for CP Industries, Inc. from 1986 to 1988.

     JACK T. CROUSHORE has been a Vice President of the Company since 1989 and
<PAGE>
<PAGE>     40
Division President of CPI since 1988.  Mr. Croushore was Executive Vice
President and Chief Operating Officer of CP Industries, Inc. and its
predecessor division of USX Corporation from 1984 to 1988.

     CHRISTOPHER SAUSE has been a Vice President of the Company since 1990 and
Division President of Alliance since 1989.  Mr. Sause was President and Chief
Operating Officer and co-owner of The Alliance Machine Company prior to its
acquisition by the Company in 1989.  Prior to joining The Alliance Machine
Company in 1987, Mr. Sause was employed by the Fordees Corporation, where he
served as head of Production Control, Plant Superintendent and Vice President
of Sales and Manufacturing.

     ALAN S. WIPPMAN has been Division President of Steelcraft since 1986 and
a Vice President of the Company since 1988.  Mr. Wippman has been with
Steelcraft for over 20 years.

     ROBERT L. RAKSTANG has been a Vice President of the Company since January
1995 and Division President of Hanna since 1991.  In the course of his more
than 20 years with Hanna, he has served as Production Manager, Materials
Manager, Vice President of Sales and Marketing and Vice President of
Operations.

     TONY STEWART has been Division President of Auto-Lok since May 1998,
sharing that position with Kimball Bradley during Mr. Bradley's transition to
the Company's headquarters.  Mr. Stewart held several management positions
with the Kingston-Warren Corporation after joining it in 1981, including Vice
President and General Manager of its King-Way Material Handling division,
Senior Vice President of Kingston-Warren Corporation and President of Harvard
Interiors division of Harvard Industries.

     ALAN J. KONIECZKA had been Acting Division President of Klemp since
August 1998 and, since January 1999, its Division President.  Since joining
the Company's Klemp division in January 1996, Mr. Konieczka also has held the
positions of General Manager, Venture Group and Manager, Special Projects. 
Prior to joining Klemp, Mr. Konieczka was Director of Manufacturing for
Dynacircuits Manufacturing, Inc.

     THOMAS J. VOGEL has been Division President of Europa since 1991.  Mr.
Vogel has also been the Manager of Administration, Risk Management, Benefits
and Human Resources and Environmental Compliance for the Company since 1988.

     The directors of the Company are elected to serve until their respective
successors have been elected and qualified or until their earlier death,
resignation or removal in the manner specified by the Company's by-laws.  The
officers of the Company are elected to hold their respective offices until the
first meeting of the Board of Directors after the next annual meeting of the
Company's stockholders and until their respective successors have been
elected, or until their earlier death, resignation or removal in the manner
specified by the Company's by-laws.
<PAGE>
<PAGE>     41
Item 11.  Executive Compensation.
          -----------------------
     The following table sets forth a summary of the compensation paid or
accrued by the Company in the fiscal years ended December 31, 1998, 1997 and
1996 to its Chief Executive Officer and its four other most highly compensated
executive officers (collectively, the "Named Executive Officers") (in whole
dollars, including notes hereto):
                                             Year Ended December 31,
                                           1998        1997        1996
                                         --------    --------    --------
  Joseph C. Lawyer, President and Chief
    Executive Officer and Director:
Annual compensation - salary             $427,316    $388,404    $354,144
Annual compensation - bonus                65,000      65,000           -
All other compensation                     75,363(1)   52,777(1)   52,277(1)

  Jack T. Croushore, Vice President and
    Division President - CPI:
Annual compensation - salary             $182,965    $164,616    $162,720
Annual compensation - bonus               100,000     205,000     187,890
All other compensation                     13,690(2)   13,409(2)   12,990(2)

  Robert L. Rakstang, Vice President and
    Division President - Hanna:
Annual compensation - salary             $155,486    $145,320    $139,728
Annual compensation - bonus               100,000      97,215           -
All other compensation                     12,725(3)   12,016(3)   11,736(3)

  John M. Froehlich, Vice President, Chief
    Financial Officer and Treasurer:
Annual compensation - salary             $145,184    $138,276    $132,960
Annual compensation - bonus                50,000      52,266      20,043
All other compensation                     12,210(4)   11,664(4)   11,398(4)

  Christopher Sause, Vice President and
    Division President - Alliance:
Annual compensation - salary             $170,576    $154,454    $154,104
Annual compensation - bonus                     -      87,754           -
All other compensation                     15,810(5)   12,333(5)   15,110(5)

(1)  Includes 401(k) matching payments of $4,950, $4,750 and $4,750 in 1998,
1997 and 1996, respectively; premiums paid by the Company for life insurance
for the benefit of the employee of $62,413 in 1998 and $40,027 in each of 1997
and 1996, respectively; and payments under the Chatwins Group, Inc. Money
Purchase Pension Plan of $8,000 in each of 1998 and 1997 and $7,500 in 1996. 
Regarding the premiums paid by the Company for life insurance, the employee
has agreed with the Company that if the policy proceeds are insufficient to
reimburse the Company for the full amount of premiums paid, the employee will
pay the shortfall to the Company.  The policy has a face value of $1.5
million.  See "Executive Compensation - Executive Employment Agreements."

(2)  Includes 401(k) matching payments of $4,950, 4,750 and $4,750 in 1998,
1997 and 1996, respectively; premiums paid by the Company for life insurance
for the benefit of the employee of $740, $740 and $740 in 1998, 1997 and 1996,
respectively; and payments under the Chatwins Group, Inc. Money Purchase
Pension Plan of $8,000 in each of 1998, 1997 and 1996.
<PAGE>
<PAGE>     42
(3)  Includes 401(k) matching payments of $4,950, 4,750 and $4,750 in 1998,
1997 and 1996, respectively; and payments under the Chatwins Group, Inc. Money
Purchase Pension Plan of $7,775, $7,266 and $6,986 in 1998, 1997 and 1996,
respectively.

(4)  Includes 401(k) matching payments of $4,950, $4,750 and $4,750 in 1998,
1997 and 1996, respectively; and payments under the Chatwins Group, Inc. Money
Purchase Pension Plan of $7,260, $6,914 and $6,648 in 1998, 1997 and 1996,
respectively.

(5)  Includes 401(k) matching payments of $4,950, $4,750 and $4,750 in 1998,
1997 and 1996, respectively; premiums paid by the Company for life insurance
for the benefit of the employee of $2,860, $2,860 and $2,860 in 1998, 1997 and
1996, respectively and payments under the Chatwins Group, Inc. Money Purchase
Pension Plan of $8,000, $7,723 and $7,500 in 1998, 1997 and 1996,
respectively.


Executive Employment Agreements

     The Company entered into an Employment Agreement, dated as of August 1,
1996 (Lawyer Employment Agreement), with Joseph C. Lawyer to serve as
President and Chief Executive Officer of the Company.  The Lawyer Employment
Agreement is scheduled to expire on July 31, 1999 but automatically renews
annually thereafter if not previously renegotiated.  The Lawyer Employment
Agreement replaced an earlier agreement between Mr. Lawyer and the Company
that expired on July 31, 1996.  Pursuant to the Lawyer Employment Agreement,
Mr. Lawyer receives (i) an annual base salary, which was established at
$354,144 for 1996, $388,404 for 1997 and $427,316 for 1998, (ii) an annual
bonus of up to 65% of his base salary based on the Company's performance
relative to its annual projections, (iii) a $600 per month automobile
allowance, (iv) two club memberships, (v) a $1.0 million life insurance policy
and a $1.5 million split-dollar life insurance policy, and (vi) coverage under
the Company's other fringe benefit plans for executive officers.  The annual
base salary for 1999 was determined by the Board of Directors.  In the event
that the Lawyer Employment Agreement is terminated due to Mr. Lawyer's death
or disability, the Company will continue to pay the base salary for not less
than a one year period.  In the event that the Company otherwise terminates
the Lawyer Employment Agreement without cause or in the event that Mr. Lawyer
resigns with good reason or following a change of control approved by the
Company's Board of Directors and stockholders (other than a change of control
resulting from a foreclosure or bankruptcy of one or more stockholders of the
Company or the threat of such an action), Mr. Lawyer will be entitled to
receive his base salary (subject to a dollar-for-dollar reduction for any
salary received from other employment), health coverage and life insurance
coverage for one and one-half years or for the balance of the term of the
Lawyer Employment Agreement, whichever is greater.


Long Term Incentive Plan

     The Company's Long Term Incentive Plan (LTIP), created on June 29, 1994,
was terminated on March 5, 1999.  As of December 31, 1998, incentive units
issued under the plan during its existence totaled 86 and were granted certain
executives of the Company, including 49 to the Named Executive Officers.  At
December 31, 1998, such units had no value.
<PAGE>
<PAGE>     43
Compensation of Directors

     Charles E. Bradley is entitled to receive a stipend as Chairman of the
Board at a rate of $100,000 per year.  The Company paid Mr. Bradley's $100,000
stipend in 1998.  As of June 29, 1994, the Company and Mr. Bradley agreed to a
split dollar life insurance arrangement (Bradley Arrangement).  Pursuant to
the Bradley Arrangement, the Company agreed to maintain three universal type
life policies on Mr. Bradley and his wife.  The Company will be reimbursed for
the premiums it pays for such policies from either the death benefit of the
policies or their cash surrender value.  Mr. Bradley has agreed with the
Company that if the policy proceeds are insufficient to reimburse the Company
for the full amount of premiums paid, Mr. Bradley will pay the shortfall to
the Company.  The annual premiums paid by the Company totaled $355,375 in
1998.

     John G. Poole is entitled to receive a stipend as a director and liaison
with investment banks of $42,000 per year.  The Company paid Mr. Poole's
$42,000 stipend in 1998.  As of December 12, 1995, the Company and Mr. Poole
agreed to a split dollar life insurance arrangement (Poole Arrangement). 
Pursuant to the Poole Arrangement, the Company agreed to maintain two
universal type life policies on Mr. Poole.  The Company will be reimbursed for
the premiums it pays for such policies from either the death benefit of the
policies or their cash surrender value.  Mr. Poole has agreed with the Company
that if the policy proceeds are insufficient to reimburse the Company for the
full amount of premiums paid, Mr. Poole will pay the shortfall to the Company. 
The annual premiums paid by the Company totaled $116,453 in 1998.


Compensation Committee Interlocks and Insider Participation

     In January of 1994 through 1999, Charles E. Bradley, Sr., Chairman of the
Board and a director of the Company, and Joseph C. Lawyer, President, Chief
Executive Officer and a director of the Company, participated in deliberations
of the Company's Board of Directors concerning executive officer compensation
for 1994 through 1999.  No other officer or employee of the Company
participated in such deliberations regarding executive officer compensation
for these years.

     See "Certain Relationships and Related Transactions" for a discussion of
Mr. Bradley's relationship to Reunion, the Company's investment in Reunion,
and the transactions which transpired between the Company and Reunion during
1995, 1996, 1997 and 1998.


Item 12.  Security Ownership of Certain Beneficial Owners and Management.
          ---------------------------------------------------------------

     As of March 1, 1999, the Company had (i) 289,677.4 shares of Common Stock
outstanding, (ii) 2,249.0 shares of Class D Series A Preferred Stock, par
value $.01 per share outstanding, (iii) 800.0 shares of Class D Series B
Preferred Stock, par value $.01 per share outstanding and (iv) 1,510.0 shares
of Class D Series C Preferred Stock, par value $.01 per share (the preferred
stock described in clauses (ii)-(iv) being herein referred to as the
"Preferred Stock").  The following table sets forth information, as of March
1, 1999, as to the beneficial and percentage ownership of each class of the
Company's capital stock by (i) each person owning beneficially more than five
percent of the outstanding shares of each class of the Company's outstanding 
<PAGE>
<PAGE>     44
capital stock, (ii) each director and Named Executive Officer of the Company
and (iii) all directors and officers of the Company as a group.  Except as
otherwise indicated in the notes to the following table, each stockholder has
sole voting and investment power with respect to the shares shown to be
beneficially owned by such stockholder.

                                               Preferred Stock - Class D
                                             ------------------------------
                           Common Stock      Series A   Series B   Series C
                           ------------      --------   --------   --------
Charles E. Bradley, Sr.     140,946.6(1)     2,249.0(2)   800.0(2)  1,510.0(3)
c/o Stanwich Partners, Inc. =========        =======     ======     =======
One Stamford Landing            48.3%         100.0%     100.0%      100.0%
62 Southfield Ave.          =========        =======     ======     =======
Stamford CT  06902
---------------------------------------------------------------------------
John G. Poole               195,003.6(1)(4)  2,249.0(2)   800.0(2)  1,510.0(3)
c/o Stanwich Partners, Inc. =========        =======     ======     =======
One Stamford Landing            67.3%         100.0%     100.0%      100.0%
62 Southfield Ave.          =========        =======     ======     =======
Stamford CT  06902
---------------------------------------------------------------------------
Stanwich Partners, Inc.     138,946.6(1)           -          -           -
One Stamford Landing        =========        =======     ======     =======
62 Southfield Ave.              48.0%              -          -           -
Stamford CT  06902          =========        =======     ======     =======
---------------------------------------------------------------------------
Cede & Co.                   46,790.0              -          -           -
55 Water Street             =========        =======     ======     =======
New York NY  10041              16.2%              -          -           -
                            =========        =======     ======     =======
---------------------------------------------------------------------------
Kimball J. Bradley           24,000.0              -          -           -
c/o Stanwich Partners, Inc. =========        =======     ======     =======
One Stamford Landing             8.3%              -          -           -
62 Southfield Ave.          =========        =======     ======     =======
Stamford CT  06902
---------------------------------------------------------------------------
Joseph C. Lawyer             18,094.0              -          -           -
c/o Chatwins Group, Inc.    =========        =======     ======     =======
300 Weyman Plaza, Suite 340      6.2%              -          -           -
Pittsburgh PA  15236        =========        =======     ======     =======
---------------------------------------------------------------------------
Jack T. Croushore             4,065.4              -          -           -
c/o Chatwins Group, Inc.    =========        =======     ======     =======
300 Weyman Plaza, Suite 340      1.4%              -          -           -
Pittsburgh PA  15236        =========        =======     ======     =======
---------------------------------------------------------------------------
John M. Froehlich                30.0              -          -           -
c/o Chatwins Group, Inc.    =========        =======     ======     =======
300 Weyman Plaza, Suite 340      -  %              -          -           -
Pittsburgh PA  15236        =========        =======     ======     =======
---------------------------------------------------------------------------
All directors               243,193.0        2,249.0      800.0     1,510.0
  and officers              =========        =======     ======     =======
  as a group                    83.3%         100.0%     100.0%      100.0%
                            =========        =======     ======     =======
<PAGE>
<PAGE>     45
(1)  Pursuant to the Securities Pledge Agreement, dated as of May 1, 1993
(Securities Pledge Agreement), Mr. Bradley pledged 127,799 shares of Common
Stock to the Collateral Agent (as defined therein) for the benefit of the
holders of the Senior Notes and Mr. Poole pledged 17,040 shares of Common
Stock to secure the Company's obligations under the Indenture and the Senior
Notes.  In May of 1998, Mr. Bradley transferred 138,946.6 of his shares of the
Company's common stock to the Charles E. Bradley, Sr. Family Limited
Partnership (Bradley FLP) for estate planning purposes.  The Bradley FLP has
granted voting control over such shares to SPI, which in turn has granted
voting control over such shares to Mr. Poole.  Because Mr. Bradley no longer
has voting control over such shares of the Company's common stock, a breach
has occurred under the Securities Pledge Agreement (as defined in the
Indenture).  Because the Indenture is cross-covenanted to the Securities
Pledge Agreement, such breach creates a default under the Indenture.  The
Indenture provides the aforementioned default will not mature into an Event of
Default, as defined in the Indenture, subject to the remedies therein
provided, including acceleration of the Senior Notes, until the Trustee under
the Indenture or the holders of at least 25% or more of the Senior Notes
notify the Company of the default and the default remains unremedied for
thirty (30) days after such notice.  As of the date of this report, the
Company had not received notice from either the Trustee or any Senior Note
holders.  In the event notice is received, the Company currently has an
agreement in place that it believes would remedy each such default within the
30 day remedy period should it become necessary.  However, there can be no
assurance that an Event of Default will not result from this default.  

(2)  Held of record by KSB Acquisition Corp., the former owner of the
corporate predecessor-in-interest to the Klemp and Steelcraft divisions of the
Company, of which Messrs. Bradley and Poole are the sole executive officers
and directors.  Pursuant to Rule 13d-3, Messrs. Bradley and Poole would be
deemed to be the beneficial owners of these shares, with shared voting and
dispositive power with respect thereto.

(3)  Held of record by Hanna Investment Corp., the former owner of the
corporate predecessor-in-interest to the Hanna division of the Company, of
which Messrs. Bradley and Poole are the sole executive officers and Mr. Poole
is the sole director.  Pursuant to Rule 13d-3, Messrs. Bradley and Poole would
be deemed to be the beneficial owners of these shares, with shared voting and
dispositive power with respect thereto.

(4)  Includes 44,599.2 shares held by John Grier Poole Family Limited
Partnership, established by Mr. Poole in 1995 for estate planning purposes,
and of which Mr. Poole owns 1% and is the sole general partner.  Pursuant to
Rule 13d-3, Mr. Poole would be deemed to be the beneficial owner of these
shares, with sole voting and dispositive power with respect thereto.  Also
includes 150,404.4 shares as to which Mr. Poole has voting rights, but no
dispositive rights.  Pursuant to Rule 13d-3, Mr. Poole would be deemed to be
the beneficial owner of these shares, with sole voting power with respect
thereto.  See note (1) above.


Item 13.  Certain Relationships and Related Transactions.
          -----------------------------------------------

General

     Since the issuance of the Senior Notes, all transactions between the 
<PAGE>
<PAGE>     46
Company and its affiliated entities, executive officers, directors or
stockholders have been on terms which are no less favorable to the Company
than the Company could obtain from non-affiliated parties as required by the
terms of the Indenture and the Financing Agreement.

Ownership of Senior Notes by Management

     As of December 31, 1998, certain of the Company's executive officers and
directors own Senior Notes of the Company, which were purchased in open market
transactions, as shown in the following table.

             Name                                  Principal Amount
             ----                                  ----------------
      Charles E. Bradley..............................$2,000,000
      John M. Froehlich...................................55,000
      Joseph C. Lawyer....................................60,000
      John G. Poole....................................2,000,000
      Alan S. Wippman.....................................25,000


SPI Consulting Agreement

     The Company has entered into a consulting agreement with SPI, dated and
effective as of March 31, 1993, as amended (as amended, the "Consulting
Agreement").  Messrs. Bradley and Poole are the principals of SPI.  Under the
Consulting Agreement, the Company retains SPI to render consulting services
within the field of financial planning and reporting.  The Consulting
Agreement was to expire on March 31, 1998, but has been extended for an
additional five-year period to expire on March 31, 2003 unless terminated
earlier by SPI on 30 days' notice.  The Consulting Agreement provides for the
payment of an annual consulting fee to SPI of $300,000, and the reimbursement
of any reasonable and necessary out-of-pocket expenses incurred by SPI in
connection with its performance under the Consulting Agreement.  The
Consulting Agreement provides that SPI's right to receive consulting fees is
subordinated to the right of the holders of the Senior Notes to receive
payments of principal and interest on the Senior Notes.

     Consulting fees expensed by the Company to SPI were $300,000 in 1998 in
accordance with the Consulting Agreement.  All consulting fees owed to SPI by
the Company under the Consulting Agreement were paid in full at December 31,
1998.

Oneida Insurances

     Since its sale to Reunion by the Company in September 1995, Oneida has
continued to obtain its property, casualty, and product and general liability
insurance coverage through the Company.  The rate was $24,600 per month for
the first seven months of 1998 and $23,500 per month for the remainder of the
year, which represented the cost of such insurance to the Company.

Rostone and CGII

     The Company owns 49% of CGII, which owned 100% of the outstanding
preferred stock and fully diluted common stock of Rostone.  Rostone compounds
and molds thermoplastic polyester resin (bulk and sheet molding compound)
primarily for the electrical distribution market and business machine market.
<PAGE>
<PAGE>     47
     On December 22, 1995, Rostone and Oneida entered into a merger agreement
whereby Rostone was subsequently merged into Oneida, the Company's former
plastics division which was sold to Reunion in September 1995, and, as the
surviving corporation, Oneida's name was changed to Oneida Rostone Corp.
(ORC).  In the merger, ORC acquired from CGII all of the issued and
outstanding preferred and common stock of Rostone.  The merger agreement
provided for the payment of deferred merger proceeds of up to $4.0 million
($2.0 million in 1997 and $2.0 million in 1998) to CGII contingent upon
Rostone's achieving specified levels of earnings before interest and taxes in
1996 and 1997.  Rostone did not achieve the level of earnings before interest
and taxes in either 1996 or 1997 as specified in the merger agreement for the
payment of deferred merger proceeds in 1997 or 1998.  As such, CGII will not
receive any merger proceeds pursuant to the merger agreement.

     The Company made three loans to CGII; $1.5 million in December 1990,
$1.35 million in December 1993 and $0.3 million in February 1994.  Rostone's
preferred stock was previously pledged by CGII to the Company to secure the
Company's December 1993 loan of $1.35 million.  As such, any merger proceeds
were to be paid to the Company until the debt and related interest was paid in
full.  Over time, the Company had provided reserves for a substantial portion
of the principal on its notes receivable from CGII and at December 31, 1997,
the net carrying value of the Company's investment in CGII common stock and
net notes receivable was $0.6 million.

     CGII's primary assets remaining after the sale of Rostone were two notes
receivable, one of which was from Rostone, and a minimal amount of cash, the
sum of which totaled $0.7 million at December 31, 1997.  During 1998, the
Company and CGII agreed that CGII's liabilities significantly exceeded its
assets and it would not be able to repay its obligations to the Company.  As a
result, the Company agreed to exchanged its notes receivable from CGII for
CGII's note receivable from Rostone which, plus accrued interest, totaled $0.5
million at December 31, 1998.

Stockholder Notes

     In January 1988, Mr. Bradley, Mr. Poole and two former stockholders of
the Company subscribed for preferred stock in the Company in consideration of
their payment of an aggregate of $57,500 in cash and their personal interest
free demand notes, dated January 15, 1988, payable to the Company in the
aggregate principal amount of $1,092,500 (Stockholder Notes).  The class of
preferred stock acquired by them was converted into Common Stock in connection
with the May 1988 merger that combined most of the Company's business lines as
divisions of the Company.  At the time the Stockholder Notes were executed,
the Company and Messrs. Bradley and Poole and such other former stockholders
had an unwritten understanding that payment on the Stockholder Notes would not
be demanded until such time as the Company was sold or funds for the repayment
of the Stockholder Notes were distributed to them as dividends on their shares
of Common Stock.

     At the time of the May 1988 merger, Messrs. Bradley, Poole and one of the
former stockholders granted the Company the option to acquire from them an
aggregate of 9,175.5 shares of Common Stock at their original cost of $10 per
share, as follows: Mr. Bradley granted the Company an option to purchase
6,422.85 shares; Mr. Poole granted the Company an option to purchase 2,064.49
shares; and the former stockholder granted the Company an option to purchase
688.16 shares.  As part of the December 1990 refinancing, the Company 
<PAGE>
<PAGE>     48
exercised its option in full and paid for said shares by reducing the amounts
due under the respective Stockholder Notes to the amounts currently
outstanding as set forth below.

     In September 1993, the Company purchased all the shares of Common Stock
owned by the obligors of the Stockholders Notes other than Messrs. Bradley and
Poole.  In connection with the Company's purchase of such shares, Messrs.
Bradley and Poole assumed the obligations of such former stockholders under
their respective Stockholder Notes.  The amount outstanding at December 31,
1998 under (i) Mr. Bradley's Stockholder Note was $643,166, (ii) Mr. Poole's
Stockholder Note was $206,704, and (iii) the two other Stockholder Notes
assumed by Messrs. Bradley and Poole was $150,874.

King-Way Service Agreement

     On November 3, 1997, SAC acquired King-Way from the Kingston-Warren
Corporation for a purchase price of $18.1 million.  SAC is a privately-held
company whose common stock is owned 42.5% by Mr. Bradley, 42.5% by Mr. K.J.
Bradley and 15% by Mr. Evans.  Similar to Auto-Lok, King-way is in the
business of producing industrial and commercial storage racks and materials
handling systems.

     SAC and Auto-Lok entered into a service agreement pursuant to which King-
Way would utilize Auto-Lok's surplus capacity in exchange for fees
approximately equal to Auto-Lok's costs of providing the surplus capacity plus
a right of first negotiation to acquire King-Way from SAC.  This right of
first negotiation has since expired.  The integration of King-Way's business
into Auto-Lok's facility took place primarily during the second quarter of
1998.  Through December 31, 1998, costs totaling $1,298,631 had been charged
to King-Way under this agreement.  At December 31, 1998, the Company had
receivables totaling $780,000 from King-Way.

NAPTech Services Agreement

     In August 1998, the CPI division of the Company and NPS Acquisition Corp.
(NPSAC), doing business as NAPTech Pressure Systems (NAPTech), entered into a
services agreement pursuant to which CPI would provide certain administrative
services to NAPTech for cash fees which approximate $29,000 per month. 
NAPTech is wholly owned by Mr. Bradley and manufactures steel seamless
pressure vessels.  The NAPTech services agreement is for one year and may be
renewed annually upon agreement by both the Company and NAPTech.  At December
31, 1998, the Company had receivables totaling $148,000 from NAPTech.  On
August 25, 1998 the Company purchased from NAPTech $1.0 million of inventory
usable by its CPI division in its normal course of business.

CPS Leasing

     During 1997 and 1998, the Company entered into various operating lease
agreements with CPS Leasing, Inc. (CPSL), a company owned 80% by Consumer
Portfolio Services and 20% by Charles E. Bradley Jr., President of Consumer
Portfolio Services, a director of the Company and son of Charles E. Bradley
Sr., Chairman of the Board, Director and a beneficial shareholder of the
Company.  During 1997 and 1998, the Company made lease payments totaling
$39,112 and $209,989 to CPSL, respectively.
<PAGE>
<PAGE>     49
Robinson Incorporated

     During 1998, the Company's Europa division sold its interest in a West
Virginia well to and collected other fees from Robinson Incorporated
(Robinson) for a total of $100,000 in cash.  Robinson is an oil and gas
company operating in Oklahoma and is controlled by several members of the
Company's executive management and board of directors.


                                   PART IV


Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.
          ----------------------------------------------------------------
          (a)  Documents included in this report:

               The financial statements and financial statement schedules,
               listed below, are included in this Annual Report on Form 10-K
               as part of Part II, Item 8, and are incorporated by reference 
               herein:

               1.  Financial Statements (pages F-1 through F-32)
               Report of Independent Accountants
               Consolidated Balance Sheet as of December 31, 1998 and 1997
               Consolidated Statement of Income for the years 
                 ended December 31, 1998, 1997 and 1996
               Consolidated Statement of Cash Flows for the years 
                 ended December 31, 1998, 1997 and 1996
               Notes to Consolidated Financial Statements

               2.  Financial Statement Schedules (Page S-1)
               Schedule II - Valuation and Qualifying Accounts and Reserves

               Other schedules have been omitted because they are either 
               not required, not applicable, or the information required 
               to be presented is included in the Company's financial 
               statements and related noted thereto.

               3.  Exhibits
               See pages E-1 through E-18 for a listing of exhibits filed 
               with this report or incorporated by reference herein.

          (b)  Current reports on Form 8-K

               None filed during 1998.
<PAGE>
<PAGE>     50
                               SIGNATURES

     Pursuant to the requirements Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual Report on
Form 10-K to be signed on its behalf by the undersigned, thereunto duly
authorized, on this 26th day of March, 1999.

                                                CHATWINS GROUP, INC.


                                                By: /s/ 
                                                   ----------------------
                                                      Joseph C. Lawyer
                                                     President and Chief
                                                      Executive Officer



     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Annual Report on Form 10-K has been signed by the following persons in the
capacities and on this 26th day of March, 1999.

Signature                                           Title
---------                                           -----

/s/                                   Chairman of the Board and Director
---------------------------
    Charles E. Bradley, Sr.


/s/                                   President, Chief Executive Officer
---------------------------           and Director
    Joseph C. Lawyer


/s/                                   Director
---------------------------
    John G. Poole


/s/                                   Director
---------------------------
    Charles E. Bradley, Jr.


/s/                                   Vice President, Chief Financial Officer
---------------------------           and Treasurer (chief financial and
    John M. Froehlich                 accounting officer)
<PAGE>
<PAGE>     F-1
                        INDEX TO FINANCIAL STATEMENTS
                                                                      Page No.
                                                                      --------
Chatwins Group, Inc.:
---------------------
Report of Independent Accountants                                       F-1

Consolidated Balance Sheet as of December 31, 1998 and 1997             F-2

Consolidated Statement of Income for the years 
  ended December 31, 1998, 1997 and 1996                                F-3

Consolidated Statement of Cash Flows for the years 
  ended December 31, 1998, 1997 and 1996                                F-4

Notes to Consolidated Financial Statements                              F-5




                      REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
and Stockholders of
Chatwins Group, Inc.

In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income and comprehensive income and of cash flows,
present fairly, in all material respects, the financial position of Chatwins
Group, Inc. and its subsidiaries (Chatwins) at December 31, 1998 and 1997, and
the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1998, in conformity with generally
accepted accounting principles.  These financial statements are the
responsibility of Chatwins' management; our responsibility is to express an
opinion on these financial statements based on our audits.  We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement.  An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation.  We believe that
our audits provide a reasonable basis for the opinion expressed above.




PricewaterhouseCoopers LLP

Pittsburgh, Pennsylvania
March 26, 1999
<PAGE>
<PAGE>     F-2
                             CHATWINS GROUP, INC.
                          CONSOLIDATED BALANCE SHEET
                                (in thousands)

                                                        At December 31,
                                                   1998                1997
                                                 --------            --------
     ASSETS:
Cash and equivalents                             $    341            $    734
Receivables, net                                   38,340              34,246
Inventories (note 3)                               20,746              16,964
Other current assets                                4,734               4,687
                                                 --------            --------
     Total current assets                          64,161              56,631
Property, plant and equipment, net (note 4)        32,371              31,380
Investments (note 5)                                6,807              11,413
Due from related parties (note 14)                  1,403                 600
Goodwill, net (note 1)                              4,505               4,764
Other assets, net (note 6)                          8,119               6,481
                                                 --------            --------
Total assets                                     $117,366            $111,269
                                                 ========            ========

     LIABILITIES AND STOCKHOLDERS' EQUITY:
Revolving credit facility (note 8)               $ 34,005            $ 26,061
Current maturities of debt (notes 2 and 9)         25,766                 700
Trade payables                                     20,444              16,239
Other current liabilities (note 7)                 10,286              11,412
                                                 --------            --------
     Total current liabilities                     90,501              54,412
Long-term debt (notes 2 and 9)                     25,737              50,723
Other liabilities                                   1,612               4,416
                                                 --------            --------
     Total liabilities                            117,850             109,551
                                                 --------            --------

Commitments and contingent liabilities (note 18)        -                   -
Minority interests (note 10)                          968               1,033
Redeemable preferred stock (note 11)                8,482               8,026
Warrant value (note 9)                                 14                 210

     Stockholders' equity (note 12):
Common stock (400,000 shares authorized,
  289,677 and 242,887 shares outstanding)               3                   3
Capital in excess of par value                      1,860               1,664
Treasury stock                                       (500)               (500)
Notes receivable from stockholders                 (1,001)             (1,001)
Accumulated other comprehensive income (losses)    (1,354)               (688)
Accumulated deficit                                (8,956)             (7,029)
                                                 --------            --------
     Total stockholders' equity                    (9,948)             (7,551)
                                                 --------            --------
Total liabilities and stockholders' equity       $117,366            $111,269
                                                 ========            ========

         See accompanying notes to consolidated financial statements.
<PAGE>
<PAGE>     F-3
                             CHATWINS GROUP, INC.
          CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME
               (in thousands, except share and per share data)

                                                   Year Ended December 31,
                                                   1998      1997      1996
                                                 --------  --------  --------
Net sales                                        $191,586  $188,920  $153,480
Cost of sales                                     154,980   153,394   123,722
                                                 --------  --------  --------
  Gross profit                                     36,606    35,526    29,758
Selling, general and administrative                23,217    22,283    19,899
Other (income) expense, net                           629       436       275
Minority interests                                    (57)     (141)        -
                                                 --------  --------  --------
  Operating profit                                 12,817    12,948     9,584
Interest expense, net                              10,099     9,776     9,559
                                                 --------  --------  --------
Income before income taxes and 
  equity income (loss) from affiliate               2,718     3,172        25
Provision for income taxes                          1,083       851         8
                                                 --------  --------  --------
Income before equity income (loss) 
  from affiliate                                    1,635     2,321        17
Equity loss from continuing operations 
  of affiliate, net of tax                         (2,677)     (224)     (549)
Equity income (loss) from discontinued 
  operations of affiliate, net of tax                (429)      162        93
                                                 --------  --------  --------
  Net income (loss)                                (1,471)    2,259      (439)
  Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment              (666)        -      (269)
                                                 --------  --------  --------
  Comprehensive income (loss)                    $ (2,137) $  2,259  $   (708)
                                                 ========  ========  ========
Income (loss) applicable to common stock         $ (1,927) $  1,803  $   (895)
                                                 ========  ========  ========
  Earnings per common share - basic (note 13):
Before equity income (loss) from affiliate       $   4.45  $   7.68  $  (1.80)
Continuing operations of affiliate                 (10.10)    (0.92)    (2.26)
Discontinued operations of affiliate                (1.62)     0.66      0.38
                                                 --------  --------  --------
Earnings (loss) per common share - basic         $  (7.27) $   7.42  $  (3.68)
                                                 ========  ========  ========
Average equivalent shares outstanding - basic     265,088   242,887   242,887
                                                 ========  ========  ========
  Earnings per common share - diluted (note 13):
Before equity income (loss) from affiliate       $   4.03  $   6.37  $  (1.80)
Continuing operations of affiliate                  (9.14)    (0.77)    (2.26)
Discontinued operations of affiliate                (1.47)     0.56      0.38
                                                 --------  --------  --------
Earnings (loss) per common share - diluted       $  (6.58) $   6.16  $  (3.68)
                                                 ========  ========  ========
Average equivalent shares outstanding - diluted   292,887   292,887   242,887
                                                 ========  ========  ========

         See accompanying notes to consolidated financial statements.
<PAGE>
<PAGE>     F-4
                             CHATWINS GROUP, INC.
                     CONSOLIDATED STATEMENT OF CASH FLOWS
                                (in thousands)
                                                   Year Ended December 31,
                                                   1998      1997      1996
                                                 --------  --------  --------
  Cash flow from operating activities:
Net income (loss)                                $ (1,471) $  2,259  $   (439)
Adjustments to reconcile net income (loss) to 
  net cash from operating activities:
  Depreciation                                      3,922     3,438     3,279
  Amortization                                      1,235       955       984
  Provision for losses on inventories                   -       158       338
  Equity in net loss of affiliate                   3,106        62       456
  Changes in assets and liabilities:
      Decrease (increase) in receivables           (4,094)   (7,841)    3,553
      Decrease (increase) in inventories           (3,782)      (97)      381
      Decrease (increase) in other current assets     (47)     (343)      909
      Increase (decrease) in trade payables 
        and other current liabilities               3,079     5,909    (3,612)
      Net change in other assets and liabilities   (5,042)     (884)   (2,357)
                                                 --------  --------  --------
Cash provided by (used in) operating activities    (3,094)    3,616     3,492
                                                 --------  --------  --------
  Cash flow from investing activities:
Capital expenditures                               (5,095)   (5,044)   (4,704)
Investment in joint venture                          (100)        -      (150)
Receipts from related parties                           -         -     3,664
                                                 --------  --------  --------
Cash used in investing activities                  (5,195)   (5,044)   (1,190)
                                                 --------  --------  --------
  Cash flow from financing activities:
Repayments of debt                                    (48)      (47)      (48)
Repayments to related parties                           -      (579)   (2,737)
Revolving credit facilities borrowings            191,281   180,115   159,449
Revolving credit facilities repayments           (183,337) (177,683) (158,967)
                                                 --------  --------  --------
Cash provided by (used in) financing activities     7,896     1,806    (2,303)
                                                 --------  --------  --------
Net increase (decrease) in cash and equivalents      (393)      378        (1)
Cash and equivalents, beginning of year               734       356       357
                                                 --------  --------  --------
Cash and equivalents, end of year                $    341  $    734  $    356
                                                 ========  ========  ========
  Supplemental cash flow information:
Interest paid                                    $  9,211  $  9,226  $  8,938
                                                 ========  ========  ========
Income taxes paid (refunded)                     $   (139) $    205  $     53
                                                 ========  ========  ========

         See accompanying notes to consolidated financial statements.
<PAGE>
<PAGE>     F-5
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1:   Summary of Significant Accounting Policies

Nature of Business

     Chatwins Group, Inc. (Company), is composed of six divisions and two
foreign subsidiaries that design, manufacture and market metal products and an
oil and gas division.  The Company's principal products include large,
seamless pressure vessels for highly pressurized gases; high quality steel and
aluminum grating; industrial hydraulic and pneumatic cylinders; high quality,
roll-formed and structural storage racks; industrial cranes; large mill
equipment; and cold-rolled steel leaf springs.  The Company's metals
manufacturing divisions accounted for substantially all of the Company's net
sales in 1998 and 1997.  See note 19.

Principles of Consolidation

     The consolidated financial statements include the accounts of the Company
and its majority- and wholly-owned subsidiaries.  All significant intercompany
transactions have been eliminated.

     Investments in other companies over which the Company does not have
control, less than a 50% equity interest, and in which the Company has the
ability to exercise significant influence over operating or financial policies
are accounted for by the equity method.  See note 5.

Use of Estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates that
affect the reported amounts of assets, liabilities, revenues, expenses, and
disclosures of contingencies during the reporting period, which in the normal
course of business are subsequently adjusted to actual results.

Cash and Equivalents

     Cash and equivalents consist of demand deposit accounts and other cash
equivalents with maturities of 3 months or less.

Accounts Receivable

     Accounts receivable are net of $715,000 and $734,000 in allowance for
doubtful accounts at December 31, 1998 and 1997, respectively.  The Company
has no concentration of credit risks and generally does not require collateral
or other security from its customers.

Inventories

     Inventories are stated at the lower of cost or market, with cost being
determined on the "last-in, first-out" (LIFO) method of inventory valuation
for approximately 81% and 78% of total inventories at December 31, 1998 and
1997, respectively, and on the "first-in, first-out" (FIFO) method for the
remaining inventories.  See note 3.
<PAGE>
<PAGE>     F-6
Other Current Assets

     Other current assets are primarily comprised of current deferred taxes,
net assets, and prepaid expenses.  See note 17.

Property, Plant and Equipment

     Properties for the manufacturing businesses are stated at cost and
depreciated over their estimated useful lives using the straight-line method
for financial statement purposes.  Estimated useful lives in years for
depreciation are as follows: 25 to 40 for buildings and improvements; 7 to 12
for machinery and equipment; 5 to 8 for computer systems; 7 to 10 for
furniture and fixtures.  Additions, betterments and replacements are
capitalized, while expenditures for repairs and maintenance are charged to
income.  As units of property are sold or retired, the related cost and
accumulated depreciation are removed from the accounts, and any resulting gain
or loss is recognized in income.

     Oil and gas properties are accounted for by the full-cost method whereby
all exploration and development costs are capitalized.  Depreciation and
depletion are provided based on a unit-of-production method.  Dispositions of
properties are treated as reductions of the cost pool and no gain or loss is
recognized subject to certain limitations.

Goodwill

     The excess of the purchase consideration over the fair value of the
assets acquired is being amortized generally over 20 years using the
straight-line method.  Accumulated amortization of goodwill at December 31,
1998 and 1997, is $1,987,000 and $1,710,000, respectively.

Other Assets

     Other assets primarily include capitalized debt issuance costs on
presently outstanding debt, which are being amortized ratably to interest
expense over the term of the related debt agreements and the cash surrender
value of life insurance policies.  See note 6.

Revenue Recognition

     Sales are recorded primarily as products are shipped and services are
rendered.  The percentage-of-completion method of accounting is used at one
division for orders with long cycle times.  Under this method, income is
recognized as work on contracts progresses.  The percentage of work completed
is determined principally by comparing the accumulated costs to date with
management's current estimate of costs to contract completion.  Contract costs
include all direct material and labor costs and those indirect costs related
to contract performance.  At the time when current estimates indicate a loss,
the Company provides currently for the total amount of the estimated loss.
<PAGE>
<PAGE>     F-7
     The following long-term contract amounts are included in accounts
receivable at December 31, 1998 and 1997 (in thousands):

                                                        At December 31,
                                                   1998                1997
                                                 --------            --------
Uncompleted contract costs over related billings $ 10,556            $  6,820
Uncompleted contract billings over related costs   (5,297)             (3,499)
                                                 --------            --------
                                                 $  5,259            $  3,321
                                                 ========            ========

Foreign Currency Translation

     At December 31, 1998 and 1997, the Company had two majority-owned,
consolidated foreign subsidiaries;  Klemp de Mexico S.A de C.V (Klemp de
Mexico) and Shanghai Klemp Metal Products Co., Ltd. (Shanghai Klemp).  Prior
to 1997, the financial statements of Klemp de Mexico were measured using the
Mexican peso.  Effective January 1, 1997, Mexico was deemed to be a highly
inflationary economy and the functional currency for the financial statements
of Klemp de Mexico changed from the Mexican peso to the U.S. dollar. 
Effective January 1, 1999, Mexico emerged from highly inflationary status. 
Therefore, the functional currency for Klemp de Mexico's financial statements
returned to the peso.  The devaluation of the peso during 1998 had a negative
impact on the financial position, results of operations and comprehensive
earnings of the Company.  See notes 10 and 12.

     Shanghai Klemp's financial statements are measured using the Chinese
Renminbi (RMB).  Therefore, its assets and liabilities are translated at the
exchange rate in effect at the end of a period.  Income statement amounts are
translated at the average rate of exchange prevailing during each month in the
reporting period.  Translation adjustments arising from differences in
exchange rates from period to period are included in accumulated other
comprehensive income (loss).  Transaction gains and losses resulting from
foreign currency transactions, if any, are included in income currently.  See
notes 10 and 12.

Earnings per share

     Basic earnings per share is computed by dividing net income (loss) by the
weighted average number of common shares outstanding during the period. 
Diluted earnings per common share is computed by dividing net income (loss) by
the weighted average number of common shares outstanding plus all dilutive
potential common shares outstanding during the period.  The Warrants (see
notes 9 and 13) are dilutive common shares under the treasury stock method,
which assumes they are exercised at the beginning of the period.


Fair Market Value Disclosure

     Statement of Financial Accounting Standards (SFAS) No. 107, "Disclosures
About Fair Value of Financial Instruments," requires disclosure of the fair
value of certain items, including debt and investments.  The Company believes
that the amounts disclosed for such amounts in the consolidated balance sheet
do not differ significantly from fair value as defined in SFAS 107.  The
carrying value of cash and cash equivalents approximates fair value because of
the short maturity of those instruments.  The carrying value of amounts due 
<PAGE>
<PAGE>     F-8
from related parties and other investments (see note 5), insofar as it was
practical to determine, was deemed to approximate fair value based on current
market conditions, as well as the relationship of the parties.  The carrying
value of debt approximates fair value based on the Company's incremental
borrowing rate.  The carrying value of redeemable preferred stock approximates
fair value based on the accretion of such amounts to liquidation value.  The
carrying value of the warrants is based on estimates received from outside
investment bankers regarding the overall value of the Company at the time of
the issuance of the $50 million principal amount of 13% Senior Notes due 2003
(Senior Notes) (see note 9).


Reclassifications

     Certain reclassifications of prior year amounts have been made to conform
to 1998 classifications.


Note 2:   Factors Potentially Affecting Future Liquidity

Senior Note Purchase Offer

     The Company has $50 million of Senior Notes due May 3, 2003 outstanding
at December 31, 1998.  When the Company acquired the Reunion common stock on
June 20, 1995, it agreed with the Trustee of the Senior Notes to a first
supplemental indenture pursuant to which the Company issued the Senior Notes
(Indenture).  Pursuant to this supplemental indenture, the Company agreed to
offer to purchase $25 million, or half, of the outstanding Senior Notes from
Noteholders on each of June 1, 1999 and 2000 at par value plus unpaid interest
to the purchase date.  The full principal amount of the first purchase offer
is classified as current maturities of long-term debt in the Company's
consolidated balance sheet at December 31, 1998.  The Company's failure to
fulfill its obligations under this purchase offer would constitute a failure
to pay principal under the Indenture and result in an Event of Default.  An
Event of Default due to a failure to pay principal would, pursuant to the
Securities Pledge Agreement, result in a Realization Event resulting in the
immediate vesting in the Collateral Agent of the voting rights of the
approximately 43% of the Company's common stock and rights to dividends and
distributions in respect of the Pledged Collateral securing its obligations
under the Senior Notes.  In addition, upon an Event of Default, the Trustee or
the holders of at least 25% of the Senior Notes mey, by written notice to the
Company, declare an acceleration of the Senior Notes.  The Company currently
has a commitment from a national financial institution that, pursuant to
certain actions by the Company and its majority shareholder, it will fund the
Company's obligation to purchase Senior Notes, if any, on the June 1, 1999
purchase date should the Company's then available liquidity be insufficient to
do so.  As of the date of this report, no reasonable estimate exists as to the
amount of Senior Notes which the Company may be required to purchase, if any,
on the June 1, 1999 offer date.  However, there can be no assurances that a
Realization Event or Event of Default will not occur.  See notes 5 and 9.

Defaults Under Indenture

     In May of 1998, the Company executed a joint venture agreement with two
other non-affiliated companies, one U.S. and one Chinese, pursuant to which
the Company contributed $100,000 for a 10% equity interest in Suzhou Grating
Co., Ltd., a Chinese manufacturing company.  See note 5.  This investment 
<PAGE>
<PAGE>     F-9
constitutes a default under the Indenture.

     In May of 1998, Charles E. Bradley, Sr., Chairman of the Board then the
majority shareholder of the Company (Mr. Bradley), transferred all of his
shares of the Company's common stock to the Charles E. Bradley, Sr. Family
Limited Partnership (Bradley FLP) for estate planning purposes.  The Bradley
FLP has granted voting control over such shares to SPI, which in turn has
granted voting control over such shares to Mr. John G. Poole, a director of
the Company and current majority beneficial shareholder of the Company (Mr.
Poole).  Because Mr. Bradley no longer has voting control over such shares of
the Company's common stock, a breach has occurred under the Securities Pledge
Agreement (as defined in the Indenture).  Because the Indenture is cross-
covenanted to the Securities Pledge Agreement, such breach creates a default
under the Indenture.

     The Indenture provides that neither of the aforementioned defaults will
mature into an Event of Default, as defined in the Indenture, subject to the
remedies therein provided, including acceleration of the Senior Notes, until
the Trustee under the Indenture or the holders of at least 25% or more of the
Senior Notes notify the Company of the default and the default remains
unremedied for thirty (30) days after such notice.  As of the date of this
report, the Company had not received notice from either the Trustee or any
Senior Note holders.  In the event notice is received, the Company currently
has agreements in place that it believes would remedy each such default within
the 30 day remedy period should it become necessary.  However, there can be no
assurance that an Event of Default will not result from these defaults.


Note 3:   Inventories

Inventories are comprised of the following (in thousands):

                                                        At December 31,
                                                   1998                1997
                                                 --------            --------
Raw material                                     $  8,228            $  7,679
Work-in-process                                     6,018               5,678
Finished goods                                      7,374               4,501
                                                 --------            --------
  Gross inventories                                21,620              17,858
Less:   LIFO reserves                                (874)               (894)
                                                 --------            --------
  Inventories                                    $ 20,746            $ 16,964
                                                 ========            ========
<PAGE>
<PAGE>     F-10
Note 4:   Property, Plant and Equipment

Property, plant and equipment is comprised of the following (in thousands):

                                                        At December 31,
                                                   1998                1997
                                                 --------            --------
Land                                             $  2,091            $  2,091
Oil and gas properties                              1,601               1,686
Buildings and improvements                         12,948              13,223
Machinery and equipment                            33,124              29,442
Computer systems                                    5,013               4,714
Furniture and fixtures                              1,552               1,386
Construction-in-progress                            2,855               1,884
                                                 --------            --------
  Property, plant and equipment                    59,184              54,426
Less:   Accumulated depreciation and depletion    (26,813)            (23,046)
                                                 --------            --------
  Property, plant and equipment, net             $ 32,371            $ 31,380
                                                 ========            ========


Note 5:   Investments

Investments are comprised of the following (in thousands):

                                                        At December 31,
                                                   1998                1997
                                                 --------            --------
Reunion common stock                             $  6,224            $ 10,930
Warrants to purchase Reunion common stock             483                 483
Investment in Suzhou                                  100                   -
                                                 --------            --------
  Investments                                    $  6,807            $ 11,413
                                                 ========            ========

Reunion Industries, Inc.

     On June 20, 1995, the Company acquired 1,450,000 shares, or approximately
38%, of the then issued and outstanding shares of common stock of Reunion
Industries, Inc. (Reunion).  Reunion is primarily engaged in the manufacture
of high volume, precision plastics products, providing engineered plastics
services and compounding and molding thermoset polyester resins.  Reunion also
has real estate development and wine grape agricultural operations in Napa
County, California.

     The Company's investment in Reunion is being accounted for under the
equity method of accounting.  The Company's share of Reunion's operating
results for 1998, 1997 and 1996 is included in the accompanying consolidated
statement of income  and other comprehensive income as equity income (loss)
from operations of affiliate.  As previously reported by Reunion, on April 24,
1998, a jury in state district court in Harris County, Texas returned jury
verdict findings against Reunion related to a November 1995 contract for the
sale of all outstanding shares of capital stock of Reunion's wholly owned oil
and gas subsidiary to Bargo.  The jury found that Bargo had a right to
terminate the November 1995 stock purchase agreement with Reunion and that
Reunion fraudulently induced Bargo into entering into the agreement.  In July <PAGE>
<PAGE>     F-11
1998, the court entered judgement affirming the $5.0 million punitive damages
jury verdict and awarded approximately $3.0 million in attorneys' fees and
costs.  Reunion maintained at trial and continues to maintain that all
requirements to closing under the contract were met, and that Bargo was
required to close the transaction.  Reunion's management continues to maintain
that no evidence sufficient to support a jury finding of fraud or related
punitive damages was presented at trial.  Reunion has filed a bond which
suspends execution on the judgment while it appeals.  Reunion has filed a
formal notice of appeal and intends to file its appeal as soon as possible. 
However, although Reunion's management believes, based on consultation with
counsel, that it is more likely than not that the judgment will be overturned
on appeal, Reunion recorded an accrual of $8.8 million for the amount of the
judgment by a charge to its continuing operations for 1998 in accordance with
generally accepted accounting principles.  In addition, according to Reunion's
financial advisor, its Bargo legal liability is a deduction of $8.8 million to
Reunion's equity value.  The Company's results of operations for the year
ended December 31, 1998 and the carrying value of the Company's investment in
Reunion common stock on the equity method of accounting were adversely
affected by this action.  Reunion has indicated that, if the judgment is not
overturned on appeal, and the possible merger with the Company and related
refinancing do not occur, Reunion would be obligated to seek alternative
funding sources, possibly including a sale of assets.

     Certain summarized financial information related to Reunion for the years
ended December 31, 1998 and 1997 is set forth below (in thousands):

                                                           1998       1997
                                                         --------   --------
     Current assets                                      $ 23,202   $ 24,207
                                                         ========   ========
     Other assets                                        $ 51,672   $ 47,852
                                                         ========   ========
     Current liabilities                                 $ 36,119   $ 28,034
                                                         ========   ========
     Other liabilities                                   $ 19,909   $ 15,568
                                                         ========   ========
     Shareholders' equity                                $ 16,239   $ 28,317
                                                         ========   ========
     Net sales                                           $ 97,318   $ 93,378
                                                         ========   ========
     Operating income                                    $  1,495   $  2,513
                                                         ========   ========
     Loss from continuing operations                     $(10,440)  $   (981)
                                                         ========   ========
     Income (loss) from discontinued operations          $ (1,710)  $    710
                                                         ========   ========
     Net loss                                            $(12,383)  $   (271)
                                                         ========   ========


Suzhou Grating Co. Ltd.

     In May 1998, the Company entered into a joint venture agreement with
Nantong Grating Composite Materials Co. Ltd. (Nantong) and American Grating,
Inc. (American Grating) to create a sino-foreign equity joint venture known as
Suzhou Grating Co., Ltd. (Suzhou).  Nantong is an independently owned
manufacturing company organized under the laws of the PRC.  American Grating 
<PAGE>
<PAGE>     F-12
is a privately held U.S. corporation incorporated in the state of California. 
The Company's 10% investment in Suzhou is accounted for under the cost method. 
This investment constitutes a default under the Indenture.  See note 2.


Note 6:   Other Assets

Other assets consist of the following (in thousands):

                                                        At December 31,
                                                   1998                1997
                                                 --------            --------
Deferred financing costs (net of accumulated
  amortization of $2,067 and $2,324)             $  2,525            $  2,043
Cash surrender value of life insurance policies     2,381               1,975
Other                                               3,213               2,463
                                                 --------            --------
  Total other assets                             $  8,119            $  6,481
                                                 ========            ========

Note 7:   Other Current Liabilities

Other current liabilities consist of the following (in thousands):

                                                        At December 31,
                                                   1998                1997
                                                 --------            --------
Accrued wages and benefits                       $  3,438            $  4,186
Accrued pension costs (note 15)                       295                 322
Accrued postretirement benefits (note 15)           1,021                 971
Accrued interest                                    1,306               1,089
Other                                               4,226               4,844
                                                 --------            --------
  Total other current liabilities                $ 10,286            $ 11,412
                                                 ========            ========


Note 8:   Revolving Credit Facility

     On October 30, 1998, the Company and NationsBank, N.A. (NationsBank), a
national banking association, executed a financing and security agreement
(Financing Agreement) wherein NationsBank has provided the Company with a
revolving credit facility (NationsBank Facility) of up to a maximum principal
amount of $40.0 million, including a letter of credit facility of up to $5.0
million.

     The NationsBank Facility includes a Special Availability Amount, as
defined in the Financing Agreement, of $6.0 million.  The Special Availability
Amount is required to be reduced in $750,000 increments on each of February 1,
May 1, August 1 and November 1 in each of the years 1999 and 2000.  Once
reduced, the Special Availability Amount may not be reborrowed.  Availability
under the NationsBank Facility is subject to a borrowing base limitation
calculated as the aggregate of 85% of eligible accounts receivable plus the
lesser of $15.0 million or the sum of 60% of finished goods and raw materials,
50% of supplies and stores, a percentage, determined from time to time by
NationsBank, of work-in-process and the Special Availability Amount in effect
at the time of the calculation, all of the above as defined in the Financing 
<PAGE>
<PAGE>     F-13
Agreement.  Interest under the NationsBank Facility is determined by reference
to various rates including the NationsBank prime rate, the Federal Funds rate
or LIBOR, each plus an applicable margin.  The Company may elect the rates
upon notification to NationsBank with applicable margins ranging from zero to
0.5% when using either the NationsBank prime rate or the Federal Funds rate
and from 2.0% to 2.75% when using LIBOR.

     The NationsBank Facility is secured by a lien in favor of NationsBank on
the Company's accounts receivable, inventory and certain other property and
accounts to the extent necessary to permit foreclosure on the accounts
receivable and inventory.  The Financing Agreement expires on October 31, 2001
and is renewable annually thereafter, subject to the approval of NationsBank,
but not beyond October 31, 2005.

     Contemporaneously with the execution of the Financing Agreement on
October 30, 1998, the Company borrowed a total of $28.9 million under the
NationsBank Facility, $28.1 million of which was used to repay, in total,
borrowings, interest and fees under the Company's then existing revolving
credit facility (Congress Facility) with Congress Financial Corporation
(Congress) and $0.8 million of which was placed on deposit with Congress as
cash collateral for unexpired letters of credit.  Such cash collateral will be
returned to the Company upon the expirations of the related letters of credit. 
The Company and Congress agreed to terminate the Congress Facility upon
execution of the Financing Agreement.  On November 2, 1998, the Company
borrowed an additional $3.25 million under the NationsBank Facility to fund
its semiannual interest payment on the Senior Notes.  See notes 2 and 9.

     The NationsBank Facility includes various representations, warranties and
affirmative and negative covenants by the Company and provides NationsBank
with certain rights and remedies including, but not limited to, acceleration,
both in the event of default or subjectively, of all amounts borrowed under
the NationsBank Facility.  Financial covenants in the NationsBank Facility
include an adjusted earnings before interest, taxes, depreciation and
amortization excluding amortization of deferred financing costs (NationsBank
EBITDA) to fixed charge coverage ratio and an indebtedness to cash flow ratio,
calculations of which are defined in the Financing Agreement.  Generally all
amounts for calculation of the ratios are derived from domestic operations and
NationsBank EBITDA is adjusted for domestic capital expenditures.  Beginning
on December 31, 1998, these covenants require the Company to maintain a
rolling twelve-month minimum adjusted NationsBank EBITDA to fixed charge
coverage ratio of 1.2:1 and a maximum indebtedness to cash flow ratio of
5.0:1.  At December 31, 1998 such ratios were 1.3:1 and 4.9:1, respectively,
and complied with the Financing Agreement.  The Company was also in compliance
with all other representations, warranties and covenants at December 31, 1998. 
Borrowings outstanding under the NationsBank Facility at December 31, 1998
totaled $34.0 million and the weighted average rate for borrowing was 7.5%. 
Borrowings under the Congress Facility bore interest at an annual rate of the
Philadelphia National Bank Prime Rate plus 1.5% which, at the time of its
termination, was 10.0%.

     For all 1998, the blended effective rate for combined average outstanding
borrowings of $28.2 million under both the Congress Facility and the
NationsBank Facility was 10.1%.  For 1997, the effective rate for average
outstanding borrowings of $24.4 million under the Congress Facility was 10.7%.
<PAGE>
<PAGE>     F-14
Note 9:   Long-Term Debt

Long-term debt consists of the following (in thousands):

                                                        At December 31,
                                                   1998                1997
                                                 --------            --------
13% Senior Notes due May 1, 2003 (net of 
  unamortized discount of $76 and $100)(1)       $ 49,924            $ 49,900
Note payable due May 1, 2001(2)                       680                 680
Other                                                 899                 843
                                                 --------            --------
  Total long-term debt                             51,503              51,423
Current maturities                                (25,766)               (700)
                                                 --------            --------
  Total long-term debt, less current maturities  $ 25,737            $ 50,723
                                                 ========            ========


(1) - In May 1993, the Company issued the Senior Notes and 50,000 warrants
(Warrants) to purchase 50,000 shares of the Company's common stock.  The
Senior Notes bear interest at 13% per year.  Interest is payable semiannually
in arrears on May 1 and November 1 of each year.  The Senior Notes mature on
May 1, 2003 and are redeemable at the option of the Company in whole or in
part at any time on or after May 1, 1998.  The Company is required to redeem
$12.5 million principal amount of the Senior Notes on each of May 1, 2000, May
1, 2001 and May 1, 2002, at face value plus interest accrued.  The Company is
required to offer to purchase $25 million of the Senior Notes on each of
June 1, 1999 and June 1, 2000 at face value plus accrued interest.  See note
2.  The maximum potential principal amount of the June 1, 1999 purchase offer
is classified as current maturities of long term debt in the Company's
consolidated balance sheet at December 31, 1998.  The Senior Notes rank senior
in right of payment to all current and future subordinated indebtedness and
pari passu in right of payment to all current and future senior indebtedness
of the Company, subject, however, to NationsBank's security interests in
certain assets of the Company under the NationsBank Facility.  See note 8. 
The Senior Notes are secured by a pledge of approximately 43% of the
outstanding common stock of the Company.  At December 31, 1998, an aggregate
of $4,140,000 of Senior Notes were held by various executive officers and
directors of the Company, which were purchased in open market transactions.

     Each Warrant entitles the holder to purchase one share of the common
stock of the Company at an exercise price of $.01 per share.  The Warrants
were not exercisable except upon the occurrence of certain trigger events as
defined in the warrant agreement or, if no trigger event had occurred prior to
May 3, 1998, upon the Company's failure to consummate a repurchase offer due
to a payment blockage, both as defined in the warrant agreement.  No trigger
event had occurred through May 3, 1998 and a payment blockage existed on such
date, resulting in the Warrants becoming exercisable as of May 3, 1998. 
Consistent with the warrant agreement, the Company notified holders of the
Warrants of the existence of a payment blockage and that the Warrants were
exercisable.  As of December 31, 1998, 46,790 Warrants had been exercised
resulting in the issuance of 46,790 shares of the Company's common stock.  As
of the date of this report, remaining Warrants which have not been exercised
remain exercisable.  See note 12.

(2) - Note payable due May 1, 2001 represents a loan agreement related to an 
<PAGE>
<PAGE>     F-15
industrial development revenue bond issue by Orem City, Utah.  Interest is
payable quarterly at 62% of the prevailing prime rate.  During 1998, the
effective interest rate under this note payable was 5.2%

     Aggregate maturities of long-term debt for the next five years are as
follows (in thousands):

                             Year ended December 31,
 Total        1999        2000        2001        2002        2003
-------     -------     -------     -------     -------     -------
$51,503     $25,766     $25,010     $   727     $     -     $     -
=======     =======     =======     =======     =======     =======


Note 10:   Foreign Currencies, International Subsidiaries 
           and Minority Interests 

FOREIGN CURRENCIES

     Export sales to foreign countries from the Company's U.S. locations are
denominated in U.S. dollars, the Company's reporting currency.  Accordingly,
transaction loss exposures due to fluctuations in the functional currencies of
the countries to which the Company's domestic locations export, which vary
significantly from year to year, are minimal.

     Sales of Klemp de Mexico and Shanghai Klemp are almost entirely within
the countries in which they are located and are denominated in each location's
functional currency; the peso in Mexico and the renminbi (RMB) in China. 
Accordingly, transaction loss exposure to the Company from fluctuations in
each location's functional currency are minimal.

INTERNATIONAL SUBSIDIARIES AND MINORITY INTERESTS

     At December 31, 1998, the Company had approximately $3.6 million invested
in Klemp de Mexico and approximately $1.9 million invested in Shanghai Klemp. 
The Company considers its investments in these international subsidiaries to
be long-term in nature.  The Company's foreign subsidiaries are self-
sustaining and operate almost exclusively within the countries they are
located.  Their cash flows are devoted to and obligations paid by their own
operations.  The Company does not provide day-to-day operating funds to the
foreign operations nor does the Company guarantee any foreign indebtedness.

Klemp de Mexico

     The Company's Mexican grating subsidiary, Klemp de mexico, is owned 85%
by the Company and 15% by Mr. Kimball J. Bradley, Senior Vive President and
shareholder of the Company and son of Mr. Bradley.  During 1996, Klemp de
Mexico, entered into a joint venture agreement with Consolidated Fabricators,
Inc., a Massachusetts company, to form CFI-Klemp de Mexico (CFI-Klemp), a
Mexican corporation.  CFI-Klemp is in the business of metal fabrications.  As
Klemp de Mexico has a 50.1% interest in CFI-Klemp, CFI-Klemp is consolidated
with Klemp de Mexico for financial reporting purposes.  Their joint venture
partner's 49.9% interest is included in minority interest in the Company's
consolidated balance sheet at December 31, 1998 and 1997.

     Total sales related to Klemp de Mexico included in the Company's
consolidated statement of income for the years ended December 31, 1998, 1997 
<PAGE>
<PAGE>     F-16
and 1996, were $4.7 million, $3.7 million and $3 million, respectively.  Klemp
de Mexico's sales for 1998, 1997 and 1996 included $1.7 million, $1.2 million
and $0.7 million, respectively, related to CFI-Klemp.  Klemp de Mexico had
losses before taxes for the years ended December 31, 1998, 1997 and 1996 of
approximately $0.2 million, $0.4 million and $0.1 million, respectively. 
Included in Klemp de Mexico's 1998 and 1997 results were $6,000 and $51,000,
respectively, of losses before taxes related to CFI-Klemp.  CFI-Klemp had no
income or loss for 1996.  During 1998 and 1997, losses allocated to the
minority interest were $6,000 and $51,000, respectively.

     Effective January 1, 1997, Mexico's economy was classified as highly
inflationary as defined in SFAS 52 due primarily to the substantial inflation
in Mexico over 1995 and 1996, which was approximately 60% and 30%,
respectively.  During 1997, inflation in Mexico subsided substantially and the
peso devalued minimally; from 7.84 pesos/$1.00 at December 31, 1996 to 8.07
pesos/$1.00 at December 31, 1997.  However, during 1998, even though inflation
remained relatively stable, the peso devalued almost 25% against the U.S.
dollar; from 8.07 pesos/$1.00 at December 31, 1997 to almost 10.00 pesos/$1.00
at December 31, 1998.  This devaluation of the peso had a negative impact on
the Company's investment in Klemp de Mexico, resulting in translation losses
charged to earnings during 1998 of $150,000 and an increase in the cumulative
translation adjustment account in accumulated other comprehensive losses in
equity of $666,000.  On a sensitivity basis, additional devaluations of the
peso, if any, of the magnitude seen during 1998 can be expected to have a
similar impact on the future financial position and operating results,
including comprehensive earnings, of the Company.  At December 31, 1998, 1997
and 1996, accumulated other comprehensive losses shown as a separate component
of stockholders' equity totaled $1,354,000, $688,000 and $688,000,
respectively.  Effective January 1, 1999, Mexico emerged from highly
inflationary status.  As such, future fluctuations in the value of the peso
against the U.S. dollar will be recorded as adjustments to comprehensive
earnings and the cumulative translation adjustment account in equity.

Shanghai Klemp

     The Company's 65% interest in Shanghai Klemp is consolidated for
financial reporting purposes.  The joint venture partners' interests are
included in minority interests in the Company's consolidated balance sheet at
December 31, 1998 and 1997.  During 1998 and 1997, Shanghai Klemp had sales of
$2.4 million and $0.7 million, respectively, and losses before taxes of
$95,000 and $167,000, respectively.  Production began in late December 1996
and its results were insignificant.  During 1998 and 1997, losses allocated to
the minority interests were $51,000 and $90,000, respectively.

     Impacts on the Company due to foreign currency rate fluctuations in China
have been insignificant.  Since establishing the joint venture, the RMB has
remained stable at approximately 8.3 RMB/$1.00.  However, fluctuations in the
RMB against the U.S. dollar could have a significant impact on the financial
position, operating results and comprehensive earnings of the Company,
primarily in the form of translation effects.  On a sensitivity basis, a 10%
devaluation in the value of the RMB at December 31, 1998 would be estimated by
the Company to have an approximate $20,000 negative impact on the cumulative
translation adjustment in equity.
<PAGE>
<PAGE>     F-17
Note 11:   Redeemable Preferred Stock

     The Company has one class of preferred stock, which has a par value of
$.01 per share and contains redemption privileges and obligations.  The Class
D, Series A and B preferred stock is held of record by KSB Acquisition Corp.,
the former owner of the corporate predecessor-in-interest to the Klemp and
Steelcraft divisions of the Company, of which Messrs. Bradley and Poole are
the sole executive officers and directors.  The Class D, Series C preferred
stock is held of record by Hanna Investment Corp., the former owner of the
corporate predecessor-in-interest to the Hanna division of the Company, of
which Messrs. Bradley and Poole are the sole executive officers and Mr. Poole
is the sole director.  The outstanding preferred stock activity consisted of
(in thousands):

                                           Class D
                               --------------------------------
                               Series A    Series B    Series C      Total
                               --------    --------    --------    --------
Balance at January 1, 1996     $  3,691    $  1,411    $  2,012    $  7,114
Accretions                          225          80         151         456
                               --------    --------    --------    --------
Balance at December 31, 1996      3,916       1,491       2,163       7,570
Accretions                          225          80         151         456
                               --------    --------    --------    --------
Balance at December 31, 1997      4,141       1,571       2,314       8,026
Accretions                          225          80         151         456
                               --------    --------    --------    --------
Balance at December 31, 1998   $  4,366    $  1,651    $  2,465    $  8,482
                               ========    ========    ========    ========

     The Class D preferred stock is entitled to receive preferential and
cumulative dividends at an annual rate of $100 per share.  In liquidation,
Class D preferred stock is entitled to a preference in the amount of $1,000
per share plus an amount equal to the dividends accumulated but unpaid to the
date of final payment or dissolution and is not entitled to vote, except as
may be required by law.  The Company has the option to redeem any or all of
the shares of Class D preferred stock, and the holders have the option to
require the Company to redeem all (but not less than all) of the shares,
unless restricted by law of the Company's financing agreements.  Both the
Indenture and NationsBank Financing Agreement restrict the Company from
preferred stock redemptions.  The redemption price is $1,000 per share plus an
amount equal to the dividends accumulated but unpaid on the date of the
redemption.

     The authorized, issued and outstanding preferred stock at December 31,
1998, 1997 and 1996 consisted of 2,249 shares of Class D, Series A; 800 shares
of Class D, Series B; and 1,510 shares of Class D, Series C.

     The Company is not permitted to reissue any shares of its preferred stock
that have been redeemed, and all such shares redeemed shall cease to be a part
of the authorized shares of the Company.  Additionally, the covenants in the
Indenture place restrictions on dividend payments and redemptions of shares. 
Such payments and redemptions are limited to approximately 50% of net income,
as defined, from the issuance date of the Senior Notes, provided that the
Company meets an interest coverage ratio (as defined) of at least 2 to 1 for
the four full fiscal quarters immediately preceding any proposed payments 
<PAGE>
<PAGE>     F-18
prior to May 1, 1996, a ratio of 2.25 to 1 for proposed payments from May 1,
1996, to May 1, 1999, and a ratio of 2.5 to 1 for proposed payments
thereafter.  The Company's interest coverage ratio for 1998 was 1.84 to 1.

     Redeemable preferred stocks are being accreted by a charge against
retained earnings for the accumulated but unpaid dividends on such stock.  At
December 31, 1998 and 1997, dividends in arrears were $3,923,000 and
$3,467,000, respectively.  
<PAGE>
<PAGE>     F-19
Note 12:  Stockholders' Equity

     In September 1993, 38,412 shares of common stock were acquired by the
Company from two stockholders for $500,000.  In February 1994, the Company
acquired 2,697 shares of its common stock from one stockholder of the Company
for $.01 per share.  Such reacquired stock is being held as treasury stock.  

     The majority of the Company's stock is beneficially owned by the two
principals of Stanwich Partners, Inc. (SPI), a company engaged in consulting
services within the field of financial planning and reporting.  Such
principals have pledged approximately 50% of the total outstanding shares of
the Company to the Senior Notes collateral agent for the benefit of the
holders of the Senior Notes.
     The following represents all activity in stockholders' equity for the
3-year period ended December 31, 1998 (in thousands):

                                                   Year Ended December 31,
                                                   1998      1997      1996
                                                 --------  --------  --------
  Par value of common stock, January 1 
    and December 31                              $      3  $      3  $      3
                                                 ========  ========  ========  
  Treasury stock, January 1 and December 31      $  (500)  $   (500) $   (500)
                                                 ========  ========  ========  
  Capital in excess of par value, January 1      $  1,664  $  1,664  $  1,664
Warrant exercises (note 9)                            196         -         -
                                                 --------  --------  --------
  Capital in excess of par value, December 31    $  1,860  $  1,664  $  1,664
                                                 ========  ========  ========  
  Stockholder notes receivable, January 1 
    and December 31                              $ (1,001) $ (1,001) $ (1,001)
                                                 ========  ========  ========  
  Accumulated deficit, January 1                 $ (7,029) $ (8,832) $ (7,937)
Net income (loss)                                  (1,471)    2,259      (439)
Preferred stock accretions (note 11)                 (456)     (456)     (456)
                                                 --------  --------  --------
  Accumulated deficit, December 31               $ (8,956) $ (7,029) $ (8,832)
                                                 ========  ========  ========  
  Accumulated other comprehensive 
    loss, January 1                              $   (688) $   (688) $   (419)
Foreign currency translation adjustment (note 10)    (666)        -      (269)
                                                 --------  --------  --------
  Accumulated other comprehensive 
    loss, December 31                            $ (1,354) $   (688) $   (688)
                                                 ========  ========  ========  
  Total stockholders' equity,
    January 1                                    $ (7,551) $ (9,354) $ (8,190)
Warrant exercises                                     196         -         -
Net income (loss)                                  (1,471)    2,259      (439)
Preferred stock accretions                           (456)     (456)     (456)
Foreign currency translation adjustment              (666)        -      (269)
                                                 --------  --------  --------
  Total stockholders' equity,
    December 31                                  $ (9,948) $ (7,551) $ (9,354)
                                                 ========  ========  ========

<PAGE>
<PAGE>     F-20
Note 13:  Earnings per Common Share

     The computations of basic and diluted earnings per common share (EPS) for
the years ended December 31, 1998, 1997 and 1996 are as follows (in thousands,
except share and per share amounts):

                                                Income    Shares     EPS
                                               --------  --------  -------
     Year ended December 31, 1998:
Net loss                                       $ (1,471)
Less:  Preferred stock dividend accretions         (456)
                                               --------
Income available to common stockholders,
  shares outstanding and basic EPS               (1,927)  265,088  $ (7.27)
                                                                   =======
Dilutive effect of Warrants                                27,799
                                               --------  --------
Income available to common stockholders,
  shares outstanding and diluted EPS           $ (1,927)  292,887  $ (6.58)
                                               ========  ========  =======
     Year ended December 31, 1997:
Net income                                     $  2,259
Less:  Preferred stock dividend accretions         (456)
                                               --------
Income available to common stockholders,
  shares outstanding and basic EPS                1,803   242,887  $  7.42
                                                                   =======
Dilutive effect of Warrants                                50,000
                                               --------  --------
Income available to common stockholders,
  shares outstanding and diluted EPS           $  1,803   292,887  $  6.16
                                               ========  ========  =======
     Year ended December 31, 1996:
Net loss                                       $   (439)
Less:  Preferred stock dividend accretions         (456)
                                               --------
Income available to common stockholders,
  shares outstanding and basic and diluted EPS $   (895)  242,887  $ (3.68)
                                               ========  ========  =======

     For 1996, assumed exercise of the Warrants has an anti-dilutive effect on
per-share income from continuing operations.  Therefore, basic and diluted EPS
are the same for 1996.  For a discussion of the Warrants and preferred stock
dividend accretions, see notes 9 and 13, respectively.


Note 14:  Other Related-Party Transactions

SPI Consulting Agreement

     The Company has maintained various consulting agreements with SPI under
which $300,000 was recorded as expense during each of the years ended December
31, 1998, 1997 and 1996, respectively.  Messrs. Bradley and Poole are the
principals of SPI.  The consulting agreement was to expire on March 31, 1998,
but has been extended for an additional five-year period to expire on March
31, 2003 unless terminated by SPI with 30 days' notice.  Under the consulting
agreement, the Company retains SPI to render consulting services in the field <PAGE>
<PAGE>     F-21
of financial planning and reporting.  Annual payments are permitted on this
agreement as long as the Company meets an interest coverage ratio of at least
1.5 to 1 for the prior 4 full fiscal quarters.  All amounts owed to SPI from
the Company have been paid in full at December 31, 1998 and 1997.

King-Way Service Agreement

     On November 3, 1997, Stanwich Acquisition Corporation (SAC) acquired
King-Way Material Handling (King-Way) from the Kingston-Warren Corporation for
a purchase price of $18.1 million.  SAC is a privately-held company whose
common stock is owned 42.5% by Mr. Bradley, 42.5% by Mr. K.J. Bradley and 15%
by Mr. Evans.  Similar to Auto-Lok, King-way is in the business of producing
industrial and commercial storage racks and materials handling systems.

     SAC and Auto-Lok entered into a service agreement pursuant to which King-
Way would utilize Auto-Lok's surplus capacity in exchange for fees
approximately equal to Auto-Lok's costs of providing the surplus capacity plus
a right of first negotiation to acquire King-Way from SAC.  This right of
first negotiation has since expired.  The integration of King-Way's business
into Auto-Lok's facility took place primarily during the second quarter of
1998.  Through December 31, 1998, costs totaling $1,298,631 had been charged
to King-Way under this agreement.  At December 31, 1998, the Company had
receivables totaling $780,000 from King-Way.

NAPTech Services Agreement

     On August 25, 1998, NPSAC acquired NAPTech from the Shaw Group for a
purchase price of $8.4 million.  NPSAC is wholly owned by Mr. Bradley.  Like
the Company's CPI division, NAPTech manufactures steel seamless pressure
vessels.

     In August 1998, the CPI division of the Company and NPSAC entered into a
services agreement pursuant to which CPI would provide certain administrative
services to NAPTech for cash fees which approximate $29,000 per month, the
estimated cost to CPI for providing such services.  NAPTech is wholly owned by
Mr. Bradley and manufactures steel seamless pressure vessels.  The NAPTech
services agreement is for one year and may be renewed annually upon agreement
by both the Company and NAPTech.  At December 31, 1998, the Company had
receivables totaling $148,000 from NAPTech.  On August 25, 1998 the Company
purchased from NAPTech $1.0 million of inventory usable by its CPI division in
its normal course of business.

CPS Leasing

     During 1997 and 1998, the Company entered into thirteen operating lease
agreements with CPS Leasing, Inc. (CPSL), a company owned 80% by Consumer
Portfolio Services and 20% by Charles E. Bradley Jr., President of Consumer
Portfolio Services, a director of the Company and son of Charles E. Bradley
Sr., Chairman of the Board, Director and a beneficial shareholder of the
Company.  During 1997 and 1998, the Company made lease payments totaling
$39,112 and $209,989 to CPSL, respectively.

CGI Investment Corp.

     In April 1990, the Company acquired a 49% interest in CGI Investment
Corp. (CGII), a company controlled by SPI.  The principals of SPI are also the
majority beneficial owners of the Company.  Since April 1990, the Company has <PAGE>
<PAGE>     F-22
made loans to CGII of $1.5 million, $1.35 million and $299,000.  None of the
principal or accrued interest thereon has been repaid under these obligations. 
Over time, the Company had provided reserves for a substantial portion of the
principal on its notes receivable from CGII and at December 31, 1997, the net
carrying value of the Company's investment in CGII common stock and net notes
receivable was $0.6 million.

     CGII's primary assets were two notes receivable from affiliates of the
Company, and a minimal amount of cash, the sum of which totaled $0.7 million
at December 31, 1997.  During 1998, the Company and CGII agreed that CGII's
liabilities significantly exceeded its assets and it would not be able to
repay its obligations to the Company.  As a result, the Company agreed to
exchanged its notes receivable from CGII for CGII's note receivable from
Rostone which, plus accrued interest, totaled $0.5 million at December 31,
1998.  The difference was provided for currently.


Robinson Incorporated

     During 1998, the Company's Europa division sold its interest in a West
Virginia well to and collected other fees from Robinson Incorporated
(Robinson) for a total of $100,000 in cash.  Robinson is an oil and gas
company operating in Oklahoma and is controlled by several members of the
Company's executive management and board of directors.


Note 15:  Pension and Other Postretirement Benefit Plans

PENSION PLANS

     The Company has various retirement plans that cover substantially all of
its employees.  Included in these plans is one noncontributory, defined
benefit plan, benefits under which are based solely on continuous years of
service and are not affected by changes in compensation rates.

     The Company's funding policy provides that payments to the pension trusts
be at least equal to the minimum funding requirements of the Employee
Retirement Income Security Act of 1974.  Assets of the plan are invested
principally in fixed income and equity securities.  The Company participates
in a separate multiemployer defined benefit pension plan covering certain
employees at one division and has defined contribution plans covering most of
its other employees.  The Company's policy with respect to these plans is to
fund the amounts accrued.


OTHER POSTRETIREMENT PLANS

     The Company maintains various postretirement healthcare and life
insurance benefit plans for certain active and retired employees.  Covered
active and retired employees include those of one operating division of the
Company and, pursuant to a November 1997 plan amendment which became effective
January 1, 1998, employees of the Company's Corporate Executive Payroll (as
defined in the plan document).

     Eligible active and retired employees of the one operating division for
which postretirement benefits are provided include both union and nonunion
employees.  Healthcare benefits for both union and nonunion retirees are 
<PAGE>
<PAGE>     F-23
provided for the most part through comprehensive major medical and other
health benefit provisions subject to various retiree cost-sharing features. 
The majority of employees eligible for healthcare benefits upon retirement are
former employees of USX Corporation (USX).  A significant portion of
postretirement healthcare earned by such employees prior to 1987 is the
responsibility of USX.  Life insurance benefits provided to eligible union
retirees are based on fixed amounts negotiated in labor agreements.  Life
insurance benefits provided to eligible nonunion retirees are based on the
employee's annual base salary at retirement subject to a maximum benefit.

     Postretirement healthcare benefits for eligible active and retired (none
as of December 31, 1998) employees of the Company's Corporate Executive
Payroll are paid for by the Company and subject to various retiree cost-
sharing features.  Postretirement healthcare benefits for Corporate Executive
Payroll employees terminate when the retiree becomes Medicare eligible. 
Postretirement life insurance benefits for eligible active and retired (none
as of December 31, 1998) employees of the Company's Corporate Payroll are paid
for by the Company and are based on the employee's annual base salary at
retirement.  Except for certain life insurance benefits paid from reserves
held by insurance carriers, benefits have not been funded.  Contributions to
the plans by the Company equal benefits paid.

     The Financial Accounting Standards Board issued SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits" in February
1998.  The new standard does not change the measurement or recognition of
costs for pension or other postretirement plans but, rather, standardizes
disclosures and eliminates those that are no longer useful.
<PAGE>
<PAGE>     F-24
     The following table sets forth the changes in the benefit obligations and
plan assets for the years ended December 31, 1998 and 1997 and the funded
status at December 31, 1998 and 1997 of the Company's pension and other
postretirement benefit plans (in thousands):

                                      Pension           Other Postretirement
                               --------------------     --------------------
                                 1998        1997         1998        1997
                               --------    --------     --------    --------
  Change in benefit obligation:
Benefit obligation, beginning  $  2,002    $  1,800     $    919    $  1,345
Service cost                        108          96           28          45
Interest cost                       128         120           65         105
Plan amendment                        -           -            -         (54)
Actuarial loss (gain)                14          96          (29)       (480)
Benefits paid                      (118)       (110)         (39)        (42)
                               --------    --------     --------    --------
Benefit obligation, ending     $  2,134    $  2,002     $    944    $    919
                               ========    ========     ========    ========
  Change in plan assets:
Fair value, beginning          $  1,365    $  1,104     $      -    $      -
Actual return                        80         221            -           -
Company contribution                165         150           39          42
Benefits paid                      (118)       (110)         (39)        (42)
                               --------    --------     --------    --------
Fair value, ending             $  1,492    $  1,365     $      -    $      -
                               ========    ========     ========    ========
  Funded status:
Net obligation, ending         $    642    $    637     $    944    $    919
  Unrecognized costs:
Prior service costs                 (69)        (76)           8           -
Net (loss) gain                    (229)       (178)         705         738
Transition obligation               (49)        (61)        (636)       (686)
                               --------    --------     --------    --------
Accrued benefit cost           $    295    $    322     $  1,021    $    971
                               ========    ========     ========    ========

<PAGE>
<PAGE>     F-25
     Net periodic pension and other postretirement benefits costs for the
following years ended December 31 are as follows (in thousands):

                                     Pension           Other Postretirement
                              ----------------------   ----------------------
                               1998    1997    1996     1998    1997    1996
                              ------  ------  ------   ------  ------  ------
Benefits earned during year   $  108  $   96  $   93   $   28  $   45  $   54
Interest cost                    128     120     107       65     105      90
  Amortization of:
Prior service cost                 8       7       2        -       -       -
Unrecognized net loss (gain)       -       3       7      (52)    (10)    (10)
Unrecognized net obligation       12      12      12       50      49      53
Expected return on plan assets  (118)    (93)    (79)       -       -       -
                              ------  ------  ------   ------  ------  ------
Defined benefit pension and 
  total other postretirement 
  benefits costs                 138     145     142   $   91  $  189  $  187
                                                       ======  ======  ======
Defined contribution plan cost 1,039   1,038   1,104
Multiemployer plan cost           43      19      17
                              ------  ------  ------
  Net periodic pension costs  $1,220  $1,202  $1,263
                              ======  ======  ======

     Assumptions used to develop the pension cost and projected benefit
obligation for the defined benefit pension plan for the following years ended
December 31 are as follows:
                                                   1998      1997      1996
                                                 --------  --------  --------
Discount rate (net periodic pension costs)          6.75%      7.0%      7.0%
                                                 ========  ========  ========
Discount rate (projected benefit obligations)       6.75%     6.75%      7.0%
                                                 ========  ========  ========
Expected rate of return on plan assets              8.25%      8.0%      8.0%
                                                 ========  ========  ========

     For the calculation of the net periodic pension costs to be recorded in
1999, the expected rate of return on plan assets was held at 8.25%.

     Assumptions used to develop the net periodic postretirement benefit costs
and accumulated postretirement benefit obligations for the following years
ended December 31 are as follows:
                                                   1998      1997      1996
                                                 --------  --------  --------
Discount rate (postretirement benefit cost)         6.75%      8.0%      8.0%
                                                 ========  ========  ========
Discount rate (postretirement benefit obligation)   6.75%      7.5%      8.0%
                                                 ========  ========  ========
Healthcare cost trend rate (postretirement 
  benefit cost)                                      3.0%      8.0%      8.0%
                                                 ========  ========  ========
Healthcare cost trend rate (postretirement 
  benefit obligation)                                3.0%      3.0%      8.0%
                                                 ========  ========  ========
Rate of compensation increase                        2.0%      2.0%      2.0%
                                                 ========  ========  ========
<PAGE>
<PAGE>     F-26
     USX administers the postretirement healthcare plans for the eligible
employees of the operating division of the Company previously owned by USX and
bills the Company for its share of the postretirement costs related to the
Company's retirees covered by the plans.  During 1997, the Company's actuary
reviewed several years of rates charged to the Company by USX for retiree
medical coverage and, as a result, elected to reduce the applicable healthcare
cost trend rate for all years subsequent to 1997 to 3%.  This reduction in
healthcare cost trend rate resulted in a reduction in the Company's
accumulated postretirement benefit obligation and an increase in the
unrecognized net gain from December 31, 1996 to December 31, 1997 and a
reduction in the net periodic postretirement benefit cost for 1998.  A one
percentage point increase in the assumed healthcare cost trend rate would
increase the benefit obligation at December 31, 1998 by approximately
$104,000, increase projected 1999 net periodic cost by approximately $26,000
and increase the total of the service and interest cost components by
approximately $14,000.  Conversely, a one percentage point decrease in the
assumed healthcare cost trend rate would result in approximate decreases in
each by $86,000, $21,000 and $11,000, respectively.


Note 16:  Leases

     Minimum rental commitments under all noncancellable operating leases in
effect at December 31, 1998, were as follows (in thousands):

                       Year ended December 31,
 Total      1999      2000      2001      2002      2003      After 2003
-------    ------    ------    ------    ------    ------     ----------
$13,073    $2,613    $2,280    $1,964    $1,281    $1,070       $3,865
=======    ======    ======    ======    ======    ======       ======

     Operating lease rental expense for the years ended December 31, 1998,
1997 and 1996, amounted to $2,685,000, $2,290,000 and $1,407,000,
respectively.


Note 17:  Income Taxes

     The tax provision comprises the following amounts (in thousands):

                                                   Year Ended December 31,
                                                   1998      1997      1996
                                                 --------  --------  --------
  Current:
Federal                                          $      -  $     91  $     16
State and local                                         -        48         9
                                                 --------  --------  --------
  Total                                                 -       139        25
                                                 --------  --------  --------
  Deferred:
Federal                                             1,083       712       (17)
                                                 --------  --------  --------
  Total                                             1,083       712       (17)
                                                 --------  --------  --------
  Total tax provision                            $  1,083  $    851  $      8
                                                 ========  ========  ========
<PAGE>
<PAGE>     F-27
     The Company's effective income tax rate, reflected in the accompanying
consolidated statement of income, differs from the statutory rate due to the
following (in thousands):
                                                   Year Ended December 31,
                                                   1998      1997      1996
                                                 --------  --------  --------
Computed amount at statutory rate (34%)          $    924  $  1,078  $      9
Net change in valuation allowance                       -      (360)        -
State and local income taxes                            -        48         9
Goodwill                                               49        25        51
Foreign sales corporation dividends                   (20)      (59)      (52)
Other - net                                           130       119        (9)
                                                 --------  --------  --------
  Total tax provision                            $  1,083  $    851  $      8
                                                 ========  ========  ========

     Components of consolidated income taxes consist of the following (in
thousands):
                                                   Year Ended December 31,
                                                   1998      1997      1996
                                                 --------  --------  --------
Income from continuing operations                $  1,083  $    851  $      8
Equity loss from continuing operations 
  of affiliate                                     (1,379)     (149)     (366)
Equity income (loss) from discontinued 
  operations of affiliate                            (221)      108        63
                                                 --------  --------  --------
  Total consolidated tax provision (benefit)     $   (517) $    810  $   (295)
                                                 ========  ========  ========

     Temporary differences and carryforwards that gave rise to significant
portions of deferred tax assets and liabilities are as follows (in thousands):

                                                        At December 31,
                                                   1998                1997
                                                 --------            --------
Depreciation                                     $ (3,210)           $ (3,503)
Inventory basis differences                        (1,285)               (389)
Other                                              (1,217)             (1,131)
                                                 --------            --------
  Deferred tax liabilities                         (5,712)             (5,023)
                                                 --------            --------
Loss carryforwards (NOLs)                           4,589               1,262
Book reserves                                       2,070               3,835
Deferred compensation                                 196                 408
Tax credit carryforwards                              759                 720
Unicap adjustments                                    235                 240
Other                                                 316                 494
                                                 --------            --------
  Deferred tax assets                               8,165               6,959
Less:  Valuation allowance                           (640)               (640)
                                                 --------            --------
  Deferred tax assets, net                          7,525               6,319
                                                 --------            --------
  Deferred taxes, net asset                      $  1,813            $  1,296
                                                 ========            ========
<PAGE>
<PAGE>     F-28
     SFAS 109 requires that deferred tax assets be reduced by a valuation
allowance if it is more likely than not that some portion or all of the
deferred tax assets will not be realized.  The Company periodically reviews
the adequacy of the valuation allowance as a result of changes in its
profitability and other factors.  Based on its 1997 review, the Company
reduced the valuation allowance by $360,000 in 1997.  Based on rates in effect
at December 31, 1998 and after consideration of the valuation allowance,
approximately $4.5 million of future taxable income is required prior to
expiration of the Company's NOL and credit carryforwards for full realization
of net deferred tax assets.  The Company believes that its future taxable
income will be sufficient for full realization of the deferred tax assets.

     At December 31, 1998, the Company had net operating loss carryforwards
for tax return reporting purposes of approximately $5.8 million, of which $1.4
million expires in 2008, $1.2 million expires in 2011 and $3.2 million expires
in 2018.  The availability of these carryforwards may be subject to
limitations imposed by the Internal Revenue Code.

     The current and noncurrent classifications of the deferred tax balances
are as follows (in thousands):

                                                        At December 31,
                                                   1998                1997
                                                 --------            --------
  Current:
Deferred tax assets                              $  2,966            $  4,754
Deferred tax liabilities                           (1,285)               (400)
Less:  Valuation allowance                           (232)               (460)
                                                 --------            --------
  Current deferred taxes, net asset                 1,449               3,894
                                                 --------            --------
  Noncurrent:
Deferred tax assets                                 5,199               2,205
Deferred tax liabilities                           (4,427)             (4,623)
Less:  Valuation allowance                           (408)               (180)
                                                 --------            --------
  Noncurrent deferred taxes, 
    net asset (liability)                             364              (2,598)
                                                 --------            --------
  Deferred taxes, net asset                      $  1,813            $  1,296
                                                 ========            ========

     At December 31, 1998, the consolidated balance sheet included deferred
tax assets of $1.4 million and $0.4 million in other current assets and other
assets, respectively.  At December 31, 1997, the consolidated balance sheet
included deferred tax assets of $3.9 million in other current assets and
deferred tax liabilities of $2.6 million in other liabilities.

     A U.S. federal corporate income tax return examination has been completed
for the Company's 1995 tax year.  The Company believes adequate provisions for
income taxes have been recorded for all years.


<PAGE>
<PAGE>     F-29
Note 18:  Commitments and Contingent Liabilities

     In June 1993, the U.S. Customs Service (Customs) made a demand on the
Company's former industrial rubber distribution division for $612,948.30 in
marking duties pursuant to 19 U.S.C. Sec. 1592.  The duties are claimed on
importations of "unmarked" hose products from 1982 to 1986.  Following the
Company's initial response raising various arguments in defense,including
expired statute of limitations, Customs responded in January 1997 by reducing
its demand to $370,968.00 and reiterating that demand in October 1997.  The
Company restated its position and continues to decline payment of the claim. 
Should the claim not be resolved, Customs threatens suit in the International
Court of Claims.  The Company continues to believe, based on consultation with
counsel, that there are facts which raise a number of procedural and
substantive defenses to this claim, which will be vigorously defended.  There
is no applicable insurance coverage.

     The Company is involved in various other litigation matters in the
ordinary course of business.  In the opinion of management, settlement of
these and other contingent matters will not have any material effect on the
Company's financial position, results of operations or liquidity.  The Company
does not have any adverse commitments at December 31, 1998.


Note 19:   Segment Disclosures and Related Information

     The Company considers its separately identifiable divisions to be its
reportable segments pursuant to the management approach.  The following
represents a description of each division.

     Alliance - Alliance, located in Alliance, Ohio, designs, engineers and
manufactures cranes used in a wide range of steel and aluminum mill
applications and large special purpose cranes used in marine and aerospace
applications and heavy industrial plants.  Alliance also manufactures lighter
duty cranes for various industrial applications, coke oven machinery and other
large steel-related fabrications.  In recent years, Alliance has expanded and
diversified its engineering and manufacturing capabilities to offer a variety
of equipment and related engineering, fabrication, maintenance and repair
services.

     Auto-Lok - Auto-Lok, located in Atlanta, Georgia, manufactures high
quality roll formed and structural steel fabricated storage racks for
industrial and commercial handling systems and general storage applications. 
In addition, Auto-Lok participates on larger contracts in the sale of total
material handling systems through purchasing and reselling related components
such as decking and carton flow devices, and subcontracting of rack erection.

     CPI - CPI, located in McKeesport, Pennsylvania, specializes in
manufacturing large, seamless pressure vessels for the above ground storage
and transportation of highly pressurized gases such as natural gas, hydrogen,
nitrogen, oxygen and helium.  These pressure vessels are provided to customers
such as industrial gas producers and suppliers, the alternative fueled vehicle
compressed natural gas fuel industry, chemical and petrochemical processing
facilities, shipbuilders, NASA, public utilities and gas transportation
companies.

     Hanna - Hanna, with locations in Chicago, Illinois and Milwaukee,
Wisconsin, designs and manufactures a broad line of  hydraulic and pneumatic 
<PAGE>
<PAGE>     F-30
cylinders, actuators, accumulators and manifolds.  These products are used in
a wide variety of industrial and mobile machinery and equipment requiring the
application of force in a controlled and repetitive process.  Hanna's
specialty is custom cylinders in both small quantities packaged by its
distributors with valves, pumps and controls as complete fluid power systems
and large quantities sold directly to equipment manufacturers.

     Klemp - Klemp, a multi-location division, is a highly diversified
manufacturer of metal grating products.  Klemp manufactures quality steel and
aluminum bar grating products in a variety of sizes, configurations and
finishes, and also custom fabricates bar grating products for specialized
applications.  Klemp products are sold for use in many industrial applications
where a combination of strength, light weight, access and a free flow of air,
heat, water or light is desired.  Its products are used in water and
wastewater treatment plants, railroad tank cars, petroleum storage facilities,
aircraft, mines, roads, bridge decks and general manufacturing facilities. 
Klemp's manufacturing and fabrication facilities are located in Libertyville,
Illinois (recently relocated from Chicago, Illinois), Orem, Utah, Liberty,
Missouri, Dallas, Texas, Dayton, Texas and Pittsburgh, Pennsylvania.  Results
of Klemp de Mexico and Shanghai Klemp are reported as part of the Klemp
operating segment.  See note 10.

     Steelcraft - Steelcraft, located in Miami, Oklahoma, manufactures and
sells cold-rolled steel leaf springs.  Its principal customers are
manufacturers of trailers for boats, small utility vehicles and golf carts and
makers of recreational vehicles and agricultural trailers.

     The Company manufactures its products in the United States (U.S.), Mexico
and China.  Of the Company's $191.6 million of consolidated net sales for
1998, $184.5 million (96%) were sales from the production of U.S. locations,
$4.7 million (3%) were from Klemp de Mexico and $2.4 million (1%) were from
Shanghai Klemp.  Products manufactured in the U.S. are primarily sold
throughout the U.S.; usually within the major geographic region of the country
where the production facility is located.  However, of the $184.5 million of
net sales from domestic locations, $12.0 million were export sales to other
countries ($5.3 million to the Far East; $3.5 million to Latin and South
America; $1.8 million to the U.K.; and $1.4 million to Canada).

     During 1998, no customer accounted for more than 10% of the net sales of
the Company.  Individual divisions of the Company have had customers in
certain calendar years that have accounted for in excess of 10% of that
division's net sales.  This occurs principally at CPI, Alliance, the Brooks
operation of Hanna and Auto-Lok due to the large contract nature of their
businesses, and commonly occurs for different customers from one year to the
next.

     The following represents the disaggregation of financial data at and for
the years ended December 31, 1998 and 1997 (in thousands except for related
notes)(unaudited):
<PAGE>
<PAGE>     F-31
                                                        Total        Capital
                          Net Sales     EBITDA(1)     Assets(2)      Spending
                          ---------     ---------     ---------     ---------
  Year ended 
    December 31, 1998:
Alliance                   $ 41,982      $  2,485      $ 18,111      $    232
Auto-Lok                     25,794         1,775        10,645           400
CPI                          28,284         6,003        20,117         1,421
Hanna                        34,458         5,714        17,544           214
Klemp                        57,003         2,627        32,439         2,731
Steelcraft                    3,960           644         1,651            10
Europa                          105            62         1,106            15
Headquarters                      -        (2,007)       15,753            72
                           --------      --------      --------      --------
  Totals                   $191,586        17,303      $117,366      $  5,095
                           ========                    ========      ========
Depreciation and amortization              (5,157)
Interest expense(3)                        (9,428)
                                         --------
  Income before income taxes             $  2,718
                                         ========
  Year ended
    December 31, 1997:
Alliance                   $ 43,791      $  3,817      $ 14,872      $    265
Auto-Lok                     26,524           899        10,054           716
CPI                          28,171         5,882        17,071         1,446
Hanna                        33,420         4,721        15,916           229
Klemp                        52,501         2,952        29,545         2,350
Steelcraft                    4,378           889         1,705            14
Europa                          135            29         1,326             -
Headquarters                      -        (2,398)       20,780            24
                           --------      --------      --------      --------
  Totals                   $188,920        16,791      $111,269      $  5,044
                           ========                    ========      ========
Depreciation and amortization              (4,393)
Interest expense(3)                        (9,226)
                                         --------
  Income before income taxes             $  3,172
                                         ========
  Year ended
    December 31, 1996:
Alliance                   $ 28,091      $  1,546      $ 12,662      $    326
Auto-Lok                     16,864          (154)        7,860           525
CPI                          25,107         5,377        16,236         1,493
Hanna                        29,617         3,127        15,972           391
Klemp                        49,643         4,012        25,115         1,653
Steelcraft                    4,010           771         1,766            45
Europa                          148            94         1,433           100
Headquarters                      -        (1,558)       20,286           171
                           --------      --------      --------      --------
  Totals                   $153,480        13,215      $101,330      $  4,704
                           ========                    ========      ========
Depreciation and amortization              (4,263)
Interest expense(3)                        (8,927)
                                         --------
  Income before income taxes             $     25
                                         ========
<PAGE>
<PAGE>     F-32
(1)  EBITDA is presented as it is the primary measurement used by management
in assessing segment performance.

(2)  Headquarters total assets at December 31, 1998 and 1997 are primarily
comprised of deferred tax assets and the Company's investment in Reunion
common stock.  See note 5.

(3)  Excludes amortization of debt issuance expenses of $671,000, $550,000 and
$632,000 for the years ended December 31, 1998, 1997 and 1996, respectively.
<PAGE>
<PAGE>     S-1
      REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE

To the Board of Directors
and Stockholders of
Chatwins Group, Inc.

Our audits of the consolidated financial statements referred to in our report
dated March 26, 1999 appearing on page F-1 of this Annual Report on Form 10-K
of Chatwins Group, Inc., and its subsidiaries, also included an audit of the
Financial Statement Schedule below.  In our opinion, this Financial Statement
Schedule presents fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements.




PricewaterhouseCoopers LLP

Pittsburgh, Pennsylvania
March 26, 1999


                             CHATWINS GROUP, INC.
                      VALUATION AND QUALIFYING ACCOUNTS
                                 SCHEDULE II
                            (dollars in thousands)

                                  Charged to
                      Beginning   Costs and                           Ending
                      Balance     Expenses     Other     Deductions   Balance
                      ---------   ----------  -------    ----------   -------
  Year ended 
    December 31, 1998:
Allowance for doubtful 
  accounts              $  734      $  338    $   -       $  357 (1)    $  715
Product warranty           288         572        -          636 (2)       224
Accrued self insurance   1,337       1,453       72 (4)    1,663 (3)     1,199

  Year ended 
    December 31, 1997:
Allowance for doubtful 
  accounts              $  922      $  347    $   -       $  535 (1)    $  734
Product warranty           365         818        -          895 (2)       288
Accrued self insurance   1,167       1,774        -        1,604 (3)     1,337

  Year ended 
    December 31, 1996:
Allowance for doubtful 
  accounts              $  733      $  449    $   -       $  260 (1)    $  922
Product warranty           434         725        -          794 (2)       365
Accrued self insurance   1,255       1,804        -        1,892 (3)     1,167
_________________________
(1)  Uncollectible accounts written off, net of recoveries.
(2)  Product warranty claims honored during the year.
(3)  Self insurance payments made during the year.
(4)  Reserve transfer.
<PAGE>
<PAGE>     E-1
                               EXHIBIT INDEX

                                                                 Exhibit No.
                                                                 in Document
                                                     Sequential  Incorporated
Exhibit No.     Exhibit                                 Page     by Reference
-----------     -------                              ----------  ------------

   2.1(a)       Loan and Pledge Agreement, dated 
                as of November 13, 1990, made by 
                Auto-Lok Holdings, Inc. to Chatwins 
                Group, Inc.                                           2.1

   2.2(a)       Notice of Exercise, dated April 27, 
                1993, from Chatwins Group, Inc. 
                to Auto-Lok Holdings, Inc.                            2.2

   2.3(a)       Certificate of Ownership and Merger 
                merging Auto-Lok, Inc. with and into 
                Chatwins Group, Inc. filed with the 
                Secretary of State of the State of 
                Delaware on and effective as of 
                May 4, 1993.                                          2.3

   2.4(e)       Stock Purchase Agreement, dated 
                as of December 1, 1993, among 
                Chatwins Group, Inc., BKO Industries, 
                Inc. and William J. Kral.                             2.4

   2.5(b)       Schedules attached to Stock Purchase 
                Agreement, dated as of December 1, 
                1993, among Chatwins Group, Inc., BKO
                Industries, Inc. and William J. Kral:                 2.5

                2.1(a) - Corporate Organization
                2.1(c) - No Conflicts
                2.1(d) - Capitalization
                2.1(f) - Broker's or Finder's Fees
                2.1(g) - Investments
                2.1(h) - Financial Statements
                2.1(i) - Absence of Certain 
                         Changes or Events
                2.1(j) - Management and Employees
                2.1(k)(i) - Land
                2.1(d)(ii) - Permitted Owned Real 
                             Property Exceptions
                2.1(k)(iii) - Leased Real Property
                2.1(k)(iv) - Real Property Permits
                2.1(k)(v) - Loan Documents
                2.1(k)(vi) - Assessed Valuation
                2.1(k)(vii) - Encroachments
                2.1(l) - Liens of Equipment, Etc.
                2.1(m) - Condition of Assets
                2.1(n) - Insurance
                2.1(o) - Trademarks and Patents
                2.1(p) - Contracts
                2.1(p)(vi) - Employment Agreements
<PAGE>
<PAGE>     E-2
                2.1(p)(viii) - Contracts for Services
                2.1(p)(ix) - Environmental Matters
                2.1(p)(xi) - Union Contracts
                2.1(p)(xii) - Employee Benefits/Policy
                2.1(p)(xiii) - Open Sales Order 
                               Exceeding $50,000
                2.1(q) - Compliance with Contracts
                2.1(r) - Litigation
                2.1(s) - Compliance with Laws
                2.1(t) - Benefit Plans
                2.1(u) - Licenses
                2.1(v) - Transactions with Affiliates
                2.1(x) - Depositories
                2.1(y) - Employment-Related Matters
                2.1(z) - Tax Matters
                2.1(aa) - Customers and Suppliers
                2.1(ab) - Environmental Matters

   2.6(e)       Plan and Agreement of Merger, dated 
                December 20, 1993, merging Arrowhead 
                Grating & Metalworks, Inc. with and 
                into Chatwins Group, Inc. filed with 
                the Secretary of State of the State 
                of Delaware.                                          2.6

   2.7(e)       Articles of Merger of Arrowhead Grating 
                & Metalworks, Inc., dated December 20, 
                1993, filed with the Secretary of State 
                of the State of Missouri.                             2.7

   2.8(d)       Stock Purchase Agreement, dated March 
                31, 1994, between Chatwins Group, Inc. 
                and Oneida Products Corp.                             2.8

   2.9(d)       Stock Purchase Agreement, dated March 
                31, 1994, between Chatwins Group, Inc. 
                and Stanwich Partners, Inc.                           2.9

   2.10(d)      Stock Purchase Agreement, dated March 
                31, 1994, between Chatwins Group, 
                Inc. and Stanwich Oil & Gas, Inc.                     2.10

   2.11(f)      Stock Purchase Agreement, dated 
                August 25, 1994, among Chatwins Group, 
                Inc., Melody Brooks Dill, T.J. Brooks, 
                Jonathan C. Dill and Melody Brooks Dill 
                as Trustees of The Jonathan Brooks Dill 
                1992 Trust and Melody Brooks Dill as 
                custodian for Jonathan B. Dill under 
                the Wisconsin Uniform Transfers to 
                Minors Act.                                           2.11

   2.12(f)      Asset Purchase Agreement, dated 
                September 30, 1994, between Chatwins 
                Group, Inc. and F P M, L.P., a Delaware 
                limited partnership.                                  2.12
<PAGE>
<PAGE>     E-3
   2.13(i)      Stock Purchase Agreement, dated June 20, 
                1995, between Chatwins Group, Inc. and 
                Parkdale Holdings Corporation, N.V.                   2.13

   2.14(j)      Stock Purchase Agreement, dated 
                September 14, 1995, between Chatwins 
                Holdings, Inc. and Reunion Resources 
                Company.                                              2.14

   3.1(a)       Restated Certificate of Incorporation 
                of Chatwins Group, Inc.                               3.1

   3.2(a)       Certificate of Retirement of Class E 
                Preferred Stock filed with the 
                Secretary of State of the State of 
                Delaware effective as of May 3, 1993.                 3.2

   3.3(a)       By-laws of Chatwins Group, Inc.                       3.3

   4.1(e)       Loan and Security Agreement dated 
                March 4, 1994, by and between Congress 
                Financial Corporation and Chatwins 
                Group, Inc.                                           4.1

   4.2(a)       Specimen Share Certificate representing 
                Chatwins Group, Inc.'s Common Stock, 
                par value $0.01 per share.                            4.2

   4.3(a)       Purchase Agreement, dated April 22, 
                1993, by and between Chatwins Group, 
                Inc. and Bear, Stearns & Co. Inc.                     4.3

   4.4(a)       Indenture, dated as of May 1, 1993, 
                by and between Chatwins Group, Inc. 
                and The First National Bank of Boston, 
                as trustee.                                           4.4

   4.5(a)       Global Note No. 1, dated as of May 3, 
                1993, issued by Chatwins Group, Inc. 
                to The Depository Trust Company and 
                registered in the name of Cede & Co. 
                in the principal amount of $49,000,000.               4.5

   4.6(a)       Senior Note No. 2, dated May 3, 1993, 
                issued by Chatwins Group, Inc. to 
                Streamview & Co. in the principal 
                amount of $1,000,000.                                 4.6

   4.7(a)       Form of Certificated Senior Notes 
                issued pursuant to the Indenture, 
                dated May 1, 1993, by and between 
                Chatwins Group, Inc. and The First 
                National Bank of Boston.                              4.7
<PAGE>
<PAGE>     E-4
   4.8(a)       Warrant Agreement, dated as of May 1, 
                1993, by and between Chatwins Group, 
                Inc. and The First National Bank of 
                Boston, as warrant agent.                             4.8

   4.9(a)       Global Warrant No. 1, dated as of 
                May 3, 1993, issued by Chatwins Group, 
                Inc. to The Depository Trust Company 
                and registered in the name of 
                Cede & Co. for 49,000 Warrants.                       4.9

   4.10(a)      Warrant No. 2, dated May 3, 1993, 
                issued by Chatwins Group, Inc. to 
                Streamview & Co. for 1,000 Warrants.                  4.10

   4.11(a)      Form of Certificated Warrants issued 
                pursuant to the Warrant Agreement, by 
                and between Chatwins Group, Inc. and 
                The First National Bank of Boston, 
                as warrant agent.                                     4.11

   4.12(a)      Exchange and Registration Rights 
                Agreement, dated as of May 1, 1993, 
                by and between Chatwins Group, Inc. 
                and Bear, Stearns & Co. Inc.                          4.12

   4.13(e)      Availability A Component Note, dated 
                March 4, 1994, issued by Chatwins 
                Group, Inc. to Congress Financial 
                Corporation, in the principal amount 
                of $20,000,000.                                       4.13

   4.14(e)      Availability C Component Note, dated 
                March 4, 1994, issued by Chatwins 
                Group, Inc. to Congress Financial 
                Corporation, in the principal amount 
                of $1,000,000.                                        4.14

   4.15(a)      Loan Agreement, dated as of May 1, 
                1981, by and between Orem City, Utah 
                and Klemp Corporation relating to 
                $680,000 Orem City, Utah Industrial 
                Development Revenue Bonds, Series A 
                (Klemp Corporation Project).                          4.15

   4.16(a)      Promissory Note, dated May 5, 1981, 
                from Klemp Corporation to Orem City, 
                Utah in the principal amount of 
                $680,000 due May 1, 2001.                             4.16

   4.17(a)      Promissory Note, dated June 30, 1989, 
                issued by Alli Acquisition Corp. to 
                the Pension Benefit Guaranty 
                Corporation, with guarantee of Chatwins 
                Group, Inc. annexed thereto.                          4.17
<PAGE>
<PAGE>     E-5
   4.18(a)      Note Payment Agreement, dated as of 
                June 26, 1989, between Alli Acquisition 
                Corp. and the Pension Benefit Guaranty 
                Corporation.                                          4.18

   4.19(c)      Availability B Component Note, dated 
                April 1, 1994, issued by Chatwins 
                Group, Inc. to Congress Financial 
                Corporation, in the principal amount 
                of $800,000.                                          4.19

   4.20(a)      Non-Negotiable Promissory Note, dated 
                January 9, 1989, issued by Chatwins 
                Group, Inc. to John P. Nasci in the 
                principal amount of $600,000.                         4.20

   4.21(a)      Form of Promissory Note, dated May 3, 
                1993, issued by Chatwins Group, Inc. 
                to certain management employees in 
                connection with termination of Chatwins 
                Group, Inc.'s performance unit plans.                 4.21

   4.22(a)      Form of Senior Exchange Note to be 
                issued pursuant the Indenture, dated 
                May 1, 1993, by and between Chatwins 
                Group, Inc. and The First National 
                Bank of Boston, as trustee.                           4.22

   4.23(l)      Amendment No. 5 to Loan and Security
                Agreement dated May 1, 1996, between 
                Chatwins Group, Inc. and Congress 
                Financial Corporation.                                4.23

   4.24(l)      Third Amended and Restated
                Availability A Promissory Note 
                by Chatwins Group, Inc. payable 
                to Congress Financial Corporation
                in the principal amount of $27,500,000.               4.24

   4.25(o)      Amendment No. 6 to Loan and Security
                Agreement dated November 1, 1996, 
                between Chatwins Group, Inc. and 
                Congress Financial Corporation.                       4.25

   4.26(p)      Fourth Amended and Restated Availability A 
                Promissory Note dated May 1, 1997 between 
                Chatwins Group, Inc. and Congress
                Financial Corporation.                                4.26

   4.27(i)      Promissory Note of Chatwins Group, 
                Inc. in the principal amount of 
                $5,800,000 issued to Parkdale 
                Holdings Corporation, N.V.                            4.27

   4.28(i)      Guaranty, dated June 20, 1995, from 
                Charles E. Bradley, Sr. to and in favor 
                of Parkdale Holdings Corporation, N.V.                4.28
<PAGE>
<PAGE>     E-6
   4.29(i)      Promissory Note of Chatwins Group, Inc. 
                in the principal amount of $200,000 
                issued to P. Dean Gesterkamp.                         4.29

   4.30(i)      Amendment No. 1 to Loan and Security 
                Agreement and Consent, dated June 20, 
                1995, between Congress Financial 
                Corporation and Chatwins Group, Inc.                  4.30

   4.31(i)      Amended and Restated Availability A 
                Promissory Note by Chatwins Group, 
                Inc., payable to Congress Financial 
                Corporation in the principal amount 
                of $26,000,000.                                       4.31

   4.32(i)      First Supplemental Indenture and Waiver 
                of Covenants of Indenture between The 
                First National Bank of Boston as 
                trustee and Chatwins Group, Inc.                      4.32

   4.33(i)      Second Supplemental Indenture between 
                Chatwins Group, Inc. and the Trustee.                 4.33

   4.34(i)      Allonge to Senior Note.                               4.34

   4.35(j)      Amendment No. 2 to Loan and Security 
                Agreement dated September 14, 1995 
                between Chatwins Group, Inc. and 
                Congress Financial Corporation.                       4.35

   4.36(j)      Allonge to Promissory Note of Chatwins 
                Group, Inc. in the principal amount of 
                $5,800,000 issued to Parkdale Holdings 
                Corporation, N.V.                                     4.36

   4.37(k)      Amendment No. 3 to Loan and Security 
                Agreement, dated October 18, 1995, 
                between Chatwins Group, Inc. and 
                Congress Financial Corporation.                       4.37

   4.38(k)      Second Amended and Restated 
                Availability A Promissory Note, 
                dated October 18, 1995, between 
                Chatwins Group, Inc. and Congress 
                Financial Corporation.                                4.38

   4.39(m)      Amendment No. 4 to Loan and Security 
                Agreement dated December 29, 1995 
                between Chatwins Group, Inc. and 
                Congress Financial Corporation.                       4.39

   4.40(m)      Second Allonge dated January 31, 1996 
                to Promissory Note of Chatwins Group, 
                Inc. in the amount of $5,800,000 issued 
                to Parkdale Holdings Corporation, N.V., 
                purchased by Charles E. Bradley, Sr.                  4.40
<PAGE>
<PAGE>     E-7
   4.41(m)      Subordination Agreement dated February 
                2, 1996 between Chatwins Group, Inc. 
                and Congress Financial Corporation.                   4.41

   4.42(m)      Notification Letter dated October 26, 
                1995 regarding purchase of Gesterkamp 
                Note by Franklin Myers.                               4.42

   4.43(p)      Amendment No. 7 to Loan and Security 
                Agreement dated May 1, 1997 between 
                Chatwins Group, Inc. and Congress
                Financial Corporation.                                4.43

   4.44(r)      Financing and Security Agreement dated 
                as of October 30, 1998 by and among 
                Chatwins Group, Inc. and NationsBank, N.A.            4.44

   10.1(a)      Securities Pledge Agreement, dated May 
                1, 1993, among Chatwins Group, Inc., 
                Charles E. Bradley, John G. Poole and 
                The First National Bank of Boston.                   10.1

   10.2(e)      Guarantee, dated March 4, 1994, from 
                Charles E. Bradley to Congress 
                Financial Corporation.                               10.2

   10.3         Intentionally left blank.

   10.4(e)      Agreement, dated as of September 2, 
                1993, among Chatwins Group, Inc., 
                Lawrence A. Siebert, Charles E. Bradley 
                and John G. Poole.                                   10.4

   10.5(e)      Agreement, dated as of September 2, 
                1993, among Chatwins Group, Inc., 
                John S. Hall, Charles E. Bradley 
                and John G. Poole.                                   10.5

   10.6(h)      Collective Bargaining Agreement, 
                dated December 8, 1997, by and between 
                Arrowhead Grating & Metalworks, Inc. 
                division of Klemp and Operating 
                Engineers Local No. 101.                             10.6

   10.7(n)      Agreement, dated June 1, 1996, between 
                CP Industries, Inc. and United 
                Steelworkers of America on behalf of 
                Local #1514-01.                                      10.7

   10.8(n)      Agreement, dated June 1, 1996, between 
                CP Industries, Inc. and United 
                Steelworkers of America on behalf of 
                Local #1514.                                         10.8

   10.9(a)      Agreement, effective May 1, 1992, 
                between Shopmen's Local Union No. 473 
                of the International Association of 
<PAGE>
<PAGE>     E-8
                Bridge, Structural and Ornamental 
                Iron Workers (Affiliated AFL-CIO) 
                and Klemp Corporation.                               10.9

   10.10(a)     Consulting Agreement, dated and 
                effective as of March 31, 1993, between 
                Chatwins Group, Inc. and Stanwich 
                Partners, Inc.                                       10.10

   10.11(a)     Amendment No. 1 to Consulting 
                Agreement, dated as of April 16, 1993, 
                between Chatwins Group, Inc. and 
                Stanwich Partners, Inc.                              10.11

   10.12(q)     Long Term Agreement effective 
                August 1, 1997, by and between
                T.J. Brooks Company and 
                John Deere Horicon.                                  10.12

   10.13 - 
   10.15        Intentionally left blank.

   10.16(a)     Asset Purchase Agreement, dated as of 
                June 26, 1989, among The Alliance 
                Machine Company, Alli Acquisition 
                Corp., George S. Hofmeister and 
                Christopher Sause.                                   10.16

   10.17(a)     Amendment to Asset Purchase Agreement, 
                dated June 30, 1989, among The Alliance 
                Machine Company, George S. Hofmeister, 
                Christopher Sause and Alli Acquisition 
                Corp.                                                10.17

   10.18(a)     Letter Agreement, dated June 30, 1989, 
                among Alli Acquisition, George S. 
                Hofmeister and Christopher Sause.                    10.18

   10.19(a)     Reimbursement and Loan Agreement, dated 
                April 19, 1990 between Robinson 
                Incorporated and Chatwins Group, Inc.                10.19

   10.20(a)     Amended and Restated Promissory Note, 
                dated April 19, 1990, issued by 
                Robinson Incorporated to Chatwins 
                Group, Inc., in the original principal 
                amount of $500,000.                                  10.20

   10.21(a)     Amended and Restated Promissory Note, 
                dated August 15, 1990, issued by 
                Robinson Incorporated to Chatwins 
                Group, Inc., in the original principal 
                amount of $300,000.                                  10.21

   10.22(a)     Option Agreement, dated December 12, 
                1990, between Stanwich Partners, Inc. 
                and Chatwins Group, Inc.                             10.22
<PAGE>
<PAGE>     E-9
   10.23(a)     Promissory Note, dated December 12, 
                1990, issued by CGI Investment Corp. to 
                Chatwins Group, Inc., in the original 
                principal amount of $1,500,000.                      10.23

   10.24(a)     Letter regarding Release of Security 
                Interest, Subordination and Payment 
                Instructions, dated May 3, 1993, from 
                TCW Capital and TCW Special Placement 
                Fund III.                                            10.24

   10.25(a)     Letter Agreement, dated December 12, 
                1990, among Chatwins Group, Inc., CGI 
                Investment Corp., Stanwich Partners, 
                Inc., Lawrence A. Siebert, John G. 
                Poole, Charles E. Bradley, TCW Special 
                Placements Fund II, TCW Capital, 
                TCW Special Placements Fund III 
                and TCW Capital.                                     10.25

   10.26(a)     Letter Agreement dated April 16, 1990, 
                among Chatwins Group, Inc., CGI 
                Investment Corp., Lawrence A. Siebert, 
                John G. Poole, Charles E. Bradley, 
                Stanwich Partners, Inc. and TCW Special 
                Placements Fund III.                                 10.26

   10.27(a)     Promissory Note, dated January 15, 1988, 
                issued by John G. Poole to Chatwins 
                Group, Inc. in the original principal 
                amount of $227,349.25.                               10.27

   10.28(a)     Promissory Note, dated January 15, 1988, 
                issued by Lawrence A. Siebert to Chatwins 
                Group, Inc. in the original principal 
                amount of $75,819.50.                                10.28

   10.29(a)     Promissory Note, dated January 15, 1988, 
                issued by John S. Hall to Chatwins Group, 
                Inc. in the original principal amount 
                of $81,937.50.                                       10.29

   10.30(a)     Promissory Note, dated January 15, 1988, 
                issued by Charles E. Bradley to Chatwins 
                Group, Inc. in the original principal 
                amount of $707,394.                                  10.30

   10.31(a)     Noncompetition Agreement, dated December 
                27, 1991, by and between Chatwins Group, 
                Inc. and Lewis, Goetz and Company, Inc.              10.31

   10.32        Intentionally left blank.

   10.33(c)     Lease Agreement, dated May 31, 1994, by 
                and between RTF Properties, L.P. and 
                Chatwins Group, Inc.                                 10.33
<PAGE>
<PAGE>     E-10
   10.34(m)     Joint Venture Agreement dated November 
                27, 1995 between Chatwins Group, Inc. 
                and Charles E. Bradley, Sr. regarding
                Purchase and Lease of certain 
                Manufacturing Equipment.                             10.34

   10.35(c)     Letter Agreement, dated June 8, 1994, 
                between Klemp Corporation Division of 
                Chatwins Group, Inc. and Ferretera 
                Sabe, S.A. terminating the Joint 
                Venture Agreement, dated August 25, 
                1993, by and between Klemp Corporation 
                Division of Chatwins Group, Inc. and 
                Ferretera Sabe, S.A.                                 10.35

   10.36(m)     Equipment Lease Agreement dated July 
                1, 1995 between Chatwins Group, Inc. 
                and Rostone Corporation.                             10.36

   10.37(o)     Employment Agreement, dated as of 
                August 1, 1996 between Chatwins 
                Group, Inc. and Joseph C. Lawyer.                    10.37

   10.38(m)     Joint Venture Agreement dated December 
                6, 1995 by and among China 
                Metallurgical Import & Export Shanghai 
                Company, Wang Gang Township Economic 
                Development Corporation and 
                Chatwins Group, Inc.                                 10.38

   10.39(a)     Export Related Services Agreement, 
                dated March 20, 1991, by and between 
                CGI Sales Corporation and Chatwins 
                Group, Inc.                                          10.39

   10.40(a)     Foreign Trade Commission, Sale Lease 
                and Services Agreement, dated March 20, 
                1991 by and between CGI Sales 
                Corporation and Chatwins Group, Inc.                 10.40

   10.41(e)     Employment Agreement, dated as of 
                December 1, 1993, by and between 
                Chatwins Group, Inc. and William J. Kral.            10.41

   10.42        Intentionally left blank.

   10.43(m)     Subordinated Promissory Note dated 
                September 1, 1995 issued by Oneida Molded 
                Plastics Corp. to Chatwins Group, Inc.               10.43

   10.44(n)     Agreement, dated June 14, 1996, between 
                The Alliance Machine Company and Local 
                Union No. 2361 United Steelworkers of 
                America AFL-CIO.                                     10.44

   10.45 -
   10.49        Intentionally left blank.
<PAGE>
<PAGE>     E-11
   10.50(m)     Letter Agreement dated January 31, 1996 
                between Chatwins Group, Inc. and 
                Charles E. Bradley, Sr. extending the 
                maturity date of the Parkdale Note 
                to June 30, 1996.                                    10.50

   10.51(n)     Letter Agreement dated June 18, 1996, 
                between Chatwins Group, Inc. and 
                Charles E. Bradley, Sr., extending 
                the maturity date of the Parkdale 
                Note to December 31, 1996.                           10.51

   10.52(n)     Joint Venture Agreement by and among 
                Klemp de Mexico, S.A. de C.V. and 
                Consolidated Fabricators, Inc.                       10.52

   10.53(n)     Second Amendment dated March 25, 1996, 
                to Lease Agreement dated May 31, 1994,
                between RTF Properties, L.P. and 
                Chatwins Group, Inc.                                 10.53

   10.54(n)     Third Amendment dated June 10, 1996, 
                to Lease Agreement dated May 31, 1994, 
                between RTF Properties, L.P. and 
                Chatwins Group, Inc.                                 10.54

   10.55 -
   10.61        Intentionally Left Blank.

   10.62(c)     Chatwins Group, Inc. Long Term 
                Incentive Plan, effective January 1, 
                1994.                                                10.62

   10.63(g)     Indemnity Agreement, dated as of June 
                29, 1994, between Chatwins Group, Inc. 
                and Charles E. Bradley.                              10.63

   10.64(g)     Form of Indemnity Agreement, between 
                Chatwins Group, Inc. and each of 
                Charles E. Bradley, Jr., Thomas L. 
                Cassidy, Joseph C. Lawyer, James A. 
                O'Donnell and John G. Poole.                         10.64

   10.65(g)     Form of Indemnity Agreement, between 
                Chatwins Group, Inc. and each of 
                Russell S. Carolus and John M. Froehlich.            10.65

   10.66(A)(f)  Employment Agreement, dated August 29, 
                1994, by and between T.J. Brooks 
                Company, a Wisconsin corporation and 
                Jonathan C. Dill.                                    10.66

   10.66*(B)(i) Stock Pledge Agreement, dated June 20, 
                1995, between Chatwins Group, Inc. 
                and Parkdale Holdings Corporation, N.V.              10.66
<PAGE>
<PAGE>     E-12
   10.67(i)     Escrow Agreement, dated June 20, 1995, 
                among Chatwins Group, Inc., Parkdale 
                Holdings Corporation, N.V., Franklin 
                Myers and IBJ Schroder.                              10.67

   10.68*(i)    Irrevocable Proxy, dated June 20, 1995, 
                between Chatwins Group, Inc. and 
                Parkdale Holdings Corporation, N.V.                  10.68

   10.69*(i)    Irrevocable Proxy, dated June 20, 1995, 
                between Chatwins Group, Inc. and 
                Franklin Myers.                                      10.69

   10.70(i)     Letter Agreement, dated June 20, 1995, 
                between Chatwins Group, Inc. and 
                P. Dean Gesterkamp.                                  10.70

   10.71*(i)    Security Agreement, dated June 20, 
                1995, between Chatwins Group, Inc. and 
                P. Dean Gesterkamp.                                  10.71

   10.72(i)     Letter from Chatwins Group, Inc. to 
                Wertheim Schroder Investment Services.               10.72

   10.73(i)     Letter Agreement, dated June 20, 1995, 
                between Chatwins Group, Inc. and 
                Franklin Myers.                                      10.73

   10.74(i)     Pledge and Security Agreement, dated 
                June 20, 1995, between Congress 
                Financial Corporation and Chatwins 
                Group, Inc.                                          10.74

   10.75(i)     Collateral Assignment in favor of 
                Congress Financial Corporation 
                executed by Chatwins Group, Inc.                     10.75

   10.76(i)     Amendment No. 1 of the Securities 
                Pledge Agreement among Chatwins 
                Group, Inc., Charles E. Bradley, Sr., 
                John G. Poole and The First National 
                Bank of Boston as collateral agent.                  10.76

   10.77(j)     Letter Agreement, dated September 4, 
                1995, between Chatwins Group, Inc. 
                and Parkdale Holdings Corporation, N.V.              10.77

   10.78(j)     Side Indemnity Letter Agreement, 
                dated September 14, 1995, between 
                Chatwins Group, Inc. and Reunion 
                Resources Company.                                   10.78

   11.1         Statement of Computation of 
                per Share Earnings.                        E-15

   12.1         Statement of Computation of Ratios.        E-16
<PAGE>
<PAGE>     E-13
   21.1         Subsidiaries of Chatwins Group, Inc.       E-17

   27           Financial Data Schedule                    E-18
_________________________

* Document dated June 20, 1995 pursuant to a letter agreement.

(a)  Previously filed as an Exhibit to the Company's Registration Statement on
Form S-1 (No. 33-63274) filed on July 30, 1993.

(b)  This Exhibit was not included in the Company's Annual Report on Form 10-K
dated March 29, 1994 (Form 10-K) since it did not contain information which
was material. The Company agrees to furnish supplementally this Exhibit to the
Securities and Exchange Commission (Commission) upon request.

(c)  Previously filed as an Exhibit to Post-effective Amendment No. 1 to the
Company's Registration Statement on Form S-1 (No. 33-63274) filed on July 30,
1993.

(d)  Incorporated by reference from the Company's Current Report on Form 8-K
dated April 13, 1994 and filed with the Commission on April 14, 1994.

(e)  Incorporated by reference from the Company's Annual Report on Form 10-K
dated March 29, 1994 for the year ended December 31, 1993.

(f)  Incorporated by reference from the Company's Quarterly Report on Form
10-Q dated November 11, 1994 for the quarterly period ended September 30,
1994.

(g)  Incorporated by reference from the Company's Quarterly Report on Form 10-
Q dated August 12, 1994 for the quarterly period ended June 30, 1994.

(h)  Incorporated by reference from the Company's Annual Report on Form 10-K
dated March 29, 1995 for the year ended December 31, 1994.

(i)  Incorporated by reference from the Company's Current Report on Form 8-K
dated June 30, 1995 and filed with the Commission on July 3, 1995.

(j)  Incorporated by reference from the Company's Current Report on Form 8-K
dated September 28, 1995 and filed with the Commission on September 29, 1995.

(k)  Incorporated by reference from the Company's Quarterly Report on Form 10-
Q dated November 14, 1995 for the quarterly period ended September 30, 1995.

(l)  Incorporated by reference from the Company's Quarterly Report on Form 10-
Q dated May 2, 1996 for the quarterly period ended March 31, 1996.

(m)  Incorporated by reference from the Company's Annual Report on Form 10-K
dated March 26, 1996 for the year ended December 31, 1995.

(n)  Incorporated by reference from the Company's Quarterly Report on Form 10-
Q dated August 12, 1996 for the quarterly period ended June 30, 1996.

(o)  Incorporated by reference from the Company's Quarterly Report on Form 10-
Q dated November 13, 1996 for the quarterly period ended September 30, 1996.

<PAGE>
<PAGE>     E-14
(p)  Incorporated by reference from the Company's Quarterly Report on Form 10-
Q dated May 15, 1997 for the quarterly period ended March 31, 1997.

(q)  Incorporated by reference from the Company's Quarterly Report on Form
10-Q dated May 15, 1998 for the quarterly period ended March 31, 1998.

(r)  Incorporated by reference from the Company's Quarterly Report on Form
10-Q dated November 13, 1998 for the quarterly period ended September 30,
1998.<PAGE>